Are Your Leaders Missing Vital Information Due to the MUM Effect?

A cautionary tale of what happens when bad news doesn’t reach the right ears

Published: Thursday, February 3, 2022 - 13:03

A tall, thin man in his late 50s approached me after my closing keynote for a manufacturing association conference on how leaders can avoid business disasters. He looked distraught and agitated. I hoped he wasn’t angry with something I said.

Mark introduced himself and asked me to tell him more about one of the dangerous judgment errors I’d discussed: cognitive bias, or the MUM effect (Minimizing Unpleasant Message). This bias causes those lower down in the organizational hierarchy to avoid passing bad news up the supervisor chain due to fears of the “shoot the messenger” problem—namely, that they’ll be blamed for the bad news. Given how often quality professionals must bring bad news to their leaders, it’s a big challenge.

Such mental blind spots stem from how our brains are wired, according to research in cognitive neuroscience and behavioral economics. Fortunately, recent research in these fields shows how you can use pragmatic strategies to address these judgment errors.

Turning back to my exchange with Mark, I started giving some examples from my consulting and coaching experience of how the MUM effect tripped up successful companies and leaders, and he grew increasingly and visibly agitated. He interrupted me and told me his story.

He served as the CEO of a successful manufacturing company for more than 12 years. Hit hard by the 2008 recession, the company struggled for the next couple of years. Still, he believed his leadership was bringing it through the rough patch.

Unexpectedly, the chair of the board of directors called him in for a meeting in March 2010 and asked him to explain accounting discrepancies he heard about. Mark had no idea what the chair was talking about and told him that. The chair told him that the board received several anonymous whistleblowing complaints about accounting issues that had cropped up during the previous year.

Upset and surprised, Mark promised to look into it. The chair asked him to coordinate on the matter with two members of the board who had accounting expertise.

What Mark and the other board members found shocked them. The CFO and others in the accounting department were covering up much more serious losses than Mark knew about, using the same kind of tricks deployed by Enron and WorldCom. Naturally, Mark fired the CFO and other accountants implicated in cooking the books.

Yet further investigation revealed that such accounting problems weren’t limited to the 2008 recession; smaller shenanigans had taken place even earlier. Moreover, the issues weren’t unique to the accounting department. The organization’s culture prevented bad news from going up the work hierarchy, whether in the accounting department, in customer service, or in operations. Safety problems in operations were swept under the rug, and customer service failures went unreported.

The board of directors took a more active hand in investigating the situation. The conclusion? The problem was Mark.

A CEO’s values powerfully shape company culture. Without realizing he was doing it, Mark encouraged complacent behaviors, rewarding those who reported good news and punishing those with bad news. Unfortunately, too many business leaders share that trait, often without recognizing it.

During his tenure, Mark grew more cut off from day-to-day operations. The people who surrounded him—those he rewarded with favor and promotions—were sycophants.

Hey, who doesn’t like people who praise them, right? Unfortunately, surrounding himself with such people kept him from recognizing reality. The organization’s performance suffered as a result, with good people who reported the truth leaving and the company failing to adjust to shifting market conditions.

The board ended up firing Mark. He’s a typical example of many CEOs who found themselves in a similar position. A four-year study, based on interviews of 1,087 board members from 286 varying organizations who forced out their chief executive officers, found that almost one-quarter of CEOs—23 percent—were fired for failing to recognize negative facts about the organization’s performance. Economic downswings often reveal such denialism and result in the removal of top leaders.

Mark’s firing put him in a grim state of mind. He had trouble acknowledging his failure. He couldn’t face it at first, suffering a depressive episode. He slept for most of the day, didn’t want to eat, stopped spending time with friends, and snapped at his wife and kids. He lost more than 40 pounds in five months. Finally, his family staged an intervention and pushed him to see a psychiatrist. He started taking medications and getting back on track with his life, including his career.

Mark went to the conference both to tap into his network to find a new job and to see if he could learn how to prevent what happened to him from repeating. My keynote really struck him hard, opening a wound that was still fresh.

He grew tearful as he shared how he really regretted not learning about the dangers of cognitive biases earlier in his career. He felt confident that what happened with the manufacturing company wouldn’t have occurred if he knew to watch out for such problems. Mark thanked me for opening his eyes about these dangers and committed to understanding how cognitive biases function in business contexts to make sure that he never again suffered from these mental blind spots in his work.

Within the next year, he succeeded in finding a new role as the COO of a manufacturing company somewhat smaller than the previous one he ran. Within a couple of years, he became CEO again. He’s still working there successfully. Mark made sure to spread knowledge about cognitive biases throughout the company. We still exchange emails sometimes when he has specific questions about biases.

Mark’s story stuck with me. Whenever I have a tough time dealing with disappointments and setbacks in my efforts to help business leaders avoid the dangerous judgment errors that lead to business disasters, I remember Mark. He helps remind me of how high-flying careers and good companies get tripped up by people doing what’s comfortable and following their gut. Better that they should suffer instead the temporary discomfort that can arise while making sound choices to avoid business disasters and truly protect the bottom line.

I hope you’ll recall Mark when you’re tempted to do what’s easy and comfortable. I also hope you’ll take a look at your own professional activities right now and think about where and how dangerous judgment errors might be tripping you and your team up. Doing so is critical for your career’s long-term success.

About The Author

Gleb Tsipursky

Dr. Gleb Tsipursky helps quality professionals make the wisest decisions on the future of work as the CEO of the boutique future-of-work consultancy Disaster Avoidance Experts. A proud Ukrainian American, he is the best-selling author of seven books, including Never Go With Your Gut: How Pioneering Leaders Make the Best Decisions and Avoid Business Disasters and Leading Hybrid and Remote Teams: A Manual on Benchmarking to Best Practices for Competitive Advantage. His cutting-edge thought leadership has been featured in more than 650 articles in prominent publications such as Harvard Business Review, Fortune, and USA Today. His expertise comes from more than 20 years of consulting for Fortune 500 companies from Aflac to Xerox and more than 15 years in academia as a cognitive scientist at the University of North Carolina-Chapel Hill and Ohio State. Contact him at Gleb[at]DisasterAvoidanceExperts[dot]com, Twitter@gleb_tsipursky, Instagram@dr_gleb_tsipursky, LinkedIn, and register for his Wise Decision Maker Course.