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How CEOs can break bad news

  • Dan Ariely

| Sat, October 15 2011 | 11:33 am

A few months ago an ex-student of mine, who was working for a big software company, asked me to come and spend some time with her and her team. My student, together with the large team, had worked very hard for two years on an innovation that they believed was the best new idea in the “computer world”. They worked very hard and were full of hope. But before I arrived at their offices, the CEO had looked at the project and cancelled it.

So, I was sitting with some highly creative people who were completely deflated. I asked them, “How many of you show up to work later than you did before the project was shutdown? ” Everybody raised their hand. I next asked, “And how many of you go home early?” All hands went up. Lastly, I asked them, “How many of you feel that you are now more likely to fudge your expenses a bit?” In this case, no one answered. Instead, they smiled a little.

Now, it’s possible the project was really not that good, or that it did not fit with the direction of the company, which would mean that cancelling it was the correct decision. But, even if this were the case, we can ask whether there are different ways to cancel projects, and whether some of the approaches to cancelling projects can sugar-coat the blow in a way that would keep team members excited and interested in their work. So I posed this question to the high-tech team and they came up with a few interesting suggestions:

1: The CEO could have asked them to present the project to the entire company. The presentation would have included the process that the team followed and the final product specifications. This would have allowed everyone at the company to understand and (hopefully) appreciate the hard work that they had done, which would have given the team some recognition and appreciation.

2: The steps that the team took in the process of development could have been collated, and then used to develop a template that could help other teams as they developed their new products. In this way, they would not have felt that their work had been wasted.

3: The CEO could have gone further and allowed the team to build a few working prototypes in order to let them experiment with the technology in more depth (which would have also provided a more accurate idea of the usefulness of the technology).

4: The team could have been asked to redirect efforts towards finding ways to introduce parts of their new technology into other products the company was working on. This way the product would not die, and parts of its DNA would keep on living. These were just a few of the team’s ideas, and of course there are many possible approaches that management could have taken to boost their morale — or at least not to demolish it.

Naturally, most of these morale-boosters would have required some investment of time and money. The CEO most probably thought of his employees as more like rats in a maze than people who are driven by the meaning of their actions – and because of that, he did not see any need to take their motivation into account. But if he had understood the importance of meaning in the workplace, he might have taken some of these steps, spent some money in the process, and ended up with more motivated employees.

I later heard that the main people in that group left the company. Maybe this is the kind of expensive lesson that the CEO needed, but most likely he will tell himself why he was right and they were all petty and wrong.

At Duke University, when we have run experiments on feelings of “meaning” at work , we have found that this particular CEO is not alone in his approach, although he does seem a bit more extreme than most other people.

The question for managers and CEOs should be: “How can we enhance the feeling of meaning in those around us?” And if not enhance those feelings, at the very least not crush them.

Dan Ariely is a professor at Duke University’s Fuqua School of Business and the best-selling author of Predictably Irrational and The Upside of Irrationality.


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