Nov 28, 2017 by Scott Garvey

Agree to disagree

I recall reading an analysis of the performance of CEOs of major corporations, which was published a few years ago. It was a study that looked at whether or not the compensation packages paid to leaders of the largest corporations in the United States had a direct correlation to the performance of the firms under their control. In other words, were these guys (and they actually were all guys) worth their mammoth paycheques?

The study reached some surprising conclusions. One of them was no, the amount CEOs were paid had little correlation to the company’s bottom line. Higher-paid executives did not necessarily produce more returns for shareholders.

Another unexpected conclusion from the study was that often the longer a CEO held his or her position the lower the firm’s profitability actually became. Why would that be? The study suggested one reason might account for it. That is, as CEOs settle into their positions, they eventually surround themselves with a like-minded executive team. The result of that was they eventually heard very few dissenting opinions. In reality, they soon assembled what turned out to be a group of “yes men”.

One rule seems to hold true in the world. No one, including us regular folk, bats 1,000 when it comes to making decisions. A few bad ones always seem to sneak in. But that study suggests if you live in world where no one ever expresses disagreement, the odds of making a bad decision get even higher.

A couple of weeks ago, Ray Dalio, CEO and number 26 on the Forbes list of most wealthy executives appeared on CNN’s Fareed Zakaria’s GPS Sunday morning news show. Dalio spoke about his recent book, “Principles: life and Work”, in which he discusses his management style.

Zakaria asked him on that show about his philosophy called radical transparency, which means people within his organization have to disagree clearly and publicly with others when they feel the need to.

“Do you take it to the point where people publicly look you in the eye and say you’re the boss, but you’re 100 percent wrong,” asked Zakaria.

“Yes. I need that,” said Dalio. “I do it because I need it. Besides my needing to hear things I need to, can you image being in the company and having to hold that inside yourself. You’re walking around thinking I did something stupid and I can’t speak up. You can’t build a culture that way.”

“In order to have independent thinkers around to get at the best ideas and have great collective decision making, you have to be able to have thoughtful disagreement. Shouldn’t disagreement be a source of curiosity? And if people are disagreeing, somebody must be wrong. How do you know that wrong person isn’t you? It raises the probability of making better decisions and raises the quality of the relationships.”

On your farm or in your business do you invite dissenting opinions? Do you invite any of your family members or employees to tell you why your idea or plan is wrong? You might not be wrong, but having to explain and justify your decision will help you clearly see why you are or aren’t.

Given that Dalio has a reported personal net worth of about U.S.$17 billion, doing exactly that has paid dividends for him. It certainly could for all the rest of us.

 

Scott

Scott Garvey

Scott Garvey


Grainews' machinery editor Scott Garvey follows trends and innovation in equipment technology, takes a look at new farm machinery offerings, tracks their performance and goes into the workshop to find better ways to keep them up and running.


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