If a company’s leadership has intentions from the beginning to operate a fast-growing business in an unethical and illegal manner, while maintaining a positive public image, I have observed one possible sadistic model that can be successful, at least on a short term basis.

The CEO needs to be a well-liked, mild-mannered, suave, polished and articulate business person.  His second in command, on the other hand, should be a domineering, short-tempered, intimidating, executive bully who doesn’t take no for an answer.  It’s his way or the highway and he drives the truck that runs over you. The second in command essentially takes direction from the CEO and barks out orders and creates fear across the organization.

The second in command is seen as someone to be feared and most people will never cross him nor question the direction of the company, even if it is unethical or illegal.  All this while the CEO looks like the good guy and the company is considered an excellent corporate citizen.  It’s the corporate version of good cop, bad cop.  Dr. Jekyll and Mr. Hyde in the C-Suite.  This leadership model is confusing to employees on the inside but the public never notices the sadistic practices of the operation.

Welcome to Evil Inc.

According to the 2007 National Business Ethics Survey published by the Ethics Resource Center, the second most observed ethical violation is abusive or intimidating behavior observed by twenty-one percent of employees.  That means one out of every five employees routinely observe the use of abusive or intimidating behavior in the workplace.

Abusive and intimidating behavior is evil, wrong and has no place in the business world. Bullies use the resulting fear to prevent employees from questioning unethical or illegal decisions or methods.  According to the Ethics Resource Center, almost thirteen percent of employees experience retaliation for reporting misconduct.  If you work for Evil Inc. the leaders get what they want and nobody dare stop them. Employees and middle management lack the nerve to question their methods because fear is the weapon of choice at Evil Inc.

Evil Inc., however, is not a long-term going business concern.  Typically the business owners, who are narcissistic and ruthless, run the business long enough to make as much money as possible for themselves before the company folds.  One day everything seems fine to the public then suddenly the company files bankruptcy or closes its doors.  Their voodoo business act is over. The curtain falls on their bipolar management style and operations stop as quickly as they started.  Sadly, the last chapter of Evil Inc.’s story is never a happy ending.

Do you know why patients sue their doctors? Poor bedside manner.  The manner in which doctors behave alongside their patients is the biggest predictor of future malpractice lawsuits.  A physician who treats a patient with respect and courtesy, along with open two-way communication, is unlikely to be sued, even if the doctor makes a mistake in a diagnosis or surgery.  A doctor with a toxic bedside manner who makes a similar mistake, however, should call his attorney and begin working on his defense.

In an effort to find quick, proven ways to predict the probability of malpractice lawsuits, an insurance company discovered a proven method in managing risk; quickly observe how doctors treat their patients. “Patients file lawsuits because they’ve been harmed by shoddy medical care and something else happens to them,” points out Malcolm Gladwell, author of “Blink,” a book on how we make instantaneous decisions without thinking.  These quick and perceptive judgments are quite accurate according Gladwell. The concept, called thin-slicing, is the ability of the unconscious mind to make precise judgments based upon thin slices of experience.

“What comes up again and again in malpractice cases is that patients say they were rushed or ignored or treated poorly,” says Gladwell. “People just don’t sue doctors they like,” states Alice Burkin, a leading medical malpractice lawyer.

This same concept is likely true for employers.  Companies who treat their employees with respect, dignity and fairness, earn the trust of their employees.  Employees typically will not file a lawsuit against an employer who has treated them well.  A company whose leaders have a poor cubicle-side manner, on the other hand, should make sure their liability insurance premium is paid and that they have a good labor attorney.

Toxic work environments create an atmosphere of fear, hatred, mistrust, contempt and brutal office politics. It is only a matter of time when these toxic company cultures begin springing up a crop of wrongful termination claims, sexual harassment charges, constructive discharge lawsuits, race discrimination allegations, unethical executive conduct investigations, insider trading reports by the press, and much, much more.

Pay attention to the signals, good and bad, displayed by your employer’s leadership.  Their cubicle-side manner could be foretelling the future.