Why CEOs NEED Bad News

Nobody likes hearing bad news, but at times, bad news cannot go unreported. It can mean the difference between an issue being swept under the carpet, or resolved in the right way. Below CEO Today hears from Arran Heal, Managing Director at CMP, on why CEOs truly need bad news.

CEOs need to be asking for more bad news. Too often senior managers are only sharing the good stories, the wins and successes in the boardroom. What’s really happening in the workplace: the grievances, the requests for mediation, the employment tribunals, are slipped under the carpet. But in reality this is the information that’s the real gauge of the condition of the business engine, how it’s working and what needs doing to ensure better performance for the future.

It’s important that CEOs understand the management styles being used in different areas, the work practices and how this is affecting employee relations and the workplace culture. Productivity, staff retention, innovation, all depend on it. It’s part of a situation where many employers are closing down and ignoring any kind of negativity or dissent, scared of using mediation, and not able to benefit from a culture of openness and challenge.

So what kinds of data need to be collected? Many organisations that do look at their people data tend to make use of a balanced scorecard approach for financial, internal, customer and learning and growth metrics. But what does this kind of data actually mean? Boards will often be given the bald figures around staff turnover, as if it were just another basic financial metric. There will be any number of variable factors affecting that figure, many of them complex and relating to culture and the external sector environment.

Much of the data needed to better understand the changing people picture is available, just not collated and interpreted effectively. Employers don’t make use of data from performance appraisals, 360 feedback surveys, engagement surveys, grievance and disciplinary data and sickness and absence. And the data that is captured can be ‘flat’: dates, times, incidents, and various actions taken with specific cases, but with no link to the root causes that helps to identify the ‘whys’ of a case. It’s easy to blame recurring sickness absence or poor performance on the individual – a lack of commitment or ability – when the real story can be more complex. Staff are replaced or put under additional performance pressures for the wrong reasons. Are there ‘bad’ managers within the organisation who are having an impact on levels of sickness absence or team working in a department? Has there been a breakdown in relationships between particular teams, caused by a change initiative?

Boards can get a grip on the situation by:

• ensuring they are measuring the true cost of conflict. Even when only taking into account the visible, measurable impacts, the costs of conflict are substantial – and need to be taken into account when planning and assessing people resources and ‘profit per employee’ or EBITDA. 370 million working days are lost every year as a result of conflict (CIPD). 42 per cent of a manager’s time is spent on conflict-related negotiations among employees (Dane Measure of Organisational Conflict).

• get HR to use a single, pro-active system to store details of employee relations: absence (and absence due to stress in particular), numbers of grievances and disciplinary case, employee relations cases (where costs occur and the amount of time spent on cases; reporting on the duration of cases, time spent by HR and investigators, legal costs, mediation costs; the number of days an employee was suspended).

• ask for analysis and interpretations, a summary of what’s happening in the different departments of the organisation; for example, how employees in certain age brackets appear to not be engaged, through to individual teams underperforming due to a specific manager. Capturing data provides evidence of how processes are being followed in a consistent way and provide equality of treatment for all staff.

• making sure there’s follow-up by HR and a focus on ROI from interventions. This kind of richer, more meaningful, data gets HR closer to the workplace reality. Greater understanding is then the basis for strategic planning to reduce unnecessary future problems: management processes and training, improving conversational intelligence, internal communications, team building, opportunities for mediation, and identifying the staff that need additional help early on and to improve working lives in general.