RVB Associates Blog

How to Avoid a Crisis Before it Goes Viral

[fa icon="calendar"] Apr 19, 2017 1:51:52 PM / by Dr. Rob Bogosian

Dr. Rob Bogosian

By: Drs. Rob Bogosian and Darlene Andert

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Crise de la semaine

Last week we saw a bloodied United Airlines passenger dragged off a plane because he wouldn’t give up his seat. The customer received a concussion, broken nose, damaged sinuses, and two missing teeth. The prior week we saw a Pepsi commercial that negatively blew everybody’s mind, except the ad creators. Two weeks ago we saw the Wells Fargo Board claw back a few more million from the C-Suite members who were at the helm during the implementation of a… shall we say, strategic contradiction. Even well-intended Wells Fargo whistle blowers were fired from the bank. If we go back in history just a little further, we saw the VW emission violations, the GM ignition switch crisis and more. Are these crises isolated incidents or do they share a common root-cause phenomenon?

We believe these organizational crises are not isolated or random. When we peel back the layers and do a little root-cause analysis, my colleagues and I discovered that these companies share a common characteristic: Cultures of Silence and lack of non-financial data to signal the need for corrective action by the CEO and/or the board of directors.

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A Culture of Silence exists when employees willfully withhold important work-related information. They don’t do this because they are insidious people – they simply enter job withdrawal for self-protection.

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Research shows that the number one cause of Cultures of Silence is the perception of egregious leadership practices and the perception that the C-Suite is so far removed (insolated) from the employee culture that they couldn’t possibly be interested in anything that the lower ranks have to say. We call this, “The Gold Cufflink Syndrome”. This is compounded when the CEO or board of directors lacks the oversight data to recognize the phenomena and insist on corrective actions(s).

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This socialized perception in Cultures of Silence is dangerous because employees interpret the isolation as dismissive of their contributions and the result can be silence caused by a sense of futility. Expressed in the vernacular, they ask, “why should I bother, my voice makes no difference”? In a 2017 Silence/Voice Index™ study of 400 US middle managers, 45% report that it makes no difference when they offer ideas to management. They tell two friends about their perceptions, and they tell two more friends and in a short time frame, we have a Culture of Silence. The corporate financials may tell the CEO and the board one story about the organization’s status, while the loss of workforce engagement in Cultures of Silence, holds the real story of organizational workforce inefficiency. This results in increased costs of turnover, training, and development; loss of corporate knowledge & innovation, and lessening of the future growth potential and profitability.

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What happened when thousands of retail banking employees raised their hands to say, “Ah, this account opening process doesn’t seem right to me.” Was there NOT ONE manager who said, “You are right, we should not do this, let me move this problem forward.” Boards are charged to provide oversight to ensure that a Code of Ethics and Corporate Compliance Program is effective, not perfunctory – and that whistle blowers are protected.

When Pepsi's advertising team said, “Yup, this one (Ad) is a “Go.” Was there NOT ONE dissenting view?

On the United Airlines flight, was there NOT ONE flight crew member who thought and said, “We should not drag paying customers off our planes.”? Assuming that there may have been ONE employee who had a dissenting view, what kept them from speaking up? How do we end up with organizational Cultures of Silence and how do we change this highly risky phenomenon? What data can the CEO and Board of Directors review that helps uncover when this is occurring?

We see examples in BP and Wells Fargo where perhaps it’s up to the Board to intervene and more significantly to prevent these crises by insisting that the organizations over which they preside, measure, shape, and sustain Cultures of Voice.

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Cultures of Silence are highly risky. Research shows that in 2014, organizations paid $15.8 Billion dollars in compliance costs and $13.8 billion in penalties paid for violations. Most shareholders would probably agree that these fines are not a good Return on Investment?

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Boards of Directors have ample financial measures that indicate the wellness (or lack thereof) of the organization. Now, Boards need to address the non-financial measure that gauge the true efficiency of the workforce –one of the largest costs in any firm. Some current measures include: voluntary versus forced turnover rates (costing $4,000 to $8,000 at the entry level/per turnover event); sick days utilization by organization/division/department; year-to-year trends in healthcare cost, ROI on training costs, number and quality of mentoring programs; the overarching tone of the HR Handbook (punitive, perfunctory, ill-directive, corrective, or developmental and inclusive). These measures are just a few of the non-financial measure boards of directors can utilize. The most important measure the board stands to receive, is the report measuring workforce climate and workforce engagement trends along with the up-stream Voice Index measuring whether the organization exists as a Culture of Voice or a Culture of Silence. These reports should occur every 18 months. The Board of Directors can then adequately supervise the CEO’s creation of either a Culture of Voice OR a Culture of Silence – and demand best performance.

The crises will keep on coming until board members take the bull by the horns and insist that their organizations do the following:

(1) Measure and report the levels of silence and voice in the organization.

(2) Drill Culture of Voice competencies into the value system and behavior framework of the CEO and every leader until the Silence Voice Index reflects a strong Culture of Voice.

Board members can and must do better to hold their leaders accountable for shaping and sustaining Cultures of Voice and eradicating Cultures of Silence that have supported the prolific examples of poor business practices we currently see.

Topics: culture of silence

Dr. Rob Bogosian

Written by Dr. Rob Bogosian

Dr. Rob Bogosian is founder and principal consultant at RVB Associates, Inc. also featured in Business Insider, CNN Money, Fortune Magazine, CEO Magazine, Entrepreneur Magazine and co-author of Breaking Corporate Silence.

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