· Features

The value of a truly open dialogue

We need informal, cultural norms that allow staff to challenge the accepted way of doing things.

The busiest shopping period of the year isn't all good news for retailers, because the six weeks leading up to Christmas are also the peak of the shoplifting season.This year the Centre for Retail Research predicts that theft will cost the industry around £450 million. So it's timely to reflect on one senior HR professional whose son was caught shoplifting.

Furious, she spelled out that her career rested on the foundations of integrity, decency, and ethical behaviour and her reputation would be tarnished if people discovered her son was a thief. The son explained he had stolen some pens he needed for his college work in order to save money for Christmas presents. "You stole pens?" she exploded. "I could have brought you some home from work if you'd asked."

That's the problem with integrity, decency and ethical behaviour. It depends on the cultural context. Take a pen from a shop, that's theft. Take a pen from work ... it seems in some organisations this is seen as acceptable.

In 1985 computer disc drive maker MiniScribe was on the brink of collapse. It was saved, however, by a cash injection from a firm of venture capitalists led by Quentin T Wiles. His ability to revive ailing organisations had earned him the title of Dr Fix-It and initially it looked as if he was working his magic on MiniScribe - its share price quintupled. But the success came at a price. A former MiniScribe executive told the Wall Street Journal that at Wiles's first meeting he ordered two managers to stand up and then fired them on the spot, saying: "That's to show everyone I'm in control."

Wiles's direction to his managers was equally forthright: "Hit your sales targets, or else ... " So that's what they did. And, in the process, questionable business practices became standard. Disc drives were tracked throughout the shipping process via serial numbers and managers realised that they often sat, uninspected, in customer warehouses for several weeks. So they decided to put bricks into the drive boxes and, after payment was received, to issue a recall on the affected serial numbers. The actual drive units would then be shipped as replacements using the monies already received to meet short-term financial obligations.

And the scam would probably have worked if MiniScribe hadn't made redundancies just before Christmas of 1989. Aggrieved employees blew the whistle.

Within days MiniScribe had filed for bankruptcy, and in 1994 Wiles was sentenced to two and a half years in prison. Throughout, he argued that he was carrying the can for rogue managers. So what really went wrong?

Wiles's autocratic style certainly created a culture in which hitting sales targets became the only measure of success. But it was the absence of good governance and strongly held values - coupled with a failure to question managers' actions - that ultimately led to state penitentiary.

The implications for HR are interesting. We need to ensure formal processes exist so that employees can voice concerns about malpractice. But there are much broader implications too. Because although it's important to have formal processes in place, there is also a huge benefit in having informal and cultural norms that add value to the organisation through positive disagreement - constructive challenges to the accepted ways of doing things.

And on an individual level it's interesting to reflect on the tone you set as a leader. Does your team feel their views are valued? Would they be comfortable disagreeing with your opinions?

The long-term value that can be derived from a truly open and constructive dialogue with staff may well be the greatest gift you can give your organisation this Christmas. Because it's one that will impact everything - from the number of pens in the stationery cupboard, to the health of the bottom line. Merry Christmas.

David Fairhurst is senior vice-president/chief people officer, McDonald's Restaurants Northern Europe.