When the Boss Becomes the Villain: Understanding DARVO in Business

When your company has five employees, most conflict is relatively easy to see. Somebody made a mistake. Somebody missed a deadline. Somebody failed to follow a procedure. You can usually sit down, talk about what happened, and work through it. As the company gets bigger, something changes.

I began noticing it when my staff grew beyond roughly ten or fifteen people. Once I started franchising, I encountered it far more often. Problems were no longer always about what someone did. Sometimes the discussion itself changed shape. An employee or franchisee would be confronted with a legitimate performance problem, and suddenly I was defending my character, my motives, my leadership, or the company itself.

There is a psychological pattern entrepreneurs should understand because, once you recognize it, certain business conflicts begin to look very different. It is called DARVO.

What Is DARVO?

DARVO stands for Deny, Attack, Reverse Victim and Offender. Psychologist Jennifer Freyd developed the term to describe a response that can occur when someone is confronted about wrongdoing. The person denies or minimizes what happened, attacks the credibility or motives of the person confronting them, and then reverses the roles so that the person originally being questioned becomes the victim.

DARVO research originated largely in the study of interpersonal abuse and misconduct, so we should be careful about casually labeling every workplace disagreement as DARVO. But the underlying pattern of denial, attack, and blame reversal can appear in organizational conflicts as well. Freyd's institutional research specifically notes that retaliation against whistleblowers can follow a DARVO pattern.

And entrepreneurs need to understand why that matters. Imagine a franchisee whose location is struggling. The system requires a particular advertising budget, but the franchisee consistently spends less. Certain sales procedures are supposed to be followed, but they have gradually abandoned them. Training recommendations are ignored. Required systems are used inconsistently.

Eventually the franchisor confronts the problem. Instead of discussing those decisions, the conversation begins moving somewhere else.

The system doesn't work.

Corporate doesn't support us.

The founder doesn't understand our market.

They're targeting me because I challenged them.

They're trying to destroy my business.

The original question was: Are you following the system?

The new question becomes: Why is the franchisor abusing this poor franchisee?

That shift can change everything.

Why DARVO Is So Dangerous Inside a Company

The mistake entrepreneurs make is assuming facts will automatically win. I believed some version of this myself. If the contracts were clear, the procedures were documented, the emails existed, and the sequence of events could be demonstrated, surely reasonable people would eventually understand what happened.

Not necessarily.

DARVO works partly because human beings respond to stories, alliances, emotion, perceived power differences, and claims of victimization. Experimental research has found that observers exposed to DARVO can perceive the person using it as less responsible and the person confronting them as less believable.

Now put that dynamic inside a company.

An employer automatically has power in the eyes of employees. A franchisor appears more powerful than an individual franchisee. The founder has the title, the company, the lawyers, the systems, and the authority. That makes the role reversal remarkably easy to communicate.

The employee becomes David.

The company becomes Goliath.

And suddenly a dispute about someone's behavior becomes a referendum on yours. This is where projection, blame shifting, group politics, gossip, and reputation attacks can begin feeding one another. One disgruntled person finds another. Individual complaints become a shared narrative. The emotional intensity of the story begins functioning as evidence for the story. That can become extraordinarily destructive.

But Be Careful: Not Every Critic Is Using DARVO

There is an equally dangerous trap waiting for the entrepreneur. Once you learn about DARVO, you can start seeing it everywhere.

An employee complains? DARVO.

A franchisee says the system isn't working? DARVO.

Someone says your leadership contributed to the problem? DARVO.

That would simply replace one distortion with another.

Sometimes the employee is right.

Sometimes management handled something badly. Sometimes the franchise system genuinely has weaknesses. Sometimes corporate support was inadequate. Sometimes the founder really did become defensive, unfair, inconsistent, or controlling.

So the useful question is not:

Who is claiming to be the victim?

It is:

What actually happened?

Strip away titles. Strip away outrage. Strip away accusations. Strip away whoever has the most allies.

Go back to the evidence.

What was expected? What happened? What was communicated? What did each party actually do? Which claims can be demonstrated? Which claims are interpretation? And, most importantly, has the conversation moved away from the original issue and toward destroying the credibility of the person who raised it?

That is the difference between using DARVO as a tool for clearer perception and using it as another convenient label.

The Rewire: Accountability Before Narrative

Entrepreneurs need a stronger mental model as their companies become more complicated.

The old wiring is:

There is a conflict → determine whose story sounds more convincing.

The better wiring is:

There is a conflict → establish the sequence of events → separate behavior from interpretation → determine responsibility → then evaluate the competing narratives.

That matters because accusations are not evidence. But neither is authority. The CEO is not automatically right because she is the CEO. The employee is not automatically right because he feels mistreated. The franchisee is not automatically right because his business is failing. And the franchisor is not automatically right because the operating manual says otherwise.

Reality gets the deciding vote. That principle becomes increasingly important as your organization grows because you are no longer managing only operations. You are managing competing perceptions of reality. And sometimes the most dangerous business problem isn't the original mistake. It's what happens when someone desperately needs that mistake to become your fault.

The Gambit

The next time a serious conflict erupts inside your company, resist the urge to immediately defend yourself. Write down the original issue in one sentence. Then watch what happens to the conversation. If you started by asking why a procedure wasn't followed and twenty minutes later you're defending whether you're a good person, pay attention. Something important just moved. And your job as an entrepreneur is to move the conversation back to reality.

FAQ

Is every defensive employee or franchisee using DARVO?

No. People naturally become defensive when criticized, and legitimate complaints against leadership should be taken seriously. DARVO is useful when it describes a broader pattern of denial, personal attack, and reversal of responsibility—not simply disagreement or anger.

Why is DARVO particularly dangerous for entrepreneurs?

Because founders and employers can become convenient targets for blame, especially when employees, partners, or franchisees are experiencing poor results. Once the dispute becomes social, reputational, or political, the original evidence can easily become buried beneath competing narratives.

What should a business owner do when they suspect DARVO?

Do not fight narrative with narrative. Return to documented behavior, timelines, expectations, agreements, decisions, and evidence. The goal isn't to prove that you're the victim. The goal is to determine what actually happened.

If you're dealing with a business situation where personalities, politics, blame, and performance problems have become tangled together, that is exactly the kind of problem worth examining through a CEO Diagnostic. Before deciding what to do, we separate the operational problem from the story surrounding it. Because leadership gets considerably easier once you know which problem you're actually solving.