As the founder or CEO of a company, the temptation is often there to ‘shield’ employees from the harsh realities of a situation.
You might, for example, be acutely aware of the fact that the operation is burning through cash and quickly emptying its bank account. Or you might be meeting with potential investors daily who simply aren’t buying into your product or strategy.
The worst thing you can do is try to hide these facts from your employees. As the founder or CEO, the realities of the situation will be hitting you hardest of all. Your employees aren’t children who need to be protected. They’ll never be as emotionally invested in the company as you, so they’ll be able to handle the news.
Moreover, your employees are probably the ones who can actually do something about the situation. They’re the ones who need to fix the product or bring in the sales. If they don’t know how bad the situation is, they won’t be acting with the appropriate sense of urgency.
There are exceptions to this rule. Spreading panic through a large organisation in which the vast majority of people can do little about the situation is a bad idea. It’s akin to alerting the world’s population that an asteroid is on its way to wipe us off the planet. It will only result in chaos.
In his phenomenal book The Hard Thing About Hard Things, CEO and angel investor Ben Horowitz calls this urge to hide a dire situation from employees The Positivity Delusion.
The lonely fight
As a young and inexperienced CEO, Horowitz had the unenviable task of trying to keep a company afloat during the dot-com collapse of the early 2000s. His company Loudcloud (later renamed to Opsware) was perennially on the cusp of implosion. Instead of telling his staff that they were fighting for their lives, he tried to hide just how perilous their situation was.
“As the highest-ranking person in the company, I thought that I would be best able to handle bad news. The opposite was true: Nobody took bad news harder than I did. Engineers easily brushed off things that kept me awake all night. After all, I was the founding CEO. I was the one ‘married’ to the company. If things went horribly wrong, they could walk away, but I could not. As a consequence, the employees handled losses much better,” writes Horowitz.
“Even more stupidly, I thought that it was my job and my job only to worry about the company’s problems. Had I been thinking more clearly, I would have realised that it didn’t make sense for me to be the only one to worry about, for example, the product not being quite right — because I wasn’t writing the code that would fix it.”