How to Ensure Honest Conversations in Your Company

by Hubertus Hofkirchner -- Vienna, 06 Mar 2020

Companies should carefully listen to the “Voice of the Employees” for strategic decision making. However, it is a challenge to get an open and honest conversation going. Here is an approach which will always work.

When company leaders cannot get honest opinions from their employees, serious strategic mistakes are likely, says Harvard Business School Professor Michael Beer in a recent HBR article. As an example, Beer mentions General Electric’s 2015 flawed decision to acquire Alstom, its key competitor. GE subsequently lost investor confidence and its share price plunged from levels about $30 to recently $10.

According to Beer, GE CEO Jeff Immelt was stuck in an echo chamber reinforcing his ideas, while lower level employees would have been more aware of possible problems and probable implementation issues, simply put: why this strategic move would not work out. However, lowly employees will not speak openly to powerful managers. Messengers of contrarian opinions will often not be perceived as team players but as critics or complainers, thereby putting their careers at risk.

Good Intentions, But ...

Beer’s seven recommendations for “open and honest conversations” in organisations are all well-intended and desirable in principle, and maybe they work in the US business culture. Personally, I am sceptical that traditional oral manager-employee conversations can solve the underlying cultural issues and personal fears in most countries of the planet, possibly not even in the US. So, what does he recommend?

1. Managers shall interview people about the good, the bad and the ugly while promising that “speaking openly will not hurt them”. I am not sure that many employees will fully trust such assertions. There are too many subtle ways in which their career can suffer.
2. Managers should ”focus on what’s important” which is ok, if a somewhat unsurprising recommendation.
3. They should “share the strategic plan with employees” before asking for their “public” opinion. However, while the former part is obvious, while the latter is wishful thinking: public speaking does not usually improve honesty.
4. After sharing, managers should just listen to employees and not react defensively. But is such a one-sided conversation really an “open” one?
5. Beer asserts that leaders still should make the decisions and not leave them to lower level employees. Fair enough but I add that the conversation should iterate for another round with the changed decision.
6. The leadership team should be accountable to employees and communicate how their input has been considered. Fully agreed, in fact, influence on decision making is by far the biggest motivator for crowd participation be it of employees or citizens.
7. The process should be repeated periodically.

A Better Way

While I subscribe to Beers recommendations in principle, strategic conversations through specialised online tools such as Prediki, our open prediction market platform, are a more reliable way to ensure honest and meaningful conversations. How so?

1. On an online prediction market, employees can - actually should - use pseudonyms. Thus, when they share honest quantitative predictions and their qualitative reasons, they have nothing to fear.
2. A Prediki market setup automatically focuses on what is important, given that the participation time per employee should not exceed 20 minutes to avoid fatigue.
3. Obviously, when asking employees for predictions of a future KPI or other outcome conditional on a strategy, the market setup must share appropriate elements of the strategic plan in each question’s wiki.
4. Markets are two-way conversations. When trading on the market and posting their arguments, employees get real-time feedback from their pseudonymous non-hierarchical peers. Peer feedback will be acceptable regardless whether it supports or contradicts one’s predictions and opinions whereas a contrarian or defensive reaction by a superior in a traditional talk is a sure conversation stopper.
5. When the strategic plan changes, it is an easy thing to field updated prediction questions. The revised KPI forecasts and the employees’ posts will in short time confirm if the new plan is in fact an improvement, or not.
6. The leadership team is automatically accountable. In each prediction question, their expectations of future KPIs from their plan will be either confirmed, first by the crowd and then by reality, or not. Evidently this requires a humble attitude of managers and the courage to be proven wrong.
7. Regarding periodicity, it is best practice to run a major strategic prediction market every year, and ad-hoc before major decisions. A smaller number of tracking predictions for strategic KPIs, fielded every quarter, will ensure that the organisation still expects to remain on track.

Yes, showing the strategic plans first and then asking for feedback on the feasibility and potential barriers can be beneficial. However, a modern prediction market both provides a great platform for advocating where management wants to take the organisation and a much more collective evaluation. Management gets much clearer recommendations and more authentic insights based on verifiable forecasts.

One more thing: A company can use so-called maxi-mix crowds, which split the totality of the workforce into many well-diversified groups. Each group can deal with predictions for a different strategic plan which increases the analytic bandwidth of an organisation substantially. It can be executed asynchronously and decentralised, across locations worldwide.

An automated, structured conversation on a modern prediction market platform not only saves significant management resources and critical reaction time, it is a proven way to ensure open and honest conversations in an organisation.

About the author:

Hubertus Hofkirchner is Chief Futurist and CEO of Prediki, the open prediction market platform. He encourages honest and open feedback to his blog. Unless you are a bloody complainer, of course.//

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