05/09/2012 05:23 EDT | Updated 07/09/2012 05:12 EDT

Seven Ways to Tell If You're Working for a Ticking Time Bomb

Spring is here and top executives seem to be dropping like flies. Best Buy is investigating its recently resigned CEO Brian Dunn who may have acted inappropriately with a female underling. And over at General Services Administration (GSA), Jeffrey Neely is in the thick of it for approving a high six figure-budget for an employee event.

Is there a way to predict the types of companies that are ripe for these crash-and-burn episodes?

The answer is yes, and the crystal ball happens to work especially well when it looks into organizations with weak cultures. These are the companies with leaders who tout worthy values. But then, in the same breath, they put up roadblocks -- or temptations -- that prevent employees from wanting to live those values.

CEOs need to realize that highly desirable employee behaviour -- being team players, adhering to deadlines and budgets, and meeting goals -- can become distorted and even destructive in a company driven by leaders with ulterior motives.

The challenge is that the difference between "pushing the envelope" and "crossing the line" can be subtle. Leaders need to look for excess and extremes in behaviours that otherwise are normal and desirable. Here are seven seemingly benign behaviors which, if exaggerated, have "scandal alert" written all over them.

[Blind] loyalties

Loyalty, generally considered a very good employee attribute, has a dark side. It can create a culture where employees have confused allegiances: to the organization or to their boss. Jeff Neely's domain within the GSA was an upbeat backslapping culture, well known for rampantly rewarding everyone early, often, and extravagantly. Perhaps employees -- in the name of loyalty -- confused their desire to be team players with not rocking the boat and wrecking all those perks. And this degraded type of employee loyalty -- silence in the face of lavish spending by leaders with their own interests at heart -- may have been exactly what GSA, at its toxic core, wanted all along.

Commitment to deadlines [at all costs]

You'd think that a company that rewards employees for meeting deadlines would have an exceptionally productive and efficient work force. Not true. At Johnson & Johnson, the understood directive associated with getting product to market on tough deadlines created a culture of "Don't ask too many questions." This resulted in a series of dangerous drug recalls that damaged the company's reputation.

[Excessive] optimism

When a person is going through a tough physical or emotional time, optimism can buoy his spirits and help healing. However, when a company is unhealthy, "Everything is going to be okay" is not the panacea you want the CEO to be telling you. David Myers, former controller of WorldCom, has conceded that he saw the problems of the now-defunct company through rose-colored glasses. He simply kept believing -- and telling his frightened staff -- that the problems would resolve themselves eventually. By the time he came to his senses, he was under arrest for accounting fraud.

Focus on the [wrong] goals

Telling employees to keep their eye on the prize is not intrinsically a bad thing. But when the goal eclipses the underlying values of organization, you can wind up with a dysfunctional culture. In the 1990s, Sears gave its auto repair mechanics a mandatory sales goal of $147 per hour. Not long after this decree, it was discovered that customers were being overcharged or sold unnecessary repairs.

[Cutthroat] competition

Boeing is known for its highly competitive employees and work culture. That's a good thing, right? Not so in 1996, when the company lost billions in government contracts for ethics violations after an employee stole 25,000 pages of proprietary documents from Lockheed. Flash forward to 2005, when work teams were still so competitive that certain ones would keep useful information secret from other teams to ensure a competitive edge.

Cost cutting [at the expense of your values]

Cost-effectiveness can get ugly when financial performance becomes the only metric that upper management values. This seemed to be the basis, many believe, of the fatal mistake made on the BP oil platform in the Gulf. Two years ago, prior to the explosion caused by a shortcut tied to a safety issue, BP's Macondo project was more than $40 million over budget. You know the rest.

Rewarding achievement [without asking questions]

Managers typically love hardworking and high-performing employees. But sometimes workers will go off the rails just to get their superiors' approval. French trader Jérôme Kerviel, who worked at the Société Générale banking group, had a profound need to be liked. He engaged in elaborate computer manipulations, which led to $4.9 billion in massive financial fraud. Kerviel's explanation -- he is thought not to have profited personally from his crime -- is telling. He said he was just working to increase the bank's profits and make his bosses happy.