Tell Me the Bad News Now

Yesterday, in a New York Times interview, Lawrence W. Kellner, Chairman and CEO of Continental Airlines, said:

“People have a tendency to deliver good news. I mean if somebody unscheduled pops up to my office, the odds are they’ve got a piece of good news and they’re eager to share it. But when something is going wrong, they have to feel they can flag it as quickly as when it’s going right, so that you can shift the organization and try to solve the problem. It’s a leadership structure that says, “Look, I don’t care how bad the situation is — the sooner you catch it, the better.” But if you’ve known about it for months and have been hoping against hope that all your other contingencies would solve the problem and you’ve burned up all our opportunities to solve it, I’m going to be a whole lot more unhappy.”
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Corner Office, “Bad News or Good, Tell Me Now,” New York Times, September 27, 2009

Warren would certainly agree. In recalling the 1990-1991 Salomon scandal, in a July 23, 2008 memo he told Berkshire Hathaway managers:

“…..let me know promptly if there’s any significant bad news. I can handle bad news but I don’t like to deal with it after it has festered for awhile. A reluctance to face up immediately to bad news is what turned a problem at Salomon from one that could have easily been disposed of into one that almost caused the demise of a firm with 8,000 employees.”
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