Saying no to the boss

May 11, 2011: 11:37 AM ET

It's all too easy for companies to fall into a yes-man culture, but managers that encourage loyal opposition are best suited to avoid corporate disaster.

By Katherine Reynolds Lewis, contributor

FORTUNE -- Imagine going to your boss with news of a delayed project or cost overrun, and hearing "thank you" in response.

That's the rule at Menlo Innovations, a software company based in Ann Arbor, Mich., which trains project managers to smile and thank employees even when they're bearing bad news.

"My job is to say, 'Thank you for letting me know,' not 'I need you to work an extra 10 hours tonight,'" says Lisa Ho, 26, a Menlo project manager. "Sometimes it's hard to do because we have this deadline we're trying to meet. But I respect them for telling me and as long as we're very transparent… I can call the client."

In corporate America, many employees are afraid to report bad news because they're essentially saying no to the boss -- telling her that a business goal hasn't been met. But companies that foster a fear-free culture enjoy better decision-making, more ethical behavior and the ability to truly harness the collective brainpower of the workforce, according to Menlo CEO Rich Sheridan and other business leaders.

Encouraging employees to say no to the boss ensures that smart new ideas bubble to the top levels of an organization, Sheridan says. He sets such a high priority on healthy dissent that he's baked it into the corporate culture through training, procedures, regular communications to employees and a willingness to take risks based on staff suggestions. More

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