‘Delivering bad news’

In this ‘Actuaries Taking the Lead’ column, Scott Reeves writes about delivering bad news downstream, sideways and upstream.

I never miss an opportunity to quote from ‘The West Wing’; it’s a failing of mine.

But I figure with self-awareness comes a licence to continue. Plus, I believe you should hear what I consider to be important.

And so I present the following exchange involving the White House Communications Director (Toby), and a new member of staff (Will)…

TOBY:   In his defence, he caught the bad note. He came to me. He made it important.

WILL:    Excuse me? You said that I caught the bad note?

TOBY:   Yeah, that was planted there to see how well you’d do telling truth to power.

Our training is technical, as is the content of our work product. We are in many cases supported by legislated mandates and compelled to present the results of our work to management, for them to consider our conclusions in the determination of financial results and business strategy. Or perhaps there is a key project that could be at risk.

But we should accept that much of our work is the result of assumptions that are – by virtue of the control cycle – not fixed. In the pressure of delivering improved bottom-line, how does our technical view stand up to a CFO asking where our conclusions are flexible?

What of the scenario where our work identifies a significant shortfall in reserves, with the awful reality that to fully reserve will render the company insolvent?

How do we, in short, tell truth to power?

Let’s begin by looking at the various directions in which bad news may need to be communicated: downwards, sideways, and upwards. In increasing order of difficulty, we’ll step through each case.

Part one – Downstream…delivering bad news is ‘easy’

In this instance, I am referring to delivering bad news to your people reporting to you. This will typically be a matter of performance, and most often with respect to technical analysis. We might feel that reporting lines give us the authority and imperative to communicate such news to our subordinates.

While the authority does exist, you only have the authority to call a meeting to communicate. There is little real authority granting you the right to have the audience understand what you have said, and act accordingly.

The emphasis should be on clarity of message, delivered with empathy. Avoid the temptation to add many, many, words in the belief it will soften the message.

The key point I keep in mind is that it will be unfair to the person on the other side of the conversation if you later call a serious performance issue that has not been addressed, because the person didn’t receive the first message you felt you gave clearly. Give the opportunity to receive the message clearly, so that it can be actioned.

Part two – Sideways…delivering bad news to colleagues

Of course, it may not be the case that you, the reader, have people reporting to you. So let’s move to the second scenario, of telling bad news to colleagues.

Can you point out that a colleague’s approach, technical ability, or behaviour is not acceptable? Do you have the authority or the imperative?

I contend that while you may not have authority in the strict organisational sense, you do have the authority to consider and act upon something you believe is contrary to the good of the company. The imperative goes hand in hand with this; imagine you later explained why you chose not to act.

It can also be quite easy to open the discussion…simply by asking “may I give you some feedback on something I’ve noticed?” Your colleague can choose to start the discussion, or they may say “no thanks, I’m not interested”.

Returning to the matter of fairness, providing feedback to a colleague ahead of their manager doing so may be preferable.

Part three – Upstream…now it gets hard

No longer protected by the authority that comes with direct reports, we must now act with the imperative of integrity where an objective is at risk. This may be company results or it may be the potential failure of a key project.

In my experience, managers and leaders rarely have appetite for failure to achieve what is needed, particularly not where failure could have been averted.

Turning to the ‘how’, requires us to understand the context of upper management, and an ability to present your thoughts in that context.

It isn’t about saying ‘you need to listen to me, you are wrong’ but more a matter of ‘the objective you need to achieve is at risk, I can help’.

I offer the following simple points to assist:

  • Ask yourself if the issue is significant, in terms of impact and likelihood of occurring.
  • Ask yourself why you feel this should be heard. Is it because of the significance, or because you aren’t being listened to?
  • Discuss the issue with your manager, they will be a greater advocate if kept in the loop and may understand if there is a greater context. Your manager can also assist with how the communication can be undertaken.
  • If you will communicate the issue yourself, focus on the delivery. Written or oral, I find it best to deliver the message by emphasising a) the situation is…, b) the problem is…, and c) I propose the resolution as …
  • And finally, in delivering the message, less detail is better. Provide more detail if asked, but don’t lose the key messages by diving into the detail up front.

To balance out the seemingly simple situation I have painted, of a willing recipient of the news, we should also recognise the possibility that you will not be warmly received. In such a case, I would propose you again focus on the first three points above. You might consider discussing the matter with the Chief Risk Officer, but inform your manager of your intention.

But above all, I would suggest that ‘telling truth to power’ is about the value of the ‘truth’, rather than you personally. With that in mind, the truth needs to be aired.

In conclusion – It’s about leadership

Now that we are comfortable with the notion of communicating outside of formal authority we can extend this in all directions. The message has the imperative, which in turn creates the authority.

But don’t wait until you feel critical information should be shouted from the rooftops. Build credibility for raising issues and delivering solutions as you progress through your career. Focus on the significance of the issue, understand yourself and why you feel this is significant, and communicate clearly.

CPD: Actuaries Institute Members can claim two CPD points for every hour of reading articles on Actuaries Digital.

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