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Beware the gatekeeper of information
July 2009
by Peter T. Kissinger  |  Email the author
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Real leaders abhor secrecy like nature abhors a vacuum. Tyrants adore secrecy. I've been doing a fair amount of consulting with small- to medium-sized technology companies that needed and sought help. My assistance was requested by stakeholders who concluded there was a problem and thought a fresh set of eyes might be helpful. I was surprised to find the problems (always more than one) were often aggravated by a key executive who controlled information both uphill and down.

In the case of CEOs, this meant that misinformation from the board of directors was used to influence operations people to do things that the board never intended. The board became an excuse to justify an action by the CEO that had, in fact, not been fully vetted or even discussed by that board at all. This was a convenient way to avoid debate and transfer responsibility for a marching order to an unseen higher authority.

In the other direction, information was carefully selected by the CEO for delivery up to the stakeholders on the board, creating another illusion. In my small sample of a half dozen companies, the CEO did not want the board interacting with operations people, and vice versa. In two cases, the board told me that the job of the CEO was to report to the board and doubted the truth of what was reported would be offensive to all. I was shocked to hear this and reminded of the common public company board excuse: "We didn't know. We thought everything was alright." My response is, "You didn't try to engage so that you could know. You are guilty!"

Situations of this sort remind me of the phrases, "Trust, but verify," and "You're not paranoid if people really are out to get you."

Twenty years ago, we heard a lot about the open corporation, meaning one in which there was financial transparency and leaders discussed both opportunities and threats with all the stakeholders in a transparent fashion. Given all the recent troubles with commercial, mortgage and investment banks, you'd think owners didn't learn a thing. It may just mean that paranoia and protecting power for personal aggrandizement are a normal part of the human condition. When managers and shareholders are the same people, at least the bastards are transparent to themselves. 

Today, managers are more often hired by shareholders who are then bamboozled. A lot of damage can be done to the latter. Attempts made to create a common interest using tools like stock options regularly had the unintended consequences of "incentivizing" the hired managers to cook the books, back-date options and buy back shares to hold up the stock price. Meanwhile, the long-term prospects for the corporation eroded.

When things take a turn for the worse, attempts by a leader to hide that fact from people lower on the organization chart are fruitless. If you want to know how a company is doing, go visit the lowly guy working on the shipping/receiving dock. If you find him outside pulling weeds, or inside painting a wall for the sixth time in a year, you already have your answer. The people you want are those who want to understand the problem and are a part of the solution. Teach them how to read financial statements. Welcome their input.

According to multiple research studies, the leading source of stress reported by adults is job-related, particularly if the job is associated with a dysfunctional supervisor. Inept leadership is extremely painful from the viewpoint of those who report who can see the organization tanking and feel helpless to save it or themselves. 

One of the hardest issues for any CEO is the balance between short-term and long-term performance. As I've mentioned in earlier essays, there is a reciprocity here that is very hard. Sacrificing long-term innovation for short-term financial results is the more certain of the choices. It's one of those questions where there is no clear answer, but there are consequences.

I believe it is important to explain honestly these ambiguities and not hide them. In technology companies, we have a lot of smart people, but we are not all smart about everything. If we are allowed to contribute our ideas, this will be appreciated even if a decision goes against us. The imperious among us like to shut off debate before it has started.

Managers at all levels can exhibit the tendency to protect turf by controlling information. I never want to work with a person like this again. Neither should you. Leaders don't fear information getting out. They share it, discuss it and seek alternative points of view. This is a sign of confidence and strength. It is not a sign of weakness. Hiding the truth is convenient at times, and wrong!

Peter Kissinger is chairman emeritus of BASi, CEO of Prosolia in Indianapolis and a professor of chemistry at Purdue University.

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