When workers suspect that a boss is not living by the values the organization professes, their behavior begins to reflect that of someone who feels betrayed and duped. And the first sign of trouble appears in where they place their loyalty.

It's common for disgruntled workers to seek refuge by trying to align with someone else in the organization, such as a respected coworker or a high-level authority figure. Others will align with the corporate culture itself; these employees commonly say, "I love the company, but hate my boss." And in organized workplaces, disenfranchised workers focus only on the values promoted by their unions. But all these symptoms indicate employees who lack trust in, and have turned away from, their supervisors.

This behavior was evident at Morgan Stanley in the weeks leading up to the firing of CEO Phil Purcell. After thirty key producers left the company in the course of a few weeks, and some retired senior executives publicly criticized Purcell's leadership, curious board members began talking to top employees. As James Cramer reported in the June 27, 2005 issue of New York Magazine, the board heard one common message: "My allegiance is to Morgan, not Purcell."

Morgan Stanley's board is due kudos for paying attention to the warning signs. Are you paying attention? Bookmark this post on del.icio.us