As the nation continues to struggle with a major economic downturn, we continue to look at its ever-growing impact on the workplace. Because we believe honest communication is one of the hallmarks of great workplaces, we thought it might be a good time to revisit the results of a survey conducted by the Corporate Executive Board last year. Michael Griffin, its author and Executive Director of the CEB, in his article entitled “Open-Door Policy, Closed-Lip Reality” reveals two disheartening survey conclusions:
- Nearly half of executive teams fail to receive negative news that is material to firm performance in a timely manner because employees are afraid of being tainted by the bad news.
- Only 19% of executive teams are always promptly informed of bad news that is material to firm performance.
“Unfiltered, honest feedback becomes increasingly scarce as it moves from the bottom to the top of the organization”, concludes Griffin. The CEB survey of more than 300,000 employees reveals that “companies that break down two key barriers to honest feedback can deliver peer-beating shareholder returns by a substantial margin.” They identified two factors which stood out when it came to increasing 10-year TSR (long-term total shareholder return) from 1998-2008:
- Openness of Communication—Employee perceptions of the extent to which managers encourage two-way dialogue matters. The CEB found that “…companies rated by their employees in the top quartile in terms of openness of communication have delivered TSR (10-year TSR 1998–2008) of 7.9% compared with 2.1% at other companies. They also had materially lower levels of observed fraud and misconduct.”
- Fear of Retaliation (and Willingness to Speak Up)—The CEB tracks 12 key indicators in their cultural diagnostic. The one that is most strongly correlated with 10-year TSR is employee comfort in speaking up. “The most important driver of this comfort is a lack of fear of retaliation. As with openness of communication, we found that companies that excel on this dimension also had materially lower levels of observed fraud and misconduct.”
The CEB has also found that fear is a particularly powerful inhibitor. In another recent survey of 100 clients, the CEB asked them to ‘estimate the amount of harm that would have to be present to share honest (negative) feedback at risk to their careers’. Their conclusions?
- Fifty-nine percent estimated that more than $1 million worth of harm to the company would have to be at stake for employees to share honest (negative) feedback.
- Twenty-nine percent estimated that more than $10 million would have to be at stake.
Our conclusion is that there is a lot of room in these numbers for employees to think it might just be better to ‘keep some thoughts to themselves’. When corporate performance may be negatively impacted (or could be seriously improved), both management and contributors ‘lose’…
We believe a free-flow of communication is now important more than ever to achieve corporate goals, encourage innovation, maintain team engagement and retain great employees. When was the last time you reviewed your own ‘open-door policy’? How well is it working? How do you plan to find out?
