As a consultant who goes from company to company helping to build sales results and improve executives’ leadership skills, I am seeing more and more organizations that are stuck. The leaders want at least the senior executive team – if not everyone – to agree with the company’s direction … and when they don’t have a consensus, they may take no big actions at all!
That’s a shame.
As a leader, it’s part of your job to make decisions, and it may or may not make sense for you to be completely transparent about the basis for every decision you make.
In a detailed examination of this important topic, McKinsey Quarterly’s “The dark side of transparency” points out that while both buyers and sellers giving each other ratings may work well for Airbnb or Uber, transparency inside organizations may overload your employees, and create endless debate with no real resolution. I’ve personally experienced “analysis paralysis” in action as individual salespeople spend as much time “gaming” compensation plans as they seem to spend in real selling activities.
You have to be careful what you incentivize people to do because they’ll probably do it. If you empower everyone to comment on everything, everyone will have an opinion, and many will seek to share theirs. That’s not the same as real forward momentum in the business.
Here's the reasoned examination of the risks of transparency from McKinsey & Company that I mentioned
earlier. Especially valuable: the story of a Canadian company that worked for a year, trying to create “a fair bonus system based on pre-established
KPIs,” only to find that employees reported seeing the new system as less fair than the CEO’s previous practice of awarding bonuses on the basis of
his personal beliefs about the value of each employee’s contributions to the business!
The CEO sought something that sounds like a no-brainer: a rational and transparent process for determining how bonus money would be allocated. The problem, in the end, was that although employees acknowledged the increased transparency, their perceptions of the fairness of their bonuses under the new bonus program was significantly worse. Even the employees who got as much or more bonus money than they’d received the previous year reported that they were significantly less satisfied with the new bonus system.
The data collected by the company tells us the employees felt the new bonus process was a critical evaluation, rather than an unexpected gift --- and the new transparency highlighted those who got bigger bonuses, triggering envy!
So what did the Canadian company do? Senior management put in a lot of additional work, meeting with employees to explain how the new bonus system worked. Looking back, executives say they wished they’d run the new bonus system as a “phantom” for the first year, telling employees what they would’ve earned under the new plan, and collecting their feedback.
The bottom line: get clear on the change you want to see and work through how you might achieve the change. Test the best options by running some “what if”-type scenarios. Realize that you don’t have to rush the decision – don’t decide just to be rid of the project. But don’t be afraid to make a decision. Consensus is an impossible ideal, and waiting for it can stop your organization in its tracks.