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Why the ‘Good News’ Culture isn’t Always Good News

To win, you need to hear the truth, not merely the varnished pleasant news

The Vietnam War, one of the traumatic experiences for the US Army and the country, ended in 1973. Even the most ardent supporters of the US would not characterize it as anything other than a ‘defeat’. It took years for the morale to be restored and pride regained.

There were, of course, many complex reasons for the ignominious outcome of the conflict. But, arguably, one contributory factor was the cultural attribute of not flagging the widespread wrong practice in one area — consumption of drugs by the US military personnel.

Though taking or even possessing drugs by the US Army personnel was prohibited, it was discovered after the war that many had routinely imbibed drugs of every hue. Some statistics put the incidence of taking marijuana at 50.9 per cent. 28 to 35 per cent of soldiers appeared to have consumed psychedelic drugs, anti-depressants, narcotics and stimulants. The data is damning enough in itself. More worrisome was the fact that no commander ever resigned or protested over this pandemic of sorts. Most cases went unreported. A culture that militated against whistle-blowing or not breaking the bad news appeared to be at play.

Culture matters. And every company, organization and family has a culture. It does not matter whether that culture is the result of visionary thinking and careful cultivation or is allowed to grow on its own volition like wild grass, the fact is a culture will come into being. And it will drive the organization in the directions of its ‘choice’. Culture is the aggregate of what the individuals collectively perceive as ‘what works’. If gossip appears to pay, gossip will become an intrinsic part of the culture. Same applies to everything else — competitiveness, probity, care, innovation et al.

And telling the hard truths to the hierarchy.

It is easy as leaders to allow a culture of ‘good news only’ develop. I suppose that it begins subconsciously and then prospers when the employees instinctively find relaying only the good news rewarding. If plain-speaking attracts criticism or worse and transmission of good news is encouraged, why would you, as the boss, be ever told the truth even if the ship is hurtling towards the iceberg?

Satyam, an IT company, was once a star company on the firmament of Indian corporate scene. Founded in 1987 by Ramalinga Raju, with 20 employees, it went public in 1991 and a few short years later became a Fortune 500 company with 50,000 employees and a global presence in 67 countries. In 2007, it won awards for good corporate governance from Ernest and Young and in 2008 from the World Council.

Five months later, it was embroiled in an accounting fraud that led to the resignation of three Independent Directors. The World Bank barred business with Satyam for having offered bribes. In Jan 2009, Raju confessed to a fraud involving Indian Rupees 780 million (USD 1.03 billion) and resigned.

In Jan 2009, Satyam’s 9-year old auditors PwC admitted that the audits had been less than accurate or meticulous. The CFO confessed that one of the deliberate infirmities had been the ‘presence’ of 10000 non-existent employees on the rolls that helped create cash from fictional accounts. Also, liabilities had been hidden, assets exaggerated and results inflated with the most creative of accounting manoeuvres. In 10 days, the new auditors Merril Lynch had unearthed the wrongdoings. It also discovered that PwC had even ignored a whistle-blower’s letter pointing to the fraud in 2008.

The theme of the story is not the collapse of Satyam. The issue that should catch the attention of corporate leaders and professionals is the culture that must have existed in the auditing firm that preventing a single employee to holler at the blatant wrong-doings. Could it be that, in pursuit of profits and renewal of contracts, the leadership encouraged looking away from the ‘bad news’ and only highlighting of the good parts? What else explains the collective dereliction on part of the employees who must have regularly sensed that these practices would bring down the company? As it did.

The case of Enron’s sudden collapse in 2001 or the 2016 troubles of Wells Fargo over fraudulent practices of cross-selling and charging unanticipated fees also points to a culture of suppressing the bitter truth in deference to the transmission of good news.

Here are 6 things you can do as a leader to obviate falling into that trap:

Review. Constantly review if the good news matches results. If exaggerated reports — verbal or written — are being received, become sceptical of the sources. Confront the sources with reality and seek explanations so that the culture of whitewashing is dissuaded.

Listen. Remember that criticism and complaints may well turn out to be your best friends. I received this wise advice from a General who said, “If you receive an anonymous letter — even an abusive one — do not focus on the tone. Check if there is any veracity in what it says. If it is true, the man has done you a favour.” Remember that it takes courage on the part of an employee to confront you with the ugly facts. Respect that display of courage. Better still, reward it.

Be Accessible. I have heard leader after leader stands at the podium and ask employees to walk up to him if they have an issue to report. I am accessible, goes the refrain. But this stratagem does not work by itself. To encourage people to walk up across hierarchy and put their jobs on the line, you need to ensure that you truly listen and act. If complaints are made against a senior manager, take corrective action but do not upbraid the manager concerned — or the hierarchy will ensure that going forward, no one approaches you. This is a nugget that must be embraced.

Demolish Barriers. Each CEO and Chairman has a moat of protection around him, zealously guarded by the staff that will not let anyone easily past the gate unless they have categorical instructions. If your people matter to you, as every company is fond of proclaiming, they must be your priority. The protective ring around you must not be given inordinate powers to block entries.

Establish Protocol. But to allow everyone to walk up to you instead of the line manager would destroy the hierarchy and disempower your junior leaders. The protocol must be clear — unless the matter is of urgent and vital importance that the top leadership must hear without loss of time, it must first be placed on the desk of the manager in the chain. If, however, no satisfactory response is received in, say 48 hours, the employee would have the automatic permission to directly approach the leadership. This will ensure that the authority of the managers is preserved, they are forced to act in a timely fashion and that all issues get addressed.

Reach Out. Not everyone who knows an important but bitter truth will be able to approach you. It is incumbent upon leaders not only to reach people in their place of work but to engage in friendly probing conversations to elicit truths. Army generals routinely visit troops in bunkers and trenches to get a first-hand view of the situation. This is a practice worth emulating.

Finally, as a leader, unless you are conscious of developing a culture which rewards truth-speakers and discourages habitual ‘pleasers’, the company would miss out on solid feedback for better performance. This is not easy because often, our fragile egos want to hear praises of the performance under our tutelage. But leaders must suppress ego and carefully cultivate a culture of truthful reporting.

That is the culture that will act as your force-multiplier.

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