The Biggest Dirty Little Secret in Business

Sep 9, 2013
  |  by Jack Welch

Can you guess the biggest dirty little secret in business?

If you’re thinking “outsized bonuses,” “bureaucracy” or “poor strategy,” guess again. While these issues may have merit in their own right, we believe that the absence of candor is the single largest roadblock keeping companies from being effective.

The concept is simple but its consequences are huge. Without of an open culture of frank, sincere and exhaustively honest talk, people feel left out of important conversations (because they are), or worse, they are brought into the loop but given inaccurate information, which they then act upon. Decisions are slowed because everybody doesn't have the same information, and what information they do have can't be trusted, so must be checked and double-checked. Ideas are debated not in open forum, but rather in cloistered quarters to which only those in the know are admitted. Costs go up as resources are wasted preparing reports to confirm what everyone in the room already knows, or think they know. And most troubling of all, team members have little idea where they stand in terms of their own performance.

While socialization, legal, and cultural factors all undoubtedly contribute to the absence of candor in business, the influence of organizational practices, metrics, norms and incentives on candor are things that all of us can do something about.

You can read any number of management books that share our opinion on the need for candor. According to most of them, the key to achieving candor is for employees to summon the courage to give tough love to peers, and speak truth to power. Senior executives, too, exhort their subordinates to speak up for what they believe in, and courageously challenge the old established ways of doing things.

But why? Why should it take courage to give your boss and other senior executives what they say they want? Shouldn't it be just the opposite? Shouldn't courage be required to give higher management what they don't want?

One explanation for this seeming paradox is that, in many organizations, the people at the top say they want candor, but what they really want is for people to agree with everything they say and go along with everything they do. And even if they don't feel that way, if your boss is the kind of person who interprets every constructive recommendation as a personal attack, you’ll end up in the same dilemma. In this situation you aren't without options but, there aren't many, and they are far from risk-free.

Often, however, when candor is punished, it is not because higher management really does not want it, but because the policies, practices, metrics and incentives inadvertently discourage it. For example, consider the norms that surround how performance feedback is given in many, if not most, organizations. The ratings of most employees are lumped into the top two performance categories, and even those employees who are not carrying their weight are assured by higher management that they are doing a good job. If an area of weakness is mentioned at all, it is mentioned gently in passing and future rewards are not made contingent upon future improvement. When people are passed over for promotion, they are reassured that it was because of politics, or told that they barely missed getting the job because someone else scored just a little bit higher. After all, they’re good people and you want to be kind.

But look, everyone doesn't perform at the same level at the same tasks. Most managers would agree that some number of their employees are underperformers. And when an important customer comes to town, will your low performers be assigned to squire them around? When you have an important job that needs to be done, will you give it to them? When a promotion opportunity opens up, will they be seriously considered? Probably not. But since no one has told them how their performance is really viewed, they think they are up for getting these things, and they die a little each time they are passed by.

Eventually, they figure it out, but by then most of their work years are gone and they're not very marketable. You may think of yourself as being nice, but really, giving less-than-candid feedback is the cruelest thing you can do. You’ve sabotaged these people's careers.

At least have the honesty to admit to yourself why you are doing this. It's not for your employees' benefit. They would be better off knowing where they stand while they are still young enough and self-confident enough to look for a great career somewhere else. And don't tell yourself that it's for the organization's benefit. Do you honestly believe that you can't find people who can help the company more than your underperformers?

Admit it -- you're doing this for your own sake. You just don't want to have those conversations. And you shouldn’t. You’ll be sick to your stomach before your meeting and you won’t be able to sleep the night before. It's a terrible thing to have to let someone go. It’s something you’ll never get used to.

But you still have to do it. It's your job! Continuously upgrading your organization's talent is one of the most important responsibilities a leader has. And while you're being kind, your customers are getting more demanding each year, and your competition is getting better each year. Talk about being cruel -- if you let your competition take over your markets and steal your customers, a lot more people are going to lose their jobs -- probably including you.

Thus, as tough as it is to learn to live and breathe, candor is an antidote not just to phony performance reviews, stifled feedback, secretive information and the future careers of your people, it’s also critical to the competitiveness of the entire organization. Companies must work to get their people to embrace this socially-maligned trait by creating an environment in which candor is encouraged, rewarded and integrated into the organizational culture itself.

For without it, organizations lose “idea capital” and valuable information, they burden their divisions with underperformers, and they keep those people from achieving success elsewhere. And worst by far, they continue to build business upon the lies and falsehoods they tell themselves, a house of cards that will eventually fall.



This article is an excerpt from a lecture that was originally presented in the Jack Welch Management Institute’s Executive MBA program.




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