Many Companies Aren't Being Truthful With Their Employees About The Challenges They're Facing

This article originally appeared on Forbes by Mark Murphy, Founder of Leadership IQ

Every company faces challenges, from competitors, industry changes, regulations, staffing shortages and more. But whether those changes are serious or minor, companies are doing a terrible job keeping employees in the loop. And while many leaders think that ignorance is bliss, when employees don’t feel like the company is being honest about the challenges facing it, employees get irritated very quickly.

In a new research study called “The Risks Of Ignoring Employee Feedback,” Leadership IQ surveyed 27,048 executives, managers and employees about a wide range of communication issues. One of the questions asked people whether their company “openly shares the challenges facing it.”

Only 15% of employees believe that their organization Always openly shares the challenges facing it, while 21% say their organization Never openly shares its challenges. And even if we combine those who say their organization Always (15%) or Frequently (20%) openly shares the challenges facing it, that still leaves nearly two-thirds (65%) of employees who feel their organization is not doing a good job openly sharing its challenges.

Responses to the question “This organization openly shares the challenges facing it.”

There are plenty of leaders who think that hiding challenging news might be a good thing; again, ignorance is bliss, right? Well, employees don’t feel that way. When an employee thinks the company is concealing or obscuring its challenges, it undermines their trust in, and engagement to, that company.

Openly Sharing Challenges Radically Improves Employee Engagement

We know from this study that whether an organization openly shares its challenges also has a large impact on employees’ work experience. The survey asked employees whether they would recommend their company as a great organization to work for and discovered the following…

• 63% of employees who think their organization Always openly shares the challenges facing it will strongly recommend it as a great organization to work for.

• By contrast, only 6% of employees who think their organization Never openly shares the challenges facing it will strongly recommend it as a great organization to work for.

In essence, if an employee believes their company openly shares the challenges facing it, they’re about 10 times more likely to recommend it as a great employer.

What percent of people will strongly recommend their company as a great organization to work for?

Just ponder that statistic for a moment; how many leaders do you know who avoid sharing the company’s challenges with their employees for fear of terrifying them? I’m willing to bet that you know quite a few leaders like that (I sure do). And yet, employees don’t freak out when they hear about the company’s challenges; in fact, they respond with greater enthusiasm and commitment.

It turns out that what really terrifies employees is not a company’s challenges, but rather leaders and companies who hide the truth. If you’ve got reasonably bright employees, chances are that they’ve already figured out that your company has challenges. Every company, from Google to Amazon to Apple and all the rest, have challenges. And typically all an employee has to do is visit Forbes.com or some other business news site to discover just how intense those challenges really are. So pretending like there aren’t challenges doesn’t seem like a viable option.

Now, one of the problems here is that, as we might expect, executives are much more likely than individual contributors to believe their organization Always or Frequently openly shares the challenges facing it (49% vs. 31%). Senior leaders are often not aware just how little information filters down to their employees because executives are much more likely to hear the tough news and just assume that everyone else is hearing the same thing. But the data clearly shows that assumption is very wrong.

Similarly, younger people are much less likely to believe that their organization Always or Frequently openly shares the challenges facing it. For example, only 30% of people ages 18-30 think their organization always/frequently shares its challenges, contrasted with 40% of ages 51-60 and 47% of ages 61+.

And it’s probably no surprise that those who work for small companies think there’s more open sharing of challenges (39%) than those at either medium (32%) or large (34%) companies. Whether through job title or company size, the closer an employee is to the top of the organizational chart, the more likely they are to believe they’re getting the full truth about the challenges facing the company. There’s a lot more data from the study, and you can see all the charts here.

It’s a natural tendency to want to hide bad news from employees; after all, it seems like it would scare people away or cause them to question our competence as leaders. But the reality is quite the opposite. People want the truth. They don’t want concealment or obfuscation, they want truth. And the truth isn’t always the land of milk and honey, sometimes the truth is that a major company is coming after our market and we’ve got to get ready for a battle. While it’d be easy to look at this study as bad news, I interpret it very positively. People want to hear the truth and they don’t expect it to always be perfect. As a leader, I may not always be able to make our situation happy and rosy, but I sure can be honest about whatever it is.

Mark Murphy is the author of Truth At Work: The Science Of Delivering Tough Messages, Hiring For Attitude and Hundred Percenters.