How lack of communication can be the biggest leadership blunder

Leaders must consider the tone and context of their communication during a crisis.

It is said that effective communication is the cornerstone of successful leadership. It is the glue that holds a team together and the compass that guides an organisation toward its goals. In other words, poor communication leads to confusion, mistrust, and disarray within the organisation.

What is the cost of poor communication within an organisation? A classic example is Richard Fuld, the former CEO of Lehman Brothers. He failed to communicate the true extent of the financial troubles the company was facing, which led to the 2008 financial crisis.

This ultimately contributed to the collapse of Lehman Brothers. Poor communication during a crisis will lead to catastrophic consequences. Leaders must be transparent and communicate the facts, even when they are uncomfortable, in order to maintain trust and ride through the storm.

During the Deepwater Horizon oil spill in 2010, then CEO of BP, Tony Hayward, made a series of infamous public statements including one where he said, "I'd like my life back." These statements were widely criticised for their insensitivity and tone-deaf nature.

Leaders must consider the tone and context of their communication during a crisis.

Another example is Wells Fargo's accounts scandal. CEO John Stumpf initially downplayed the extent of the scandal. In reality, employees had opened millions of unauthorised customer accounts. Stumpf's communication was seen as defensive and failed to accept responsibility.

Leaders need to take swift and decisive action when a crisis occurs, and they must clearly communicate the steps being taken to rectify the situation. Denying or downplaying issues will damage credibility and business.

Poor communication can cause havoc on employee morale. Imagine also the massive job losses when these businesses collapse. It is then a social problem as well, which is why regulatory and other governance mechanisms have been put in place to prevent such disasters.

Marissa Mayer and Yahoo

Marissa Mayer, former CEO of Yahoo, made a controversial decision in 2013 to ban remote work. This decision was communicated in an abrupt and top-down manner, which caused significant backlash and lowered employee morale.

Effective communication with employees, especially when making significant policy changes, is crucial. Involving stakeholders in the decision-making process and communicating the reasoning behind changes will mitigate backlash.

The importance of vision and direction cannot be more underlined. Ron Johnson's tenure as CEO of JC Penney was marked by poor communication. His abrupt changes to pricing strategies and store layouts confused both employees and customers. The lack of a clear, well-communicated vision led to financial losses and a damaged brand.

Leaders must communicate a clear vision and direction for the organisation. Consistency and clarity in communication help employees understand their role in achieving that vision.

What strategies can leaders employ to overcome the mistake of poor communication within their organisations?

Invest in training and development

Infosys has invested heavily in training programmes to enhance the communication abilities of its employees at all levels. They conduct workshops, public speaking sessions, and even provide resources for improving written communication. Leaders can follow this lead.

Embrace technology

Businesses can leverage technology to improve communication among employees. It can be through an app or a platform to share information and updates.

Leaders can harness technology to bridge communication gaps within their organisations. Internal communication platforms, project management tools, and collaboration software can facilitate efficient communication.

Dialogue and feedback

The Tata Group encourages open dialogue and feedback through various channels. They have a culture of regular employee surveys, town hall meetings, and a grievance redressal mechanism. This approach has led to an environment where employees feel heard and valued. Leaders should create channels for open dialogue and feedback.

Clear and consistent messaging

Hindustan Unilever (HUL) ensures that its communication is clear, consistent, and aligned with its values and mission. They use storytelling to convey messages effectively, which resonates with its diverse audience. Leaders should align messages with the organisation's mission and values, and use compelling narratives to help employees better understand and connect with the message.

Leadership by example

Anand Mahindra, Chairman of the Mahindra Group, is known for his active presence on social media. He sets an example of transparency and approachability by using these platforms to communicate with employees and stakeholders, sharing company updates and responding to queries.

Harsh Goenka of RPG Group is another such leader. When leaders actively communicate with employees, whether through social media, company-wide emails, or in-person interactions, it demonstrates their commitment to open and honest communication.

Empowering middle managers

Wipro has empowered its middle managers to play a pivotal role in communication. They are trained to be effective communicators and are responsible for translating the vision and strategy into actionable plans for their teams.

One of the most powerful tools to do this is the well-known Balanced Scorecards that we have deployed in many organisations, including Wipro. Leaders must empower middle managers to facilitate communication within their teams. When middle managers are skilled communicators, the organisation will effectively execute at all levels.