Faced with a dud boss, employees tend to do one of three things:
1. Flight. Leave and get another job. This pretty obvious if a significant number of employees do it but brings no real consequence if it's just a few (which may occur if there are limited suitable jobs available elsewhere).
2. Fight. This is most likely in a large organisation (especially government) where actually getting sacked is fairly difficult and requires a lengthy process. Such people are, of course, generally very obvious and usually have a lot of knowledge about the business.
3. Fraud. I don't mean taking money and sticking it in your back pocket, but there are numerous ways an employee can effectively do things against the company's interests. As unions have long been aware, simply following all the rules to the letter generally kills productivity. There's a million and one ways to do it, but if you've ever watched the TV program "the Mole" then you'll get the concept. Someone who is disgruntled and so inclined will always find some way to act against the best interests of the company.
A dud boss can certainly achieve good results in the short term, but they do so by creating a myriad of problems which eventually surface. Once the employees lose initiative and stop thinking, it's all downhill from there and it comes down to something fairly simple. The better employees will go and work for the competition, leaving the rest behind. You then end up with a company full of unmotivated staff who don't think too much - that's not a recipe for long term success of the business.