LAW
6
KEEP EVERYONE INFORMED
TO BUILD AND MAINTAIN trust, a leader must communicate. Leaders must be determined to share the facts with everyone, simply, persuasively, and thoroughly. That means telling it like it is, during good times and bad.
In low-trust organizations, communication is generally wanting. We may know what’s going on in our department, but when it comes to the company’s broader goals, we’re in the dark. Left to guess, we begin to wonder if leaders have a real plan. An inspiring mission becomes an impossibility, and we begin to wonder whether we’ve got the respect of those in the executive suite. From there, trust goes downhill.
Academic studies have shown that employee satisfaction depends significantly on effective internal communication. Team members have a hard time developing trust in their leaders if they’re unsure where the overall organization is headed, and whether that direction is good for them. The solution to this trust-killing lack of information is, of course, communication and lots of it. “Err on the side of overcommunication,” Max De Pree, the renowned leader of Herman Miller office furniture, liked to say.
Trust-building organizations tell the truth, through words and actions and words again. They report unpleasant news as openly as they celebrate success. People are smart. They pick up on spin as well as on partial truths and legalisms. If you came out with a new flavor of soft drink that bombed, say so and be clear about what your team is doing to fix the problem. If you have to lay people off, don’t do it secretly, hoping competitors and the media won’t notice. Take responsibility for your decision while helping people understand its implications. And don’t hire corporate “bad guys” to do the dirty work.
While transparency takes on different forms, the common characteristic of each is a commitment to trust the team with information. Some examples:
Autodesk, which makes architectural and engineering software, aims to be totally transparent about its financial results. Each quarter, executives “share the numbers” with all employees by inviting them to listen in on the earnings call.
Several years ago, S. C. Johnson, the household cleaning-supplies titan, distributed a fifty-page summary of its business goals to all employees, taking the risk that a copy might be leaked.
Google developed a “bureaucracy busters” program in which employees were asked to post ideas for cutting through internal red tape. Almost twelve hundred ideas emerged, including better maps of Google’s campuses.
In 2012, Kimberly-Clark hosted a “One K-C Culture Jam” for employees worldwide. “Transcending organizational and geographical silos,” a five-day online event produced ideas not only for better Kleenex but also for improving the culture.
Zappos, the online shoe retailer, made transparency a calling. In what commentators called “revolutionary,” the organization decided some years back it would share its sales data with everybody in the supply chain; tweets from the CEO linked to internal emails about facility operations. Which sneakers are selling and which hiking boots are not? What are the margins and what are the inventories? Employees and customers got the information, but so, too, did competitors. The theory: Transparency would generate trust and loyalty in multiple constituencies. It’s too soon to know if Zappos’s transparency produced measurable results—and the company has had high turnover of late due to other management issues—but it won praise in the business press for its transparency on sales.
Here are four communication principles that will build trust:
1. Own the bad news. Few of us are eager to confront error or unfortunate circumstances beyond our control. But whether it’s a hiring decision gone awry or unexpected market forces or the expectation the U.S. Food and Drug Administration might not approve the drug that a key division has been developing, people want to know the bad news right along with the good. If people are told only the good, no matter how triumphantly, they will be consumed by mistrust: What aren’t they telling me? Does doom wait just around the corner? Sugarcoating the bad, or ignoring it altogether, is a common mistake we’ve all made.
It’s tempting to believe that downplaying bad tidings will lessen their negative impact, but the evidence suggests it only exacerbates the impact. When the real story comes out, you’ll have a hard time explaining why you weren’t up front with your team. It’s far better to get out ahead of the news, and to use the setback as an opportunity to build trust by showing respect for your colleagues. To be sure, most organizations with competent crisis management and PR teams can minimize weak spots—and too many do little else. But most people prefer to be associated with a company in which leaders aren’t afraid to tell the truth.
The truth has many clear benefits. The most obvious: The more transparent you are about challenges, the more likely it is that individuals will come up with creative approaches to conquer them. If yours is a company that employees are proud of—where they believe they’re respected and where they own the mission—then they’ll be much more inclined to stick around and help instead of fleeing at the first sign of trouble.
2. Discipline yourself to stay positive. This isn’t the same thing as glossing over the truth. Staying positive means that when the going gets tough, good leaders steer clear of negativity, high-velocity language, and tantrums. We’ve all had moments in which disappointment, embarrassment, and stress combined to produce a cocktail of negative feeling. Adrenaline is natural. But we also know that it’s wiser to let such feelings pass before we talk to colleagues, write emails, or call a meeting. Even one tirade by a leader can endure, and carelessly written emails seem to live forever. The trust that develops slowly can be lost evermore in a rant.
From childhood, Dwight Eisenhower had an awful temper. It’s not that he outgrew it to become the moderate, smiling Ike we see in the newsreels. Instead, he learned to master his temper. He wrote down the names of those he despised, then tore up the pieces of paper and tossed them “into the lowest drawer of my desk.” That, he explained, “finishes the incident and so far as I’m concerned, that fellow.” Yes, like most of us, Eisenhower occasionally raged—but in solitude.
3. Pay attention to body language and atmospherics. Research indicates that gestures and facial expressions are potent forms of communication. The way you sit, how much you fidget, and whether you’re making eye contact—all these send subtle messages. An eye roll, an arm cross, or a finger wag will turn off listeners, and averting eye contact or looking down when speaking will suggest indifference. Pay attention to your body language and cultivate the habit of listening to capture what the other guy is saying.
Whether they know it or not, organizations also communicate a great deal symbolically. How people dress, where executives eat and entertain, what art is displayed, all matter. These forms of communication can separate people or bring them together. When you’re outside your organization, be on the lookout for how other companies do things and which practices are consistent with the culture you’re trying to develop. On the inside, be alert for dated practices and scrap them when they do more harm than good. At Peterson Partners, the investment firm I founded twenty years ago, we scrapped the artwork and replaced it with an array of logotypes, scale models, and other memorabilia of the products and advertisements celebrating the 150 portfolio companies we’ve backed. This reminds people that we work for our entrepreneurs.
When it comes to nonverbal communication, nothing trumps a leader’s actions. Whether kind or ruthless, actions at the top say it all. There are some actions that everyone notices, such as in a companywide presentation or in certain personnel decisions. But there are many more actions that few see, and those often count just as much. Word gets around about how you behave on the tennis court or when you pull into your parking space. As a team leader, your credibility rests disproportionately on the many small decisions you make every day. Even if most people don’t witness these, they’ll feel them—in the same way we often can feel comfortable or agitated without fully knowing why.
You are communicating, whether or not you want to. So be intentional: Think about building trust with each word and action.
4. Consider what budgets say about your priorities. Realize that your budget is among your firm’s most reliable indications of its values. If people find themselves on a team that can’t budget in ways that sync up with the team’s values, trust dissolves; if you’re going to emphasize work-life balance as a priority but budget so as to be chronically understaffed, employees will sense a lack of integrity. You’re better off saying nothing than saying one thing and budgeting for another.
Keeping budgets secret often lets people get away with obscuring problems. The problems, of course, don’t disappear. They just linger and intensify before erupting. But while transparency in budgeting makes low-trust organizations nervous, their high-trust counterparts have learned that the late U.S. Supreme Court Justice Louis Brandeis had it right: Sunshine is a superb disinfectant. Because budgets are compelling value statements at the very heart of developing trust, they must be open.
Radical openness is a concept coined a few years ago by author-consultants Don Tapscott and Anthony Williams. In a 2013 book, they explained the phenomenon—both its foundation and its utility. “Times have changed,” they wrote. “While secrecy and opacity have been hallmarks of business behavior in the past, maintaining and defending secrets is costly and difficult in an era where billions of smartphone-wielding citizens can transmit information around the globe in a heartbeat.”
The extension of radical openness, Williams explained in a TED Talk, means that industries “are opening up their innovation processes and treating their customers and partners as valuable sources of intelligence and new ideas.” Rather than fighting to “protect proprietary resources and innovations,” companies share intellectual property “in a bid to accelerate research, cultivate relationships and stimulate progress in other areas where they will see profits.” Consistent with this approach, Elon Musk, the founder of Tesla, made all of its patents public in 2014. And in the spirit of openness, when Warren Buffett bought a private plane at Berkshire Hathaway (which could afford it and which had a leader whose time was particularly valuable), he wryly named it The Indefensible.
In this spirit of openness, high-trust leaders think of a budget as values in action and budgeting as, literally, an investment in trust. Sharing budgets broadly is a great way to debate priorities and to build trust over time.
THE INTEGRITY OF LEADERS is the sine qua non for a high-trust culture, and communication—through words, symbols, budgets, and stories—is the fuel they use to power trust in their organizations. Leaders should thus avoid the trust-destroying silence, secrecy, and doublespeak so damaging to organizations. By learning to communicate lavishly, to open up budgets for discussion, and to deal with good and bad news with equal openness, one can secure a reputation for trustworthiness, internally and externally.