Founder's syndrome, sometimes called founderitis, is where the founders of organizations fail to adapt their business methods after their company has grown. The term is colloquial and is not a medical syndrome. Founder's syndrome is common where there has been only one person leading the organization or the board of directors since its inception and commonly occurs in both non-profit and for-profit.
An organization faces founder's syndrome as the scope of activities widen and number of stakeholders increase. Without an effective and inclusive decisionmaking structure and process there is potential for conflict between newcomers who seek effective involvement with organizational development and the founder(s) who seek to dominate the decisionmaking process. This can be very disruptive both to the organization and to the individuals concerned and should be carefully and clearly diagnosed and addressed quickly and decisively.
A number of negative effects may occur when an original founder CEO seeks to maintain disproportionate power and influence beyond the initial growth phase of an organization.
- Exclusion of newcomers: First, a founder's passion and charisma, initially essential to the successful establishment of an organization, becomes a limiting rather than a creative and productive force. As an organization matures, professionally trained and talented people are normally engaged and the board is expanded. The founder's domination of the decision making process may frustrate effective and inclusive group decision making.
- Exclusion of other founders: In projects where there was more than one founder, but only one remains with the project, the remaining founder may use their influence to remove all references to the other founders from the project, in order to create the appearance that they were the only one.
- Identity of the organization: The organization may, over time, be overly identified with the person or personality of the founder and may experience diminished public trust. Typically, there is little organizational infrastructure in place. There is no succession plan, and it is not unusual to hear the words, “That’s not how we’ve always done it.”
- Decision making: The founder is at the center of all decision-making. Decisions are frequently made quickly, with little input from others. Often, decisions are made in crisis mode, with little forward planning to prevent problems from recurring. As a whole, the organization becomes reactive, rather than proactive. Staff meetings are held generally to report crises, rally the troops, and get status reports on assignments. There is little concept of team strategy development and shared executive agreement on objectives. Limited or a complete lack of professional development for existing and budding leaders reinforces and solidifies the balance of power.
- Nepotism/cronyism: In its early development, the board is often selected by the founder and thus is often composed of friends and colleagues of the founder. The board’s role may be relegated to "support" for the founder, rather than to lead the organization. It is often a rubber-stamp board, having little understanding of the work the organization does. Its commitment is not to the mission, but to the founder. It is unable to answer basic questions without checking first – such as the size of the budget, the major funding sources, the extent of the programs. This may limit the independent functioning of the board and deprive the organization of more diverse and representative views. Staff may also have been chosen due to their personal loyalty to the founder rather than skills, organizational fit, or experience. Founders tend to surround themselves with cheerleaders, rather than people with valuable insights and ideas.
Coping with founder's syndrome requires discussion of the problem, a plan of action, and interventions by the founder, the board and or by others involved in the organization. The objective of the plan should be to allow the organization to make a successful transition to a mature organizational model without damage to either the organization itself or the individuals concerned.
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