The Good News About Bad News

Failure is an inherent part of business development. Major global brands like Apple—when Steve Jobs left—FedEx—who’s founder avoided bankruptcy with a trip to Las Vegas—and GM—who’s post financial crisis bankruptcy revival saw management turn the culture around from "conflicting to cooperative"—faced failure, recovered, and now are listed as a Fortune 100 company.

These are tremendous stories. Not all failures are this colossal, but they can start to add up. Which begs the question, how should failure be communicated within an organization? It might be tempting to just “sweep failure under the rug”, however research points to a different direction.

Failure and Performance

Economist Sabrina Jeworrek, from the Halle Institute for Economic Research, and colleagues conducted a series of experiments that targeted how leadership communication of past organizational failure effected employee performance. More precisely, the researchers observed how transparency would affect performance and motivation in a phone campaign workforce. The workers would spend their days in conversation—ears and jaws strapped to the phones—attempting to recruit volunteers for charitable organizations.

The workers hired for this phone campaign were split into two groups. All workers received a welcome letter from the management of the campaign. The control group would not receive any information about the past failure in this letter (i.e. a low number of recruitments), but in the experimental group the shortcoming of the prior campaign was communicated. “It’s important to note the quality of the feedback communicated,” says Jeworrek. “The organizational failures were not on the part of the workers, it was management. We did not use individual framing in the message. ”

The results (2021), published in the Leadership Quarterly, found that performance in the failure groups was almost 20% greater than the control group. Performance was based on the number of calls—the quantity indicator—and the number of completed interviews—the quality indicator. And to sweeten the pot, the experimental group spent additional unpaid time writing down ideas and contributing feedback about how to improve the recruitment process.

Organizational Response to Failure

The organization is a “container” that holds the potential of a company. Leader’s responses to failure are a defining feature of organizational growth. However, communication is not fixed at a person-to-person scale. Ute Franzen-Waschke, a Conversational Intelligence Leader that specializes in corporate communication and organizational culture, wrote,

“At the organizational level, often what is communicated is not even coming from those that are communicating the message. The content can come from various sources, such as leaders communicating a change initiative, or departments communicating news to their workforce.” Therefore the importance of how failure is communicated, as Jeworrek wrote, “speaks even more in favor of increasing transparency in the leader-follower communication.”

So What’s The Good News About Bad News?

It might not negatively impact worker performance; in fact it can be a strong motivator. And in the case of the phone campaign, it increased the quality of the worker’s conversations! Organizational anthropologist, the late Judith E. Glaser, created the conversational intelligence methodology to improve corporate communication at the individual, team, and organizational levels. Her 35+ years of research in Fortune 500 companies found that organizational transparency helps team members see the bigger picture. That includes the good and the bad news. Failure is an opportunity for growth. As the famed business magnate Henry Ford once said, “The only real mistake is the one from which we learn nothing.”