James O’Toole

Warren Bennis

<article-ideainbrief class="article-ideainbrief">
 <h4 class="ideainbrief-title">The Idea in Brief</h4>
 <div class="ideainbrief-contents">
 <ul>
 <li>No organization can be honest with the public if it’s not honest with itself. But being honest inside an organization is more difficult than it sounds. People hoard information, engage in groupthink, tell their boss only what they think he wants to hear, and ignore facts that are staring them in the face.</li>
 </ul>
 <ul>
 <li>To counter these natural tendencies, leaders need to make a conscious decision to support transparency and create a culture of candor.</li>
 </ul>
 <ul>
 <li>Organizations that fail to achieve transparency will have it forced upon them. There’s just no way to keep a lot of secrets in the age of the internet.</li>
 </ul>
 The Idea in Practice
 If you want to develop a culture of candor, start with your own behavior and then work outward—and keep these recommendations in mind.
 <ul>
 <li>Tell the truth. We all have an impulse to tell people what they want to hear. Wise executives tell everyone the same unvarnished story. Once you develop a reputation for straight talk, people will return the favor.</li>
 </ul>
 <ul>
 <li>Encourage people to speak truth to power. It’s extraordinarily difficult for people lower in a hierarchy to tell higher-ups unpalatable truths—but that’s what the higher-ups need to know, because often their employees have access to information about problems that they don’t. Create the conditions for people to be courageous.</li>
 </ul>
 <ul>
 <li>Reward contrarians. Your company won’t innovate successfully if you don’t learn to recognize, then challenge, your own assumptions. Find colleagues who can help you do that. Promote the best of them. Thank all of them.</li>
 </ul>
 <ul>
 <li>Practice having unpleasant conversations. The best leaders learn how to deliver bad news kindly so that people don’t get unnecessarily hurt. That’s not easy—so find a safe place to practice.</li>
 </ul>
 <ul>
 <li>Diversify your sources of information. Everyone’s biased. Make sure you communicate regularly with different groups of employees, customers, and competitors, so that your own understanding is nuanced and multifaceted.</li>
 </ul>
 <ul>
 <li>Admit your mistakes. This gives everyone around you permission to do the same.</li>
 </ul>
 <ul>
 <li>Build organizational support for transparency. Start with protection for whistle-blowers, but don’t stop there. Hire people because they created a culture of candor elsewhere (not because they can outcompete their peers).</li>
 </ul>
 <ul>
 <li>Set information free. Most organizations default to keeping information confidential when it might be strategic or private. Default, instead, to sharing information—unless there’s a clear reason not to.</li>
 </ul>
 </div>
</article-ideainbrief>Until recently, the yardstick used to evaluate the performance of American corporate leaders was relatively simple: the extent to which they created wealth for investors. But that was then. Now the forces of globalization and technology have conspired to complicate the competitive arena, creating a need for leaders who can manage rapid innovation. Expectations about the corporation’s role in social issues such as environmental degradation, domestic job creation, and even poverty in the developing world have risen sharply as well. And the expedient, short-term thinking that Wall Street rewarded only yesterday has fallen out of fashion in the wake of the latest round of business busts and scandals.

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Reprint: R0906F
If there&#8217;s one thing that the past decade&#8217;s business disasters should teach us, it&#8217;s that we need to stop evaluating corporate leaders simply on the basis of how much wealth they create for investors. A healthier yardstick would be this: the extent to which leaders create firms that are economically, ethically, and socially sustainable. The first step toward accomplishing that task is to create a culture of candor.
Companies can&#8217;t innovate, respond to stakeholder needs, or run efficiently unless the people inside them have access to timely, relevant information, point out professors O&#8217;Toole, of the University of Denver&#8217;s Daniels College of Business, and Bennis, of the University of Southern California. Increasing transparency can be an uphill battle against human nature, however. The obstacles are numerous: macho executives who don&#8217;t listen to their subordinates or punish them for bringing bad news; leaders who believe that information is power and hoard it; groupthink among team members who don&#8217;t know how to disagree; boards that fail to question charismatic CEOs.
Nevertheless, leaders can take steps to nurture transparency. By being open and candid, admitting their errors, encouraging employees to speak truth to power, and rewarding contrarians, executives can model the kind of conduct they want to see. Training employees to handle unpleasant conversations with grace also will break down barriers to honest communication. To avoid being blinded by biases, leaders can diversify their sources of information&#8212;an obvious measure that&#8217;s rarely taken. Perhaps the biggest lever for cultural change is the executive selection process&#8212;choosing leaders for their transparent behavior, not just their ability to compete. And a few companies have even gone so far as to share all relevant information with every employee.

A Culture of Candor

Reprint: R0906F If there’s one thing that the past decade’s business disasters should teach us, it’s that we need to stop evaluating corporate leaders simply on the basis of how much wealth they create for investors. A healthier yardstick would be this: the extent to which leaders create firms that are economically, ethically, and socially sustainable . The first step toward accomplishing that task is to create a culture of candor. Companies can’t innovate, respond to stakeholder needs, or run efficiently unless the people inside them have access to timely, relevant information, point out professors O’Toole, of the University of Denver’s Daniels College of Business, and Bennis, of the University of Southern California. Increasing transparency can be an uphill battle against human nature, however. The obstacles are numerous: macho executives who don’t listen to their subordinates or punish them for bringing bad news; leaders who believe that information is power and hoard it; groupthink among team members who don’t know how to disagree; boards that fail to question charismatic CEOs. Nevertheless, leaders can take steps to nurture transparency. By being open and candid, admitting their errors, encouraging employees to speak truth to power, and rewarding contrarians, executives can model the kind of conduct they want to see. Training employees to handle unpleasant conversations with grace also will break down barriers to honest communication. To avoid being blinded by biases, leaders can diversify their sources of information—an obvious measure that’s rarely taken. Perhaps the biggest lever for cultural change is the executive selection process—choosing leaders for their transparent behavior, not just their ability to compete. And a few companies have even gone so far as to share all relevant information with every employee.

A Culture of Candor

Summary.

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