Home > Audit, Compliance, Human Resources, Risk Management > Auditing Career: Dealing with Mentally Unstable Managers

Auditing Career: Dealing with Mentally Unstable Managers

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The subject of “mental stability” is a mine field that has kept Psychologists and Psychiatrists busy since Sigmund Freud first proposed to make the study of human behavior into a hard science.    Today, the meaning  of mental stability is still not well defined in the social sciences, so it is extremely difficult for those of us outside of those fields to discuss it, define it or pass judgment on it.   However, like pornography, a  lack of mental stability in people, specially in the workplace, is something most of us recognize when we see it.   As auditors, many of us have had to deal with mentally unstable people at different times and  at different levels of the corporate world, including those at executive levels tasked with making significant decisions for their organizations.   The effects of mental illness often cause serious negative impacts on the departments and the people the sick individuals interact with.   But, because mental illness is still a taboo subject in corporate America, these people remain in their high level posts “undiscovered” for years.   As auditors we often hear about managers who constantly change their minds or have difficulties making up their minds for the simplest of things, or directors who have sleeping  disorders and call their staff’s at 3:00 AM to criticize their peers or  to brainstorm strategies without end.    Or, the abusive vice-president who obtains pleasure from humiliating her staff in public, insults minorities with “indirect” comments and makes disgusting facial contortions when talking to junior employees.  And, one I personally remember… the supervisor who  reprimands his team for following the very procedures and policies he instituted a few months earlier.    When the person with these types of  instabilities is your boss, you have a problem.

I’ve written this article as a result of a discussion I recently held with a Psychologist who specializes in Organizational Psychology, and she pointed out to my amazement, that in corporate America it is better to be an alcoholic or drug addict than to have a mental disorder.   In 2010, most personnel departments address employee and executive level addictions with a variety of solutions such as 12 step programs,  psychotherapy, etc., but mental illness, because of the difficulty in “proving it” carries legal issues that scares the average personnel manager, and so it is awkwardly “ignored.”   This process of ignoring the destructive behaviors of  mentally unstable managers or executives often includes an “unofficial” gag around direct discussions on the behaviors of the individual,  instead “politically correct” comments like, “you have to be extremely patient to work with Mike,” or “Helen is a little eccentric,” or “Herbert is impulsive and a little abrasive” are heard.  At the end of the day folks like Mike, Helen and Herbert terrorize their staffs, ignore business controls, make a mockery of policies and procedures and create an atmosphere of tension that often damages a respectful and cooperative work environment.   Worse than that, these individuals almost always chase away good talent and bring about unnecessary risk exposures to the entire company.    All of these things have indirect impacts on the work of auditors.    I am going to use the “How many controls are enough” example below, to bring the point home.

One of the most common questions asked of auditors is “how many controls do we really need?”  The question is often a legitimate one, but it can also hide a myriad of other  issues that have little to do with risk management, compliance and audit.   Variations of the too many or too few question sometimes come  from low level staffers looking to “reduce unnecessary work,” but at other times you hear it from business managers, before Risk Assessment work begins, explaining that “given the fact that we know what our weaknesses are, and we have good controls already, why should we bother evaluating controls and looking for new ones?”  At other times you hear the classic given by over zealous project managers, “we only have 10 minutes to discuss each control, so lets get this over with quickly.”   Then there is the direct comment:  “This is all a waste of time and I don’t give a %$#@ about  you, controls or the audit department.”  Most of these excuses or arguments are not presented by mentally unstable people, but some are.   When used by mentally unstable people, watch out because all hell breaks lose, and you find yourself in a swamp full of snakes.

Dealing with these challenges is an art most auditors need to perfect.   How indeed should these questions be answered, especially to people who do not understand the basics of controls, compliance and risks we auditors carry in our heads.   How can all these complex legalistic requirements be translated for people who do not care to understand them, or have no intellectual ability or lack the attention span to “get it” within the short periods of time allotted to the process?   These are our normal challenges with “normal” people.   The challenges when dealing with mentally unstable managers may be insurmountable.   Clearly conveying the message in a professional manner doesn’t cut it.  Preparing nice PowerPoint presentations doesn’t cut it.  Speaking in a low tone when they are screaming and insulting you doesn’t cut it.   What my Psychologist friend pointed out is that  these folks are sick, and not misbehaving or involved in temporary tantrums.   As untreated sick people, they often can not control what they are doing.  If you do not accept this fact, you will hit your head against the wall trying to interact  with them in ways that work for normal folks, but do not for the mentally unstable.   You must also understand that these events are not your fault since most mental disorders start early in a person’s life, way before you had the unfortunate luck of stepping in the person’s path.

My Psychologist friend jokingly suggested that auditors receive training  on how to interact with people suffering with  Attention Deficit Disorders, bipolar disorders and in group dynamics in the corporate environment.    A company’s culture is a very complex organism.   Even the smallest places have complicated political and social layers (silos) that have nothing to do with the official roles and functions performed by individuals and shown in organizational charts.    Decisions in organizations, anyone who is observant will confirm, are not always made based on logic, business reasoning, policies, controls, and/or the need to comply with external regulations.  They are often made based on fear, anger, sexual attraction, insecurity, jealousy, greed, hate, prejudices and confusion.    Because of these things, it is easy for mentally unstable people to “hide” in the open.   In many organizations these behaviors are sheltered because those at the top benefit from that sort of culture.    For example, a manager who regularly works 8:00 AM to 9:00 PM (without asking for extra compensation), keeps to himself,  does not take well to change, drives his staff like cattle, but surpasses his quotas, may be highly “appreciated” by his superiors.   In these types of organizations calls to perform, comply with and produce results based on COSO, CobiT, As-5, PCAOB, SOX, ITIL, etc… are ignored, stone walled, analyzed to death or “adjusted” to the point of non-recognition.    So, answering the “why do we need these controls?” question can be tricky if you happen to be in the wrong organization or before an unstable manager.   Reaching an “understanding” on the need for a dozen or less controls can drag-on for twelve to eighteen months, or more, easily.  Usually, the conclusion of these torturous wasteful exercises is reached via discussions or negotiations that have little to do with the compliance, legal or operational issues originally brought to the table.

Most accountants, auditors, lawyers and IT folks I know have no training on dealings with folks with mental health problems in the workplace.   I do not know of anyone who can say they  would know how to deal with either mentally unstable managers (those whom they report to) or mental instability in those they audit.   Our capitalist system proposes that business people function in a balanced manner because the marketplace acts as an invisible counter-weight to bad or irrational decisions and bad behaviors.     By some miracle the “marketplace” is self policing, self healing and a good arbitrator of even mental health.    The marketplace is supposed to distribute higher profits to those who play by this rule.   This neat picture of social and economic behaviors however is flawed.   It assumes that all human beings are primarily motivated and controlled by money.   Because of this simplistic view, even the smallest of our corporate organizations can be inhabited by well dressed and impressive looking people with serious mental illnesses.   Given the epidemic levels of untreated Attention Deficit Disorders, Personality disorders and bipolar disorders in our society, why is it taboo to conclude that these are also at epidemic levels in corporate America?   During the hiring process, when most mental disorders can be identified, most organizations do not ask if the candidate has had a history of mental illness, and current law does not obligate the candidate to disclose the information.

So, what do you do when you determine, based on the “pornography” (when you see it you know it) test, that your boss is mentally unstable?   The answer given by my Psychologist friend is simple and direct.   The answer is to look for another job as soon as possible, especially if you determine that the organization turns a blind eye to the problem.   Many mental disorders are not curable, even though, they are treatable if the person obtains long term consistent help, medications and therapy.   Given the manner in which our society works, and our corporations are structured, working under a mentally unstable person is a no win situation.   Any organization that maintains a person of authority ignoring his/her signs of mental illness is not a healthy organization and may have  other serious problems hidden just under the surface.   The responsibility of an auditor is to deal with reality in a transparent manner, trying to report risks that may impact stockholder value, assisting management with control’s and solutions for better performance and detecting potential fraudulent acts.   When those who manage the audit function, compliance or risk management are mentally unstable, the integrity and reliability of those functions can be in question.

What do you do when you determine, based on the “pornography” (when you see it you know it) test, that someone you are auditing is mentally unstable?   The answer depends on whether the mental instability is known in the organization or not.   If it’s known, but there is an “unofficial” gag situation, where the personnel department  and other managers ignore it, you have a challenge at hand.   As an auditor, you have discovered a risk to the organization, you probably also have evidence that the person may be ignoring policies and procedures, is abusive to staff and may have even tampered with audit samples.   However, he has held the job for 15 years and each year he gets his bonus and good reviews.   His boss of 15 years, a man related to the CFO and a major share holder said the guy is “colorful” but “OK.”  To help you make the decision, here are a few queries you should answer:

  • What is the likelihood that you are the only auditor during the last 15 years to find these irregularities?
  • Why would the inner circle consider this unstable person “OK” and take the risks associated with his illness?
  • What do other auditors know about the situation, and what do they say?
  • What is the company “culture” like, regarding others who ignore and break company policies and procedures?
  • Is HR aware and concerned about the problems with the manager and his staff.
  • Are there previous audit reports citing the manager, his department or any compliance issues linked to him?
  • Are there others in the company with similar conditions?
  • Has your superior expressed concern over how you may report the findings, without giving you adequate reasons for the concerns?
  • Are the issues, risks and failures discovered by the auditor been in effect for a long time, in a way that knowledge of them have been an “open secret” requiring that multiple individuals “play along” in order not to make waves?
  • Has there been an insinuation, a gossip or small talk to the effect that the auditors should not pursue issues with the individual in question because of his “connections” in the company?

These ten questions should give you a sense of where things are regarding the mentally unstable individual, his social connections in the company, the corporate, legal and business culture that nourished him for 15 years, and how you may best proceed.    If the answers to these questions lead you to believe that the organization has been aware of the problem, you may be better off working elsewhere.    If  multi-billion dollar organizations are reluctant to address these issues and resolve them, you need to carefully think about how you can maintain your professionalism and ethics as an auditor, and that may only be achieved by going elsewhere.   When the organization is ready to address the issues at hand, or when it is forced to by the legal system, you can read about it in the newspapers.   But, an inquisitive person may ask, “in this situation, don’t you have an obligation to report this information to your superiors?”    The answer is “Yes.”  But, if they already know about it and want you to keep your mouth shut, what can you do?   If you stay in the job, you  are in essence taking part in a conspiracy and cover-up little different than those that  occur during a financial fraud, and if it blows up, you will have as the auditor, to answer some hard questions as to what you knew and when you knew it.   Most interestingly, will be how you answer the “why did you not report it” question.

If your queries on the other hand lead you to conclude that you have a new finding, and the mentally unstable person’s condition is unknown to others in audit, HR and/or legal, you should, in consultation with the Chief Audit Officer or audit Director, find a strategy to address the issue and report it according to said strategy.   If the company has a policy for addressing mental health issues, you should consult it and incorporate its guidelines in your approach and documentation.    This process will likely not be smooth and easy.   Imagine if your findings lead to a psychiatric determination that the CFO has bipolar disorder.   Can this finding become a “material weakness” from a SOX perspective?   It can be argued that the symptoms of bi-polar disorder in the CFO can negatively impact financial reporting!   How would you write this up in the 10k and what would constitute an acceptable “remediation?”   Can the board call for the removal of the CFO because of this?   When do the lawyers step in?

To be fair to all.   Not all organizations deal with mental illness problems in a bad manner.   Many organizations have invested money, time and have trained their HR and legal departments in ways to address this serious challenge.   But, to do so everyone has to admit to the problem and an entire new set of corporate policies and guidelines need to be adopted on how to fairly address mental illness in the workplace.    As auditors, you will likely see more and more of these situations as the problem in the general population gains media attention and more people are diagnosed with these disorders.   It is also important to note that those who suffer from mental disorders, although sometimes disruptive, conflict prone or unpredictable in the work environment, should not be stigmatized or abused because of their illnesses.    The mentally unstable deserve professional treatment for their sake and for the sake of those around them.   Without it, they pose risks that will not go away by simply ignoring them.

As always, I will welcome reader comments on the subject, especially if they are based on real life work experiences.    Thanks for reading!

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  1. May 4, 2010 at 1:48 PM

    Mental Disorders 101,

    Thanks for the Trackback….


  2. Papa_K
    May 5, 2010 at 5:20 PM

    Great article. Thanks. I just used some of this article in a formal complaint I just filed. Don’t know if anything is going to get done but I’m relieved now. People will be running around trying to CYA for the next few months and crossing their fingers that this unstable individual doesn’t push some red button he’s created with all the controls he’s managed to accumulate.

    Oh well.

    Thanks Joel, very good article it helped me feel a stress relief I haven’t felt in years.

  3. lsg
    May 5, 2010 at 5:21 PM

    “It is also important to note that those who suffer from mental disorders, although disruptive, conflict prone and often unpredictable in the work environment, should not be stigmatized or abused because of their illnesses.” Give me a break! This is exactly the type of statement that creates a stigma. To imply that all people with mental illnesses are disruptive, unpredictable, or conflict prone is prejudicial.

    the point of view suggested by this article seems to be a slippery slope. Mental illness may be considered a disability under the Americans with Disabilities Act if certain criteria are met and the employer knows about the disabililty. The majority people with mental illnesses do not pose a greater risk than any other employees. Most are competent, good employees and managers. Like someone with cancer or a physical disability they may need some accomodations from time to time by the employer. Since mental illness may be difficult to spot, it is up to the employee to approach the subject with the employer. Mental illness is a disease like cancer or diabetes, but it carries a much heavier stigma. For this reason, many people with mental illnesses are reluctant to disclose this information to an employer or co-workers. Many feel that disclosure will bring about discrimination or even harassment.

    Since mental illness is a medical condition, information regarding the diagnosis is protected by the HIPAA privacy laws. Unless an incident led to a public record (such as an arrest) a background check is not likely to provide any useful confimable information. Background checks that rely on the hearsay provided by friends and former co-workers could open the oganization up to a lawsuit.

    To consider the presence of a mental illness a material risk from an audit or risk management perspective is a dangerous road to take. How would uyou report it in your audit report without risking an accusation of slander?

  4. G Man
    May 5, 2010 at 5:47 PM

    I was floored reading this article. I have had personal experiences with these types of managers and was angry at the complicit nature of senior management, knowing and encouraging these inviduals….out in the open! At least with this article, I feel encouraged to continue my job hunt knowing that the job hunt will actually never end as the marketplace is flooded with these types of individuals in practically every company at some level. Sadly, some of those individuals are the precise individuals (in government and privately held or publicly held companies) that have the power to make changes to identify and help these individuals early on, instead of allowing them to affect and infect others unneccessarily. Good job! You should consider writing a book on this subject with your friend and provide some easy to follow procedures for individuals at all levels to follow.

  5. Papa_K
    May 6, 2010 at 4:17 PM

    lsg I think this article is about those who don’t know they have a mental illness and bring their illness to work. We as workers, like porn can see it but they because of their own lack of objectivity don’t see it.

    For people who know they have a problem and are working towards a solution to that problem yes they are protected but those people who have a mental illness and don’t do anything about it is sort of like the person who doesn’t bathe regularly. He’s a valuable employee, works hard, comes in on time, doesn’t make a lot of noise but he stinks. He stinks so bad when he comes through the hall you have to walk in when Fabreeze behind him. He may not know he stinks, he probably doesn’t know his stink offends others, but it does.

    The same goes for the boss who has a disorder and causes others stress and isn’t accountable. It’s like others have to walk behind him with a can of FaBreeze to cover up the smell.

  6. Isabella Ruffino
    May 24, 2010 at 8:06 PM

    Great article.


  7. Joe Ferrell
    May 26, 2010 at 6:50 PM

    Good article but I’m cautious on the blanket advice to find a new job if you are working with someone you determine by the pornography definition to be mentally unstable. If you find yourself doing this too many times in a short period of time the mentally unstable person might be … you.

    As the demotivator poster says, “the only constant in all your failed relationships is you.” That’s not to say that this is an absolute but some objective advice from a stable friend or therapist might help identify where the troubled work relationships are going wrong.

    • May 26, 2010 at 8:20 PM


      I think you’ve made a good point, and offer good advice.

      This is an area that’s very difficult to navigate, as I point out in the article. Assuming that the root of all relationship problems is external is by itself a red flag.



  8. Michael
    June 8, 2010 at 8:02 AM

    As I read this article I was reminded of a very unpleasant situation I found myself in, several years ago.

    My boss turned out to be bi-polar but we did not know it. The results of his illness caused havoc in the department, and the place became a revolving door, because few could survive his abuses and antics for more than 8 to 12 months. Eventually I had to leave as well. He remained in the job and was not fired until he had a breakdown (tantrum) during an important meeting with outside auditors and the CEO.

    It is unfortunate, but in these situations the company does nothing unless there is an outcry from the outside and the situation becomes a public issue. That was my experience!


  9. Robert
    June 10, 2010 at 9:54 AM

    I think this is the type of article few outside of the mental health profession ever bother to write. As some of your reader comments show, it is a subject that brings out a lot of tensions in many people. Although, I do not believe 100% with your premises, I thank you for writing it and for doing so in a way that resonates with many auditors and specially young ones like myself. The problems you point out are real, whether we like them or not!

  10. David
    June 12, 2010 at 6:41 AM

    Fantastic article.

    After discussing it with coworkers, and having a huge argument about the meaning of “insane,” we agree with your premises. Unfortunately, we also believe that nothing is likely to change because present laws protect the “insane” very often at the expense of the rest of us.


  11. Barbara
    June 12, 2010 at 8:10 AM


    As always, you’ve written about a controversial issue in our field. And, you’ve described situations that have directly impacted my work. Prior to this article, I had not heard or read anything in the professional literature specific to the work of auditors, that addressed the subject of what to do when working for a mentally unstable person.

    From your article, the part that hits home the most is your comment that given how our society and corporate cultures work, working for a person with a mental illness of the kind you describe, is almost always a no win situation. Unfortunately, I had to leave a job I liked because of this type of problem. Sadly, my ex-boss is still on the job and no one dares say anything. My understanding is that the person who replaced me recently left for the same reasons I did.

    Thank you for writing about this very controversial issue.


  12. Miguel P
    June 13, 2010 at 7:07 AM


    Gracias por el articulo. Has escrito mucha de las cosas que e visto en auditoria en EU, pero pocos se atreven a decirlo.


  13. October 30, 2010 at 4:37 PM


    Your article on mental instability in the workplace was informative. These problems are less acute in Germany. Recent EU legislation requires that companies put in place policies for addressing the treatment, transition or dismissal of persons whose mental illness impacts the performance of coworkers and/or the organizations they work in.


  14. Robert
    November 16, 2010 at 5:43 AM

    You write what no one wants to admit!

    When staff is suspected of lacking attention, forgetting or not following orders, he or she is written up, HR gets involved and he or she can eventually be fired. When a manager, director or VP does it, cover ups are the norm, and unless they have a public breakdown, they never get fired…


  15. Linda Roberts
    November 17, 2010 at 7:16 AM

    I would like to thank you for the efforts you have made in writing this article.

    I hope you continue to write about these important issues. In fact your creative writing abilities have inspired me to start my own Blog.

    Best Regards.


  16. incognito
    February 5, 2012 at 2:14 PM


    Best to distinguish between mental illness and incapacity which implies you can get better with treatment, to personality disorder where there is an insane malign logic at work, and the plain old dysfunctional workplace with its dependents. As a troubleshooter investigating financial errors and “lost profits” in plcs, I am amazed that no one can get through to the shareholders that their money is being badly accounted for. Senior managers turn the other way too proud to admit their own shortcomings in dealing with this. Often the trouble lies with the FD often a socially inadequate introvert who relies on a smokescreen provided by social snoops. So glad I am not alone…I have enough material for a book!

  17. Justin Jacobs
    February 10, 2012 at 9:23 AM

    I recently resigned as GM of restaurant because the owner became impossible to work for. I stuck it out for almost a year, hoping if I voiced my concerns he would eventually change. I couldn’t have been more wrong. The more I spoke up about my frustrations the worse it got. Eventually, he start devising startlingly manipulative plans to try to convince the staff that I was crazy. When I finally walked out, all but 2 members of the staff followed. The 2 that stayed did so reluctantly because they had families to support. They still reach out to me regularly to update me and the situation has gone from bad to dangerous. I actually fear for my co-workers well being. I feel like someone needs to step in but no one will. I’ve been compelled to see what legal options are out there but I fear that by the time I can actually do something it may be to late. What do you think is the best course of action when dealing with someone that could potentially hurt someone.

  18. Linda
    September 9, 2013 at 6:32 AM

    A well thought out article which has only touched the surface of what is often viewed as a taboo subject. Many of the situation examples you have described for auditors can also be applied to other professionals who have to work with such managers. Thank you for sharing your insights.

  19. Bert
    January 18, 2014 at 11:44 PM

    An excellent article on a very difficult issue which nobody wants to talk about.

    The issue permeates through all areas of life. I have had to deal with friends, flat mates, colleagues and superiors whom I found to be mentally unstable.

    Very often, the relationships start on a good note but with time, it would plummet into chaos, confusion or some sort of bullying with which no amount of effort on my part could remedy. Very little is done when I feedback to the relevant people within the organisation.

    I agree that when something like this happens, the last thing one needs is berating himself. It creeps up on one unaware most times until one realises he is caught.

    Sustaining relationships with them was a very destructive experience for me. Almost always, the network around me would be badly affected with fabricated stories, lies, set ups and traps. My network as far as it was accessible or visible to these individuals was torn to shreds.

    As you rightly point out, it was a no win situation. In all but one scenario I stayed on the job but at the expense of myself having to take a career break eventually to recover. I have had better experience since but was recently challenged again.

    Looking back, was living under the same roof or staying on the job the right move ? Hard to say. The long and short answer: I appreciate the longevity reflected on my CV but really, if it happens again, I won’t do it.

    That is why given my present circumstances (it happened again), I reported the matter to my superiors and produced the recordings I had (the legality of those is a separate question) and choose to leave the organisation or avoid reporting to such an individual if I could (sorry, I know the last point is obvious!).

    I learnt with time that nothing is worth compromising my health and welfare unless I could manage it. Even then I would want to undertake the battling that comes from dealing with these individuals, only if I could manage them with adequate self care on my part.

    I think in dealing with them there are 2 sides to the coin. 1st, these individuals are usually victims of another’s making. There is a place for showing them compassion and directing them towards their own healing. However, I think that that is the place for the counsellor, professional social help available and personal support around them.

    As for the external world to which these individuals come into contact on a daily basis, I feel it is important to hedge the right boundaries. For example, at the work place the matter should be reported along the right channels and action should be taken to investigate; the landlord should know about it.

    I had helped in counselling these cases from a professional stand point as well as working alongside them in an organisation. I had also lived with them. In just about all instances, sweeping the matter under the carpet or excusing their behaviour is not an answer. Someone needs to know, even if they don’t do anything about it. It might be useful reference point for a future mishap and one’s reporting could save a future victim.

    People should be made more aware of this issue as well because it is becoming more prevalent (at least from my own observation). Hence, I applaud the author fro writing this article. It was so timely that I came to it when I needed to clarify my thoughts around it.

    Thank you so much for the article ! Highly recommended reading.

  20. Bert
    January 19, 2014 at 12:58 AM

    Sorry, to clarify, can I also add that from experience, not all mentally ill persons are conflict prone and disruptive. In some cases, they are not at all and are one of the nicest and most loving people I had met.

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