When you’re the boss, who gives you reviews? by Fortune Editors @FortuneMagazine December 22, 2010, 3:01 PM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons Asking for feedback when you’re the boss is a fraught enterprise, but it’s an essential one in today’s business world. Here are a few ways to make the process a smooth, helpful one. By Daniel Debow, contributor A chief executive at a fast growing tech start-up recently approached executive coach Dave Kashen with an all-too common problem. The CEO frequently reached out to his executive team for feedback, but whenever he sought their opinions, his subordinates seemed to shut down and withdraw. “It turned out that without even realizing it, my client was undermining the feedback his direct reports were providing,” says Kashen. “He thought he was just adding value to their ideas with his own. But every time he jumped on one of their ideas, he was having exactly the opposite effect.” Every interaction between manager and employee has the potential for disaster — especially when the boss is the one looking for feedback. And the higher up you go in a company, the tougher it is to get honest opinions about your effectiveness as a leader. “Leaders send out subtle signals that encourage subordinates to mute their criticisms and exaggerate their praise,” says Marshall Goldsmith, a pioneer in the field of executive coaching who has worked with more than 100 CEOs of major corporations. On the flip side, CEOs often find that their suggestions take on a far greater magnitude than what they intended. “It’s called CEO amplification,” says Stephen Miles, a vice chairman at Heidrick & Struggles who has coached chief executives of many large global corporations, including Nokia’s NOK Stephen Elop and BHP Billiton’s bhp Marius Kloppers. “Employees tend to exaggerate the importance of anything the CEO says.” Yet in today’s rapidly evolving, connected company, leaders need to engage and involve the people around them to succeed. “The traditional hierarchical model of leadership doesn’t work anymore,” says Goldsmith. “Tasks have grown too complex, and information too widely distributed, for a CEO to solve every problem on his own. The effective leader of today needs to consistently ask for feedback.” So what’s a 21st century corporate chief to do? The first step is to create an environment where employees feel it’s safe to be honest and open. “One of the reasons American auto makers ran into trouble is that their employees were afraid to speak up during product launches when things were going wrong,” says John Baldoni, a Michigan based leadership development consultant and author of Lead Your Boss: The Subtle Art of Managing Up. Baldoni says one of the keys to the recent success of Ford F CEO Alan Mullally is that he made it safe for his employees to raise their hands. One important way to get there is to disengage the feedback process from that uncomfortable and largely useless annual ritual: the performance review. Dan Pink, the author of Drive, The Surprising Truth About What Motivates Us, calls performance reviews, “the West’s form of kabuki theatre — highly stylized rituals in which people recite predictable lines in a formulaic way.” This is hardly the place to expect genuine and useful feedback. If you have to do them, “performance reviews should be formal, and reserved solely for discussions about compensation,” says Baldoni, “Whereas feedback should be ongoing and conversational.” So, de-emphasize the review forms and focus on the frequent bits of feedback that actually promote learning. The more you do it, the easier it becomes. Another effective strategy for a CEO to ensure honest feedback is to set up an easy mechanism to receive it anonymously. Goldsmith conducts interviews with the executive team around his CEO clients, and then collates it and delivers the results. And there are several web-based tools that provide similar services. “You are never going to get any real information by asking for public, personal feedback,” says Goldsmith. A CEO who signals their belief in the importance of open, honest feedback will create a cascade effect — a feedback fountain that flows down throughout the organization. The simple act of asking — and making it safe to respond honestly — will change the behavior of your team. “If a CEO is willing and able to separate ideas from the people delivering them, it can be the best thing in the world. You get creative tension without social conflict,” says Heidrick & Struggles’ Stephen Miles. Indeed, a recent research study of leadership development programs at eight major corporations, including American Express AXP and GE ge , conducted by Goldsmith and his colleague Howard Morgan concluded that “leaders who discussed their own improvement priorities with their co-workers, and then regularly followed up, showed striking improvement” in their ability to translate their priorities from senior management down through the corporation. Meanwhile, “leaders who did not have ongoing dialogue with colleagues showed improvement that barely exceeded random chance.” In other words, it’s not enough just to get feedback. Like working out, if you want to get in shape as a leader, you have to do something about it. The vice chairman and CEO of India’s HCL Technologies, Vineet Nayar, has been universally praised for creating an employee-centric corporate culture. Nayar’s HCL Technologies was recently named the best employer in India by human resources firm Hewitt Associates. “My belief is that I cannot motivate anybody,” Nayar recently wrote on his CEO blog. “That is because I believe everybody has to motivate themselves. What I can do is to create an environment that will encourage this… for if management is accountable to employees, it automatically creates a culture conducive to self-motivated employees.” Daniel Debow is co-CEO of Rypple, a social software company that lets people set priorities, share continuous feedback and coach each other at work.