The insulated CEO: It's not just a large company problem

The Wall Street Journal ran an article last week about GM’s faulty ignition switch and how bad news doesn’t get to top leaders quickly, or at all. I disagree. It’s not just a large company problem–small companies can have the same problem because it’s not a function of size–it’s a function of the culture created by the leadership. I’ve seen how leaders in all size companies discourage bad news.
For example, in a group meeting, I saw a CEO ask his direct reports to provide feedback on how he could do better. He gave assurances that he welcomed constructive feedback and truly wanted their input. Only a few were willing to take what the CEO said at face value, open up, and provide candid feedback. And sure enough, those people were punished, publicly. Not then and there, but in due course. Never again will he receive any such open feedback.
I’ve also seen the reverse, where a CEO doesn’t really trust that the board will handle bad news well, and so information to the board is filtered, altered, or just not communicated.
For sure this is not a problem in every company, and where it does exist, it can be corrected. But the first step is to acknowledge a problem, and the leader is in no position to judge if there is a problem or not. And in either case, if you ask employees, they will act rationally and say there is no problem. If it’s a large company or a small company, the only way to really determine the situation is to have an independent person, one who is willing to be candid, to assess the situation and provide feedback. And that’s the case for CEOs and for boards.

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