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CEO Daily Brief – Dec. 23, 2010

CEOs Need In-House Critics Does every employee at your company always seem to agree with the CEO? That may be something a CEO hopes for. But in reality it can be a very bad environment for the business. CEOs need feedback from their employees for lots of reasons. Yet, it is often hard for the …

CEOs Need In-House Critics

Does every employee at your company always seem to agree with the CEO? That may be something a CEO hopes for. But in reality it can be a very bad environment for the business.

CEOs need feedback from their employees for lots of reasons. Yet, it is often hard for the chief executives to get honest comments from members of the team.

In addition, Daniel Debow, co-CEO of Rypple, says the higher “you go in a company, the tougher it is to get honest opinions about your effectiveness as a leader.”

Marshall Goldsmith says that CEOs and other top executives may often emit “subtle signals that encourage subordinates to mute their criticisms and exaggerate their praise.” To further compound the problem, suggestions from CEOs may become far more important than was expected when they made the statement, says Debow.

Here are some suggestions from Debow on how to promote honesty in the corporate culture:

  • Change to a culture in which it is OK for employees be honest.
  • Stop making the performance review the method to gain feedback.
  • See if there is a way for employees to give feedback anonymously.

In the end, the honest feedback given to CEOs will lead to a better team and a better company. It will also be easier to implement change if there is an open environment for employee feedback. For more about getting honest feedback from employees, as reported by Fortune, please click here.

 

Nominee for Federal Reserve Board Has Nobel Prize but Senate Delays Approving His Appointment

Winning a Nobel Prize in economics is not enough to please some members of the U.S. Senate who are looking for someone to serve on the Board of the Federal Reserve. The U.S. Senate has adjourned without taking a vote on the nomination of Peter Diamond.

President Barack Obama can either withdraw the nomination, and find someone else, or resubmit it, even though there will be fewer Democrats in the Senate starting in January after the November election.

Bloomberg News said Republican Senators challenged Diamond’s experience on monetary policy and argued that the nomination is prohibited because of a rule that no two Federal Reserve governors can reside in the same Federal Reserve region.

Obama said Diamond lives in the Chicago Fed district. However, Diamond has been a professor at the Massachusetts Institute of Technology since 1966, which is located in Cambridge. Diamond, however, said that he has taught regularly at Northwestern University, the University of Chicago and other colleges located in the Chicago Fed district.

Senator Christopher Dodd, the Connecticut Democrat who is outgoing chairman of the Banking Committee, said the law was not meant to be a residency requirement, and there were past examples, similar to Diamond’s, which met the test of the law.

Senator Richard Shelby, Republican from Alabama, said the committee that awards the Nobel prizes “does not determine who is qualified to serve” on the Fed Board. That is true.

But unless Diamond has committed such sins as being in favor of welfare states or planned economies (it appears he is not), having a brilliant economist on the Federal Reserve Board can only help the economy at this point. Have any of the Senators been able to pinpoint doctrinaire attitudes by Diamond that should prevent his appointment? Nothing has been reported. Is there a paper trail that would embarrass the Federal Reserve if Diamond were appointed? Then where is it? Given the current economy, the earlier someone can join the Fed Board the better.

For more about Diamond’s appointment, as reported by Bloomberg, please click here.  

 

Social Networking Biggest Business Development in 2010

Bill George, a professor at Harvard Business School, has concluded that social networking “is the most significant business development of 2010.”

Consider these facts:

  • Facebook has more than 600 million users.
  • Over 300 million users spend at least one hour a day using the Facebook site.
  • Approximately 200 million people regularly use Twitter.
  • 100 million people use LinkedIn.

In the corporate world, IBM's Sam Palmisano, PepsiCo's Indra Nooyi, Apple's Steve Jobs, Microsoft's Steve Ballmer, and Carlson's Marilyn Nelson each regularly use social networks.

“These social networks are a unique way of broadly communicating real-time messages to the audiences they want to reach,” George explains. “They can write a message anywhere, anytime, and share it with interested parties without any public relations meddling, speech writers, airplane travel, canned videos, or voicemail messages.”

Companies are changing as a result.

Middle-level managers “may become obsolete when they are no longer needed to convey messages up and down the organization,” George said.

In addition, he points out that: marketing budgets are being reassigned from media ads to companies distributing their own content; there is greater transparency; there is more equality among those taking part; and, perhaps most important, business leaders are regaining some of their lost credibility.

As the new year is set to begin, companies and other organizations who are not taking part in social media will be hurt in the already competitive business environment. If 2010 was a year that business discovered social media, 2011 will be the year that they use it to be profitable. CEOs to make sure they are part of the trend.

For more about social networking, from the Harvard Business Review, please click here.

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