The Coverup is the

By CIOinsight  |  Posted 08-11-2005 Print Email
More Persistent Problem">

But you have to telegraph the punch to all your employees so those that survive the inevitable layoffs buy into your plan, and don't let the identity crisis undermine their effectiveness.

Apparently, Polaroid's owners didn't bother with this, and the effect on the survivors has devastated productivity.

They just had a tin ear for what it would be like to change their self-identity as though it's swapping one Kmart clip-on tie for another.

They, and the U.K. government, made what I call the Etinuum Error—a tendency to keep policies secret even when the secret is bound to be uncovered and, when revealed, will create shockwaves more severe and costly than if the policy was public from the beginning.

I worked for a short period for a company called Etinuum, a dot-com whose executive team was perhaps the most functionally dysfunctional I've ever worked with or for.

They decided to do a big layoff and re-org to raise Wall Street's hopes for their sagging prospects.

The president held layered meetings talking about big changes, a new business plan, new models and methods. From people at the very highest levels, he invited input and listened a little.

He invited directors to comment and ignored their comments. He had the directors tell the managers and get their comments, and ignored the managers as well. Everyone lower in the great chain of being was ignored totally.

The president made his decisions, and the executive cabal compartmentalized all the knowledge and news by level and by department, like a Communist sleeper cell.

Everything was kept secret from everyone who didn't have a "need to know," and everyone was instructed to tell no one, so no one knew enough to know the whole story.

And every level was supposed to keep everything secret for every other level and group.

The president imagined, his ship, like the Titanic, was unsinkable because of his ornate revolutionary sealed compartments.

Verily, the president was playing divide and conquer. No one knew how to carry out the plan because the justification had been kept from everyone.

Everything that happened every day was an invention no one could have foreseen. No one had any goals and objectives against which to make decisions.

Having not designed the plan so they could all hang together, they all hung separately.

Morale, flexibility, speed and productivity all went deep into the toilet, no one picked up missing connections in processes, hundreds of jobs and millions in shareholder value were washed away in a short time.

Here's the real thing.

The more significant the change, the more serious the result, the worse the backlash is from those who are kept in the dark.

The Etinuum debacle cost only a few hundred good-paying jobs in a recession.

The British police, on the other hand, are facing a much stronger backlash—fueled by the intensity of the situation, the finality of the execution, the fact that it occurred in front of so many witnesses, and the secrecy, which became almost incomparably much more passionate—than Polaroid and Etinuum put together.

Why do managers make these mistakes?

Sometimes corporations need to make radical changes, which are often resisted by the staff and stockholders.

The executive team, feeling beleaguered by critics, unsure of the support of their staff, and wishing to keep their competitors in the dark for as long as possible, have a lot of incentive to keep quiet.

Further, there may be ego issues involved. Managers who have to fix a problem for which they're partly to blame may not want their organizational "children" to know of their failure.

Or they may feel embarrassed having their peers at the Junior Presidents' Klub know the organization they head is struggling.

It's more likely to happen if the executive team has experienced bruises or outright failures in previous change initiatives. Executives with scars may think that if they don't ask anyone's opinion, and then don't tell what they're up to, they'll benefit somehow from delaying any kind of public knowledge, let alone acknowledgement.

Next Page: Disaster causes overreaction, secretiveness, distrust.



 

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