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JWI 522 (1192) Page 1 of 7

JWI 522 Strategic Partnering with the C-Suite

Week Seven Lecture Notes

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TRUTH AND TRUST

What It Means The vast majority of companies do the right thing. The same is true of employees. However, from time to time in the life of nearly every business, something will go wrong. Someone will make a morally questionable decision, cross a line that shouldn’t have been crossed, and occasionally, even engage in criminal activity. In such times, HR leaders are often called upon to step into the middle of a firestorm and help the organization make sound ethical and legal decisions that safeguard company assets and protect the rights of the individual. Why It Matters

• Employees will stand behind leaders who are honest with them and will give it their all, even when the future is uncertain.

• Trust opens the lines of communication and empowers people to share ideas freely without fear of reprisal.

• Candor is a tool of speed that cuts through the clutter and gets to what really matters.

“Leaders establish trust with candor, transparency, and credit.”

Jack Welch

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DEVELOPING A CULTURE OF TRUTH AND TRUST

What does it mean to have a culture of truth and trust? It goes without saying that you must follow the law. Your workplace must be free from biases that discriminate against sexual orientation and religion and it must provide a safe and secure environment for people in need of special accommodations, but it’s more than that. It’s about establishing a culture where employees are confident that leaders will tell it like it is. Telling it like it is should be a principle that is familiar to JWMI students. For Jack Welch, this is expressed in a single word: candor. While it would be impossible to reduce the entire body of Jack’s leadership lessons to a single practice, if we had to single out just one as being the foundation upon which everything else is built, we would probably vote for candor. For Jack, candor isn’t simply a belief in always telling the truth because it’s the right thing to do. Candor is, in his words, “a tool of speed.” Candor, “cuts through the clutter of ‘business speak’ and gets to what really matters.” It requires people to face facts and to share information openly. That includes not just feedback on individual performance and letting people know where they stand, but also information about how the business was doing. This is something Patty McCord strongly agrees with:

“One of the most important insights anyone in business can have is that it’s not cruel to tell people the truth respectfully and honestly. To the contrary, being transparent and telling people what they need to hear is the only way to ensure they both trust you and understand you.”

Powerful, P. 32

Building an organization that truly embraces candor as a way of life is not an easy task. In fact, Jack says it was one of the toughest things he did at GE. That sounds a bit strange, doesn’t it? It seems simple enough, just tell the truth, but there is a little more to it than that. The reality is that we are fighting against millennia of human conditioning. People don’t want to deliver bad news. We don’t want to tell others they’re not doing a great job or that things aren’t going well. We want to hold off in the hope that it will get better. A problem that plagues far too many organizations is that upper management keeps an excessively tight hold on performance information. Such a mindset does a huge disservice to the organization for two primary reasons:

1. Not sharing information about performance – both at the individual or corporate levels – robs people of the chance to make meaningful changes in their own performance or change in how they manage their teams and their businesses.

2. It undermines the opportunity to get every brain in the game. Sharing information more openly allows the entire team to come together and attack the problem, think about other ways of doing things and find better solutions.

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The tough thing about building a culture of truth and trust is that it’s not always pleasant. It often means delivering some pretty harsh news. The thing is, however, that while not everyone will like what you have to say, at least they will know where things stand. People are a lot more willing to rally behind a leader they trust even when the odds are against them than they are for someone they think is hiding the facts.

“Too often upper management thinks that sharing problems confronting the business will heighten anxiety among staff, but what’s much more anxiety provoking is not knowing. You can’t protect people from hard truths anyway. And holding back truth, or telling them half- truths, will only breed contempt. Trust is based on honest communication, and I find that employees become cynical when they hear half-truths. Cynicism is a cancer. It creates a metastasizing discontent that feeds on itself, leading to smarminess and fueling backstabbing.”

Powerful, P. 42 Having a seat at the table presents HR leaders with the opportunity to guide decisions on how and when information gets shared from the top down, as well as how feedback from the bottom up is encouraged and rewarded.

“The other vital point about honesty concerning business issues is that it’s got to go both ways. Employees should be told never to withhold questions or information from you or their direct superiors. As a leader, you should model this, showing, not just telling, that you want people to speak up and that you can be told bad news directly and disagreed with.”

Powerful, P. 43

This behavior has to be modeled at the senior-most levels of the organization. Management has to demonstrate that when team members come forward with problems, the manager and the team rally around to support the person and address the problem head-on. If you bring a problem forward and management jumps down your throat, as Jack says: “That’s the end of candor.” Building a culture of truth and trust requires that we, as HR leaders, work with our colleagues to foster an honest sharing of ideas, present a realistic assessment of performance, and encourage open debate where opposing views can be expressed without fear of reprisal.

HR AS PEOPLE ADVOCATE In examining what HR needs to do to get a seat at the table, much of our focus has been on addressing the problem that too many HR departments don’t align their activities well enough to the needs of the business. We hope that our focus on promoting a “people first” agenda has been clear and consistent. We firmly believe that people are the most important part of any organization and that effective talent development practices are critical to building a winning organization and creating a sustainable competitive advantage. But getting a seat at the table doesn’t give HR the right to abdicate its role as people advocate. There will be times, in even the most people-centric organizations, when choices will be presented that create a tension in which for the business to win, some employees will have to lose. We can’t be naïve about the realities that there will be choices that make good business sense, but which will have a

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negative impact on individuals who have given a lot to the company. There will be times when layoffs happen, when teams become redundant and when factories have to be relocated. When faced with such situations, what is the role of the CHRO as an advocate for people? While the circumstances around such events will vary widely, Conaty and Charan argue that one thing is critical … the strength and character of HR leadership.

“The key issue is whether the HR leader is strong enough to face off with a tough CEO and CFO and be a true employee advocate without getting rolled.”

The Talent Masters, P. 51 Having a seat at the table does not mean that you can’t ever oppose the boss’s point of view. CEOs need honest counsel. They need people around them who will push back when needed, and who will, respectfully, but firmly, support an opposing view. Standing up to a tough CEO can be painful, and in extreme cases, it can be career limiting. Over the years, there were numerous times when Bill Conaty supported a position in opposition to Jack. This was a stance that, as I am sure you can imagine, is not for the faint-hearted. But Jack encouraged this. In fact, Bill would likely not have been around long if Jack did not feel he could count on him to speak his mind and be an advocate for what he felt was right. Did that mean Bill always got his way? Of course not, but it did mean that the facts and the arguments were put on the table and debated honestly. Jack knew that Bill could always be counted on to be an advocate for people and to fight for what was right when tough decisions had to be made.

MAINTAIN A CONFIDENCE OR TAKE OFFICIAL ACTION? This is not a course on workplace law or industry compliance. We trust that, as an HR professional, you are well acquainted with the regulations that you and your team must follow and that you participate in regular training to stay on top of things. Further, we expect that you are working with your organization’s legal team, and are seeking external or specialized counsel when needed. But there will be times when the path forward in dealing with an ethical or legal issue is not as clear as we would like. It would be wonderful if we all had access to a set of rules that covered every single circumstance and told us when we should officially report something and when we need to maintain a confidence. The reality is that each situation is different. There are, nevertheless, core questions that every HR leader must ask when faced with a tough decision.

• Does the person bringing an issue to me want me to do anything with it? • Is there a potential that a law is being broken? • Is there a risk that, if I don’t escalate the matter, the company will be put in jeopardy?

As those questions get assessed, they will lead to a decision about whether the issue must be brought to the CEO or should be dealt with by the HR leader. In bringing an issue to your boss, however, there is a right way and a wrong way to do it. An important part of being a trusted advisor is also being seen as a competent manager. A competent manager doesn’t add work to the boss’s day; she takes it away.

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Bill would frequently have to knock on Jack’s door and say, “I want you to know what’s going on with such and such … I don’t need you to do anything about it, I’m handling it and will keep you updated.” Taking a problem to your boss without bringing a solution is not the way to demonstrate your potential as a leader. When assessing your decision about escalating a problem, ask yourself: Is this something that the boss even needs to know about? Does it impact the organization in a way that requires the attention of the person you are bringing it to? If the answer is no, then deal with it yourself or hand it to someone at the appropriate level to take care of it. If the answer is yes, then does it require action from your boss, or does the boss just need to be informed? The only problems that should land on the desk of a CEO are the problems that can’t be handled by anyone else down the ladder. That’s a pretty tall order. When you do bring a problem to the CEO’s attention, make sure you come with as much information as you can about all the relevant factors. It’s true that when something is unfolding quickly in real time and is important enough that the CEO has to be updated, you are unlikely to know everything that’s going on, but gather as many facts as you can first, and make the initial briefing detailed enough that the risks, options and ownership of action items are made clear.

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GETTING THE MOST OUT OF THIS WEEK’S CLASS

As you read the materials and participate in class activities, stay focused on the key learning outcomes for the week:

• Explore the importance of developing a culture of truth and trust Is management trusted in your organization? How do you know? What tools have you deployed to reach that conclusion? Anonymous surveys, exit interviews? Off-the-record discussions? Have you discussed the role of candor as “a tool of speed” with your team and with other leaders? What concrete actions could be taken to identify and address trust issues that may be holding the business back? How would things change if there were a significant increase in the level of confidence that all employees were being told the truth and were treated fairly, regardless of their level in the organization?

• Discuss the role of HR as a people advocate and steward of the business

How do senior HR leaders balance being advocates for people and strategic drivers of the success of the business when conflicting interests arise? What are the checks and balances that must be in place to guide your actions? How can having a strong and clear Mission and a set of Values/Behaviors help all parties to make better decisions for the business and the employee?

• Assess when to maintain a confidence and when an issue must be officially addressed

What support mechanisms do you have in place to guide your decision-making process when there are tough ethical and legal decisions to be made? Do you have your own trusted mentor you can go to as a sounding board, knowing that things will be kept confidential? Are you fully versed on the laws and regulations that outline when official action must be taken? How do you escalate an issue without dumping it on someone else? It is important to have these guides be in place before they’re needed. You don’t want to find yourself searching for a roadmap in the middle of an ethical or legal crisis.