Sycophancy is sure good for the ego. Alas, that’s all it’s good for.
In fact, flattery and knee-jerk agreeability from staffers, senior or otherwise, minimize opportunities for corporate improvement at every level. Worse, in a crisis, when the integrity and future of the company are on the line, it’s death to stifle honest feedback from everyone around you. Creating an environment of candor – however difficult it may be to do so in the short term – is the ideal alternative that can provide the early warning systems needed to master every variety of crisis under the sun.
Richard S. Levick
In recent years, the importance of candor within an organization has escalated as work becomes less rote and more creative. Indeed, as a salutary and emerging force in corporate life, candor needs to be seen in a larger socio-economic context.
This commentary is excerpted from the book, The Communicators: Leadership in the Age of Crisis, by Richard S. Levick and Charles Slack (Watershed Press, 2010).
In past decades, when employees were seen as more or less interchangeable, popular wisdom held that the best corporate managers were those with the best systems. Because machines could manufacture products and process information faster and more accurately than any human, the primary challenge was to organize and regiment the fallible and largely interchangeable humans needed to keep the machines running.
“It was all about getting people within hierarchies to do relatively simple things more efficiently because of great systems,” says Stratford Sherman, a partner with Accompli, a change advisory group serving senior corporate leaders, and co-author of the best-selling Control Your Destiny or Someone Else Will.
But a funny thing happened on the way to the Orwellian future. Technology has not enshrined hierarchical, impersonal management systems as the holy grail of corporate process. It has destroyed them.
“Companies don’t need so many workers and managers performing rote tasks,” Sherman says. “What’s left are leaner, flatter organizations with fewer people in them. As the number of players is reduced, the work they do becomes less mechanistic. Here’s what we’ve learned: people are able to add value only to the degree that they can actually think and speak openly.”
Companies that insist on strict hierarchies and prefabricated approaches to problems are just like the British commanders who sent exposed and rigidly deployed lines of Redcoats into battle against flexible and well-hidden Colonials. They are fighting the last war instead of the current one.
To migrate from the old industrial and pre-industrial systems to leadership models that can succeed in the 21st century, managers must transform their relationships with those they manage. And the key to that is fostering cultures that encourage or even mandate candor. “Great decisions require great information,” Sherman says, “If you don’t have candor and teams working together, you can’t have great decisions. It’s just not possible. Getting better decisions requires developing a culture of candor.”
Sherman spent years studying the management methods and philosophies of Jack Welch, the legendary GE chief executive. What impressed him most was the sincere value Welch placed on the opinions of others – the more directly and freely expressed, the better.
Once per quarter, Welch would gather managers from GE’s far-flung business operations for meetings of the company’s corporate executive council. Specific discussions of budgets and revenues were off the table. Instead, Welch wanted to hear candid thoughts on where the future was headed and what GE needed to do, even (especially!) if those thoughts ran counter to his personal preconceptions.
“Because of the scope of GE’s businesses, the folks in that room were unbelievably well informed about a lot of stuff,” says Sherman. “The effect of getting them all in one room was that they made the CEO a hell of a lot smarter, but only because they were free to be candid. Welch had a very powerful and ultimately humble recognition that the brilliance that was attributed to him was due in very large part to being part of a community where candor was intensely valued.”
To that end the CEO must overcome the infallibility complex – the idea that being the leader means you must by definition know more than everyone and necessarily be correct.
“Mature leaders over time become more rather than less open to the idea that they might be wrong and could improve,” Sherman says. “The really great leaders aren’t threatened by their own imperfections. On the contrary, they are hungry for improvement. Those are the really strong, grounded, inspiring people that other people love to follow. They’re the ones who are comfortable saying, ‘I was wrong’ or ‘I don’t know.’”
Communicate impatience or sensitivity about views contradicting your own and every subordinate, from the receptionist in the lobby downstairs to your CFO, will clam up. Only you can guarantee candor.
Give people in your organization a useful glimpse into your decision making and thought processes. Sherman cites one company where the managers were becoming extremely frustrated because the CEO seemed to reverse course without warning. As a result, they were reluctant to stick their necks out with new ideas or suggestions that might be approved one minute, then summarily rejected the next.
“It turned out that this executive was getting important financial updates every two weeks,” Sherman says. “So, he might say something in Week One, then make a course correction in Week Three when revised data came out.” But he hadn’t advised his staff accordingly, so his people thought he was simply capricious. Once they knew what was going on, they were more willing to change course with him.
To see how lack of candor makes bad situations far worse, look no farther than Merrill Lynch in 2007 under then-CEO Stan O’Neal, Sherman suggests. In October of that year, when Merrill announced a record quarterly loss of $8.4 billion related to the subprime meltdown, nobody seemed more surprised than the company itself. As the website MoneyMorning.com reported when O’Neal was fired later that month, “What really stunned Wall Street…was the fact that Merrill clearly didn’t have a clue about the depth of its problems.”
O’Neal, as CEO, had a reputation not just as a risk-taker, but as an aloof executive who surrounded himself with a small number of hand-picked advisors. It’s hard to say to what extent, if any, these people insulated O’Neal from bad news, but, clearly, if anyone had the nerve or foresight to warn O’Neal about the dangers of the company’s exposure to massive amounts of shaky mortgage securities, the message never got through. According to news coverage, O’Neal had his own problems with candor, discussing a possible merger with Wachovia without first informing the board. The Wachovia deal fell through, O’Neal was out, and a legendary company, unable to recover on its own, is now a Bank of America vassal.
Sherman contrasts Merrill and Stan O’Neal with JP Morgan and its fiery, blunt leader, Jamie Dimon, proclaimed “The Toughest Guy on Wall Street” by Fortune magazine. Crucially, that toughness does not entail browbeating underlings who happen to disagree with him. On the contrary, Sherman points out that Dimon intentionally surrounds himself with people tough enough to tell him when he’s wrong. That internal heat helped Dimon and JP Morgan navigate the financial crisis with their finances and reputation intact.
One way to foster open environments is to simply come right out and affirm that candor is important. “Declare that it’s something you are going to demand,” Sherman suggests. “Move off the agenda at your next meeting and say, ‘Let’s spend the next hour talking about candor; what’s promoting it and what’s inhibiting it.’”
Note that authentic discussion does not require CEOs to be anything less than human and fallible. You will have emotional reactions and you may even get angry. The key is in being able to differentiate emotion from fact and to draw a distinct line between the two. “What usually happens is a leader gets totally frustrated and, out of that emotional state, they make some angry statement and they throw some facts in and they think they are making a factual statement. But all they’re really doing is expressing anger,” Sherman says.
When facts are abused to support anger, subordinates have no choice but to go along with you or face the consequences. Openness is destroyed. But getting angry shows you’re only human, Sherman says. Tell your staff what made you angry. Then return to the factual discussions after everyone has calmed down. In that way, people can accommodate the human factor – they can forgive the chief executive’s outburst – without ever having to sacrifice the right to openly share their thoughts and expertise.
As Sherman puts it, “Now that you’ve faced, not just business reality, but human reality, your company is a place where value is created by people and not by machines.”
Richard S. Levick, Esq., is the president and chief executive officer of Levick Strategic Communications, a crisis and public affairs communications firm. He is the co-author of The Communicators: Leadership in the Age of Crisis and Stop the Presses: The Crisis & Litigation PR Desk Reference, and writes for Bulletproofblog. Levick is on the prestigious list of “The 100 Most Influential People in the Boardroom,” which is compiled by NACD Directorship Magazine. Reach him at rlevick@levick.com.