« At what cost? | Main | Be mad, but don't be crazy »

Listen to the front-liners

At any company I've been involved with, the front-line people always know what is really going on.  Executives have varying degress of knowledge, but no one fools the people on the front-line.  When a strategy change is announced or someone is fired, you can usually hear people on the front-line saying "FINALLY!"  If people at the company know what should be done, why does it sometimes take the executives so long to figure it out?

The most common reason is that no one listens to the front-line people.  Maybe top executives don't spend time with people on the front-lines.  Maybe they hear things, but their top managers dismiss this feedback in order to deliver their own message.  In any event, if you aren't listening to people on the front-line, you are missing what is really going on.

If you are a CEO, you have to be careful when you try to get this feedback directly.  Employees have to feel safe in bringing up issues with you.  They can't fear reprisal, from you or anyone else.  Also, you have to be careful in how you react.  If you say "we shouldn't do that" when you hear about an issue, that becomes a directive.  I remember a company I worked at once where the CEO (Frank) did a good job talking to people on the front-line.  But, "Frank said" became the way that someone could cut through normal decision-making.  And, "Frank said" usually meant that Frank was empathetic, not making a decision on the spot.  Instead, try "I'll look into it" (only if you mean it).

Here's a current example of top leaders ignoring feedback from the front-lines.  In today's column by Steven Syre in the Boston Globe, he writes about Sheila Bair, head of the FDIC since 2006.  She was trying to raise an early alarm on sub-prime mortgages:

Bair was working in Washington as assistant secretary of the Treasury for financial institutions until 2002. She already didn't like what she was seeing in the mortgage market then.

"In 2002, she had tried to get the Federal Reserve to pay attention to subprime loans," says Tom O'Brien, former dean of the Isenberg School of Management at UMass. "She was worried there was fraud being perpetrated, and she was sure this was going to cause tremendous problems for people taking out the loans. But none of us saw the systemic risk and how it mushroomed. But we used to talk about the fact that she couldn't get the Federal Reserve to take that seriously."

Ben Branch, a UMass finance professor and friend of Bair's, recalls similar conversations in Amherst.

"She was way ahead of the curve on all these problems and trying to get people's attention. Unfortunately, people didn't listen to her so much."

I didn't know anything about Bair until this morning, but it sounds like we have the right person in charge of the FDIC, which insures bank deposits.  The FDIC will be under alot of pressure as some banks fail, but hopefully she'll make the right calls (and listen to people in her front lines).

TrackBack

TrackBack URL for this entry:
http://www.thefeinline.com/blog-mt1/mt-tb.fcgi/414


Hosting by Yahoo!

Comments

Can I get you to send this to my boss? :D

Post a comment

(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)