Open Door Policy, Closed Lip Reality?
Firms that break down barriers to honest feedback achieve a significant advantage over competitors.
Research suggests that firms whose culture encourages open communication outperform peers by more than 270% in terms of long-term (10 year) total shareholder return. Sounds too good to be true, right?
Wrong. It’s a fact, based on extensive, new research conducted by CEB. So, if transparency has such a huge payoff, why don’t more organizations promote this as best practice?
Consider this all-too-common scenario:
You’re the CFO tasked with selling your firm’s new strategy to its five largest shareholders. A few of the investors you meet with are skeptical of the strategy’s long-term viability. Naturally, you’re concerned – this should be a red flag. Your boss – the CEO – assumes buy-in from investors, and asks you about the longer-term viability of the plan. How would you respond?
Many people would hesitate to express their concern to the CEO. But why? What leads to this potentially damaging silence … that’s what we’d like to hear from you. Please share your insights below.
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5 Responses to “Open Door Policy, Closed Lip Reality?”
Fear. The question itself implies that the asker knows something you don’t. It may be perceived as a trap. Tell all, and you anger your boss, the CEO. Hold out on full discloser, and you risk the company’s assets and anger the investors.
Part of the solution is to prepare yourself with questions from extreme positions, so that you have adequate arguements to respond. Practice with the CEO prior to the meeting, so you are both on the same page.
Comment made on March 30th, 2010 at 10:11 amMy brother worked at a high position for a large firm in Charlotte, NC some years back.
There were some managerial changes and he faced some issues.
When he expressed his concerns under the Open Door policy, he was asked to stay home till the investigation was completed. Each time he asked, he was told that the investigation is in process and everything will be fine for him.
About two months later, he was fired. Everything was done in a very polished manner. There was an internal plot of getting rid of him, and people in authority succeeded in doing so. They are bunch of XXXX, but since they have authority, they are still in the position and enjoying the power.
This is what happens when people believe in Open Door policy. That is why, there may be many who are unhappy and see wrong use of managerial power, but are scared to open up.
This is a common story and a reality.
Comment made on March 30th, 2010 at 10:55 amMy question is why are you asking this stupid question? Top management usually only promotes people they get along with and trust. There are no exceptions to this rule. When a CEO promises a completely false schedule to Wall Street, all the people he or she trusts will hold the code of silence. These people he or she trusts are typically executive VPs or head of a division. When an auditor approaches senior management to examine the controls, they would normally answer with a canned statement such as “there are no separate teams; we are one team and we work well together with other divisions”. The director or VP of audit (who I assume is concerned about his or her career) would usually ask auditors to evaluate controls. Management actions are not in the scope of controls. Hence, even if there is obvious collusion going on and the code of silence is painfully obvious, the auditors may only say the situation is generally under control and could only praise employee’s efforts in addressing this impossible schedule. Who would be stupid enough to say to an auditor, “there is no way this … task… can be accomplished within the specified schedule”. If the senior management personnel value his career he better hold the line and maintain the code of silence. In the end only investors and customers suffer due to the lies. In the case of Tyco, the CEO would even say he does not know what are his products but he most likely instructed his inferiors to hold the line and maintain the code of silence. In some cases, the board of director knows about the problems as well.
It might be easy for some expert auditors like Dr. Dan to say use statistics to prove what is presented is unlikely. However, in real life, the path of the audit is typically laid out in the first 2 weeks of a 3 month audit. The rest of the time you are preparing risk assessments and interim reports and the rest of the fruits of the audit. In the 2 weeks you most likely rely on the opinions of the experts to clue you into what is wrong. No one who likes what they are doing will open up and say what is in their mind 2 weeks after getting to know the auditor.
One of the biggest problems is compensation to the executives. They get paid only if a certain milestone is hit. So to get around this, rolling out a product that is far from finished is not out of the ordinary. There has been stories from people who have been in the company for 30 to 40 years plus whom most auditors would consider experts in their fields, would say products are moved or displayed for the sake of the milestone. However, putting the product back after the false milestone display caused many weeks of additional work to get things back in order. To an investor this should be called fraud. Again, to an auditor, one can only say, “the internal controls are functioning” and no judgment can be passed on to the action of management.
In a lot of cases, the leadership in upper management is so lacking the company morale is at a historical low. The turn over in upper management is so severe that most executives don’t stay at their post for more than a number of months and even shorter in some cases. By some magic they are supposed to know what his product is within the few months he or she is at the post. For some in senior management whose knowledge is obviously lacking they would only compensate and hide their incompetence by pushing a schedule that does not make any sense to any technical experts. This disconnects almost always end up costing the company more money because of the need to rearrange the schedule and wasted time in negotiating a new schedule that might work. At best, most technical experts would only consider these idiots at the top as negative people. In time, most auditors will “play the game” and look after his or her career as well.
Comment made on April 1st, 2010 at 1:11 amIn response to why many people hesitate to express their concern to the CEO.
1. People have been told that they shouldn’t bring a problem to leaders without a solution. Since they don’t have solutions, they’re hesitant to share the problem.
2. Overall corporate culture where people are reluctant to share that bad news. Perhaps they somehow feel that it will be associated with the messenger and reflect on performance. (Sometimes this association is accurate.) Think about how many projects are behind schedule, or over budget, or under-delivered in some way, yet they continue to report to senior management that the project is progressing towards its deadline. . . only to get near the deadline and then learn that the project will be delayed and/or delivered with less than originally planned functionality.)
3. If people are lower in the corporate hierarchy and raise a concern, it often is stopped at their leader, who is reluctant to bring issues higher (see reasons #1 & 2 above), or the leader may be somewhat to blame for the issue, or failed to take action previously, which then puts him/her in a position to want to cover it up vs. share with higher management.
4. No one likes a naysayer/complainer.
We need to change the culture, change the expectation so that people will fully articulate risks and issues and be somehow rewarded for doing so vs. keeping quiet or painting a rosy picture.
Comment made on April 11th, 2010 at 11:57 amWhy do we hesitate to express our concerns? It’s simple, but not easy to change.
We all learned early in childhood that speaking our mind usually didn’t get us the positive response we were looking for. Combine that with blaming them for how we felt about it and the memories of feeling powerless were driven deep.
As adults, it’s no wonder we struggle with finding our voice in difficult situations when we are still very much connected to the emotional imprinting from our early experiences of expressing our opinions.
Until we individually understand this connection, and the injustice our current lack of sharing important information can create for ourselves and others, this type of damaging, frustrating and ultimately disrespectful behavior will continue.
One place to begin in changing this dynamic is to first understand that people usually do what they do because they are allowed to. Next, if people are doing or saying things that you find offensive, ask yourself, “What have I been allowing them to do or say to me that I am not willing to accept anymore?”
Until you have an answer to that question, others behaviors towards you and yours to them are not likely to change. And nothing much else in your world will either.
The good news is, today as adults, we each have the power and responsibility to speak up. The quality of our relationships, or lack of, are determined by our willingness to enforce the boundaries of what we will and won’t allow others to say or to do to us. You can begin to change the world by modeling the behavior we all need from each other the most; listen for their voices and react like you would want others to do for you.
It’s simple, but not easy to change.
Comment made on July 23rd, 2010 at 4:34 pmLeave a Comment