21 October 2019

The capacity to uphold ethics, have integrity and to remain independent is enshrined in the role of the lawyer. Sometimes the lawyer is the teller of uncomfortable truths; truths that may ultimately force an organisation to re-evaluate its whole direction.

Sometimes these qualities can be viewed as detrimental or at odds with being a business partner. As General Counsel look to ascend the ladder of the C-suite, do they need to leave these fundamental qualities of being a lawyer behind, or does how we evaluate successful leadership need to encompass more of these qualities? 

Companies have to be much more focused on ethics and compliance than ever before. And for many it’s not an attitude of “oh we have to tick this box,” but wanting to work for good and endeavour to have an ethical thread running through everything they do. 

A key aspect in trying to create a culture that’s ethical and authentic is leadership that’s ethical, transparent and able to communicate the message effectively. Could this then be a chance for lawyers to fully embrace and bring a key skill as lawyers to leadership in organisations?

What is radical honesty? 

There are varying interpretations of radical honesty, but for the purposes of this article we are focusing on the approach taken by Patty McCord and outlined in her 2018 book Powerful. McCord was the former Chief Talent Officer at Netflix and oversaw much of the company’s growth and its move from a DVD mail rental service to the streaming and content creation giant it is today.

According to McCord, one of the key aspects that helped define the Netflix culture was its honesty, and this was a quality defined and driven by leadership. The notion of trust and transparency in the leadership and the leadership’s trust in the employees is inextricably intertwined with building a successful culture of honesty.

Failure to create a culture of radical honesty in leadership can be down to two issues. Firstly there’s the notion of leadership as a sort of elite cabal; the inner workings of which cannot be contemplated or understood by the unwashed masses. Second is the impulse to be nice; of not wanting to be honest about criticism, even constructive criticism, for fear of causing offence.

Leading in the radical honesty model means understanding that sometimes uncomfortable truths have to be told. 

The mystique of leadership

In traditional thinking, leadership and the C-suite is generally surrounded by mystique and often separated – literally and figuratively – from the workforce. In Start with Why, Simon Sinek tells the story of Gordon Bethune, who took over as CEO of Continental Airlines at one of the most difficult times in the company’s history: it had filed twice for Chapter 11 bankruptcy in the previous ten years, it was losing money and was ranked last in almost every measurable performance category. The problem Bethune felt was that it was “a crummy place to work.”1 And that was a leadership problem. Part of the problem was a lack of transparency, which was physically noticeable in the way leadership was given its own executive floor, only accessible to a chosen few. 

When taking over at Continental, Bethune set about abolishing the executive floor, which had previously been a locked sanctuary only accessible to those with the title of vice president or above, key cards were required to access the floor and there were security cameras everywhere. This showed a lack of trust and a lack of honesty and transparency by leadership. Getting rid of the security on the 20th floor and having an open-door policy was fundamental to demonstrating this. As quoted by Sinek, Bethune said:

“You don’t lie to your doctor and you can’t lie to your own employees.”2

Creating the culture for candour 

What becomes clear when thinking about the type of leadership needed for the type of transparency demonstrated by Gordon Bethune at Continental is the need to build a culture where leadership can create reciprocal freedoms for the rest of the organisation – the freedom to have your opinion heard and the freedom to try new out ideas.

Patty McCord describes the culture developed at Netflix as being a mix of freedom, but with discipline surrounding it. For McCord, successful leadership at Netflix was about creating the interplay between a sense of freedom, which allowed for different thinking, but also providing guidance and the means to give people the confidence to think differently. The inspiration for McCord writing her book was partly the popular response to Netflix’s culture deck, an unadorned PowerPoint which quickly achieved mythical status on the web – not something McCord ever expected, as she admitted in an article in Harvard Business Review in 2014: “Sheryl Sandberg has called it one of the most important documents ever to come out of Silicon Valley. It’s been viewed more than 5 million times on the web. But when Reed Hastings and I (along with some colleagues) wrote a PowerPoint deck explaining how we shaped the culture and motivated performance at Netflix, where Hastings is CEO and I was chief talent officer from 1998 to 2012, we had no idea it would go viral.”3

Outlined in the deck were the key principles of Netflix’s culture and approach to talent management. What defined it could be summarized as “don’t add but subtract.” Much of that approach was the result of not favouring a type of leadership that could have been said to have lost its way, particularly regarding transparency and communication. Lack of transparency and communication is often masked by rules and schemes, which aim to foster employee engagement but can end up doing anything but.

“Most companies are clinging to the established command-and-control system of top-down decision-making but trying to jazz it up by fostering ‘employee engagement’ and by ‘empowering’ people.”4

For McCord, if employees were truly engaged and enjoying what they did and being empowered to do it in the right way, then the need for schemes to foster engagement becomes null and void.

But, in a legal department context, it could be argued that a valuable part of a lawyer’s remit is to create a culture which can ensure there’s the freedom to speak up when things are not right.

Rachel Walker is the General Counsel for Gazeley, a leading developer, investor, owner and manager of logistics facilities and technology-led solutions in Europe. For Rachel, it’s the leadership’s attitude to compliance which is defining for all leaders not just legal leaders:

“In some other organisations, the perceived tension between legal and the rest of the C-suite can be focussed around approach to compliance. We’re different – commitment to compliance is something that is upheld in all areas of the senior leadership team, although it’s my job to ensure that we have a robust programme in place and that our colleagues are trained properly."

"In today’s social media-driven world, reputation can be shattered in an instant. So I really don’t see us a being a company where on the one hand the deal teams want to take certain risks and legal says ‘No!’ – we are so much more aligned than that,” she said.

For another leading General Counsel who we spoke to, it is balancing this need for candour with pragmatism that has been key to being seen as a firm leader, not just as a lawyer: “Lawyers at all levels need to feel empowered to tell business colleagues their thinking. At the same time, that requires nuance in terms of how things are presented, because if you are going to be part of the strategic conversation you can’t simply be a naysayer; your voice has to be pragmatic and your advice on risk has to be understood not as fear-based but as coming from a deep concern for the long-term well-being of the firm.”

This doesn’t mean that it’s all plain sailing, but for Rachel Walker, creating this shared accountability means that leaders are co-creating a culture where the right discussions are taking place: “To the extent there is any tension, I welcome it. Tension leads to decisions where you have considered every angle – therefore good decisions,” she said.

Is good leadership really just about creating the conditions for people to flourish? And in good legal leadership, not just managing the legal department per se, does it actually need to be a leader that helps to find ways to empower a culture to become compliant naturally.

Can this be done? McCord agrees that the move from aspiration to reality can be challenging; a key aspect of the Netflix culture deck was recognising this inherent tension in navigating aspiration and reality: “It’s easy to write admirable values; it’s harder to live them. In describing courage we say, ‘you question actions inconsistent with our values.’ We want everyone to help each other live the values and hold each other responsible for being role models. It is a continuous aspirational stretch.”5

It is almost a perfect description of the evolving role of the General Counsel and the legal department to have the ethical courage to question actions inconsistent with values – both those of the company and the wider ethical values of society. Increasingly we see those coming together as companies understand the economic consequences of being held accountable for their actions. 

Rachel Walker certainly agrees: “This 100% resonates with me. As General Counsel I am often asked to talk about Gazeley’s corporate culture and I absolutely see it as one of my responsibilities to lead with integrity and to set the tone for the rest of the business.”

But Rachel disagrees with McCord’s desire to abandon most policies. Netflix’s abandonment of performance evaluations, holidays and expenses policies gained a lot of publicity. Rachel feels that having a framework of some rules is helpful, if only to give clarity, particularly in a global context: “Where I think Patty McCord and I are perhaps not fully aligned is on how you achieve this discipline. Within Gazeley we do see a framework as being necessary in order to provide clarity to colleagues as to expectations and ways of working. But we allow flexibility within this framework. This ensures that colleagues operating across multiple jurisdictions have clarity, don’t waste time wondering what they should and shouldn’t be doing, but have enough flexibility within that framework to remain nimble. We’ve worked really hard over the last few years to ensure our framework achieves the right balance between, on the one hand, allowing the teams to operate with dynamism and urgency on the ground, but on the other, managing and minimising risk.” 

Leadership and transparency

The notion of transparency in leadership links to ideas of a sense of shared purpose in organisations. If key decisions are communicated and the decisions behind them are also shared with the workforce then, generally, there’s greater cohesion around seeing the necessity for those decisions. And that can produce greater alignment in teams.

The view from the top needs to be shared more comprehensively; as McCord writes in Powerful:

“People need to see the view from the C-suite in order to feel truly connected to the problem-solving that must be done at all levels and in all teams, so that the company is spotting issues and opportunities in every corner.”6

Part of this is that if employees don’t understand the issues and the drivers for the business, then acting in a way which will propel growth in the right direction is much more hit and miss: “The irony is that companies have invested so much in training programs of all sorts and spent so much time and effort to incentivize and measure performance, but they’ve failed to actually explain to all of their employees how their business runs,” McCord adds.

In many significant legal and compliance failures in companies, it is not always bad actions but ignorant action which can be the cause. 

Last year we interviewed Martin Mason, Managing Director of luxury shoe brand Trickers. Martin was the first non-family member Managing Director and took over at time of change when hard business decisions had to be made. What he felt was part of the success in navigating this time of change was transparency and communication across the organisation: “The key is really just communicating. Once I had the brand book done, I gave everyone a copy, including the people on the factory floor. I then broke down my business plan for three to five years into chunks and delivered those messages via a monthly meeting. I had weekly meetings with every factory supervisor covering the broad areas of change but not going into the financials. They appreciated being told. I did talk about the challenges too, as there’s no point disguising it’s going to be a challenging journey, but even the challenges can be spun in positive ways.”7

It’s often going to be those dealing with problems at the coal face who can come up with more pragmatic or creative solutions than leaders themselves. Here communication is central. 

Another Chief Legal Officer agrees and feels that the key is balance: “On one hand if leaders’ decisions are assumed to be right and are unquestioned simply because they’re in leadership positions; that’s a problem. The other extreme of too much radical honestly is equally problematic as a complete lack of hierarchy and disrespect for authority is a recipe for paralysis, chaos and the inability to agree a strategic direction. The key is a healthy balance where there’s respect for leadership roles but a culture of substantive and valued input in discussion and decision-making.”

Ideally, balance is a decision-making process between leaders and their teams that is truly communicative in its structure. One General Counsel feels that’s where the equilibrium lies: “Whilst you need to have respect for leadership and power structure of the organisation and the role of people empowered while in those roles to make these decisions; the nature of decision-making is complex and should be based on communication,” he said. 

He feels that it’s up to the leader to see the benefit of involving others in the process of leadership. It is recognising that being in the role of leader does not necessarily lead to the best decision-making in and of itself; rather it needs to be an interactive process. “In my experience if you involve people who are good in your team and people whose opinion you value, you will always end up with a much better decision,” he added.

Communicating the big picture 

This clearly shows that one of the most significant skills that leaders need to bring into play is communication. But they need to remember that communication is a two-way street and includes listening not just speaking. Listening is not just not speaking when the other person does, it is actively engaging with them and their truth and where their words come from. Richard Mullender is an expert at listening, having honed his skills as Scotland Yard’s chief hostage negotiator for many years.

Mullender believes we need to listen at three different levels. First – and the level too many people stop at – is the need to communicate our own agenda; here listening becomes more a process of taking a pause in your own story because that’s the right thing to do. Secondly is hearing the story from the other person and understanding their agenda and their needs. Finally, the third level is getting to the core of the other person’s values and beliefs that make them act in the way they do.8

This may indeed be a key skill that lawyers already have and that can assist them if they want to move to the C-suite. As Alex Dimitrief, former General Counsel at GE and CEO of GE Global Growth, said: “We’re taught at law school to evaluate the strengths and weaknesses of a particular position, but also to respect and hear out the other side. I’ve encountered a lot of leaders who don’t want to hear bad news or who don’t want to hear contrary opinions. Therefore, I think your training as a lawyer to solicit advice and hear out the other side; to make sure that you aren’t missing some weaknesses in your own position, really helps.” 

Written by Dr Catherine McGregor for DLA Piper WIN.

Footnotes

[1] Simon Sinek Start With Why (2009) p.83

[2] Simon Sinek Start With Why (2009) p.85

[3] How Netflix Reinvented HR

[4] Patty McCord Powerful (Kindle e-book published by Silicon Guild 2018) Introduction “A New Way of Working” Locatiom 109

[5] Netflix Culture

[6] Patty McCord Powerful (Kindle e-book published by Silicon Guild 2018) Chapter Two  “Every Single Employee Should Understand the Business”  Location 391

[7] Interview with author October 2018

[8] Richard Mullender, Communication Secrets of a Hostage Negotiator (Kindle e-Book Griffin Professional Business & Training Services 2012) The Three Levels of Listening location. 1257

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