Article by Claire Suddath, Bloomberg BusinessWeek, May 13-19, 2013
How do you tell 400,000 people they're terrible at their
jobs? Do you hold a meeting? Send a mass e-mail? Tell only a few people
and wait for your criticism to circulate, middle school-style? Or do you
follow IBM Chief Executive Officer Virginia "Ginni" Rometty's example
and record a video message, post it to your company's internal blog, and
then share it with the entire workforce?
After the disappointing
earnings report on April 18, Rometty released a video to all 434,000
employees in which she admitted that IBM hadn't "transformed rapidly
enough." She called out the sales staff for missing out on several big
deals. "We were too slow," she said. "The result? It didn't get done."
The press got wind of her message, and Rometty's now accused of the
corporate equivalent of yelling at her children in public. The Wall Street Journal, which broke the story, called the outburst a "rare companywide reprimand." IBM declined to comment on the video.
"You
have to assume that things like this will get leaked," says Ron
Ashkenas, a senior partner at Schaffer Consulting and an executive in
residence at the Haas School of Business at the University of California
at Berkeley. "You know that old adage: As soon as you tell a second
person, it's no longer a secret. Well, when you're telling 399,999 other
people, it's definitely not a secret." Ashkenas adds that whether you
choose an e-mail – as Yahoo! did in February, informing employees
they'd no longer be allowed to work from home – or a video, the need to
reach such a wide audience almost guarantees it will feel impersonal.
"It's OK to put sand in the oyster shell," he says, "but you have to
make sure it turns into a pearl."
The key to keeping bad
news constructive, says George Bradt, managing director of the executive
consulting firm PrimeGenesis, is preemptive damage control. "there are
people who are going to be very emotionally affected by what you're
about to do," he explains, "and you can't let them find out about this
along with everyone else." Bradt suggests speaking to those employees in
person, no more than 24 hours before any announcement.
Afterward,
managers should encourage people to come forward and talk to them. Noel
Tichy, the former head of General Electric's Leadership Center, who's
writing a book about IBM, says Rometty's video has already inspired a
lot of feedback within the company. "With the video, she can see where
her message is landing – who's watching, who's responding," he says.
That's very important for a company as large as IBM, with employees
spread across 170 countries.
Companies rarely nail this
prep-first, follow-up after technique, Bradt says. "People take great
pains to craft the announcement, but they don't think about the
follow-through and quickly lose control over the conversation." The
results is a horde of angry employees. Mary Dixson, dean of
interdisciplinary programs at Northwest Vista College in San Antonio,
has been on the receiving end of critical companywide messages at a
previous job. "It did not results in a sudden urge on our part to suck
less," she says.
Employees aren't going to watch one video or read
one memo and completely change the way they work – the company has to
change, too. In the video, Rometty laid out a plan for IBM to respond to
customers within 24 hours: "Engage management, engage leadership, and
let's deal with it." She's already "reassigned" the head of IBM's
computer hardware department, the source of a large portion of the sales
drop. "Ginni's a very direct, no-BS type of CEO, and she had one
message that she delivered to everyone," Tichy says. "It would be much
worse if it went through the int4ernal channels. No one wants to hear
that the CEO thins they dropped the ball through word of mouth."