The Value of Reporting Bad News

06 Jul 2017 by Mike Tisdall
Guest Columnist: Craig Fisher of RSM Hayes Audit

 

"Funders want to see failure"

This may initially seem like a strange statement from people who on behalf of their organisations have invested considerable sums of money with an express desire to achieve successful outcomes. And even more so when you learn and appreciate the very detailed assessment and due diligence processes that these particular funders undertake before making any decision to fund a charitable initiative.

Hence the statement appeared worthy of pondering and some unpicking. The rationale behind my enlightened funder friends' statement is that theyare realists. By virtue of being human and part of the world we all get to "enjoy" a range of experiences every day. Any experience is intrinsically valuable, and especially negative ones. But only as long as one is aware of it, and then able to objectively analyse it to seek to understand what happened and why.  And then most importantly; to take some remedial, corrective, or different action in the future as a result.

 

 

We learn more from our mistakes than our successes

This is a life lesson well worth learning. We would all like a life where everything progressed smoothly and to plan. But sadly that is just not realistic. (Or at least not in the world I and all the organisations I deal with live in!). Mistakes or failures can often be painful, soul destroying experiences. As with most painful things it is generally human nature to do our utmost to avoid them. And this includes trying to not even think about them to avoid re-living the pain mentally. But such avoidance (and let's be honest; some of us have got very good through years of practice and experience at avoiding confronting painful things) is actually a lost opportunity. 

Our failures, mistakes and other challenges in life when things haven't gone to plan are actually a gift. If they haven't killed us and our organisations, then they represent a fantastic opportunity for learning. 

Modern start-ups and software development also provide useful learning with the concept of "fast failure". Recognition that you are likely to need to try lots of different things before you succeed. Hence, it is best you do this as quickly and inexpensively as possible. 

How does all this apply to organisational reporting?

I've also been thinking about the value of reporting bad news in the context of the requirement for service performance reporting. This new requirement for registered charities in New Zealand is already impacting Tier 3 & 4 charities and will be impacting Tier 1 & 2 in the not too distant future. The service performance reporting essentially requires them to report what they set out to achieve, and what they actually achieved. 

When you consider that this reporting is intended to, and I believe will, become a key communication vehicle to stakeholders, there is a natural tendency to want to present one's organisation and its experiences in the best possible light. After all, who doesn’t like to get dressed up when they go out in public.

But have you ever read what you were expecting to be an informational report, whether it be from a corporate or a charitable organisation, that just read like a marketing or promotional tool? I'm sure you have and I am equally sure that your reaction to it was fairly similar to most people - our natural scepticism tends to kick in, and we often quickly discount the truth, or the value of the information. 

For this reason one of the qualitative characteristic requirements for service performance reporting is "faithful representation".  This is attained when information is complete, neutral, and free from material error. Neutrality is the absence of bias. Hence for service performance information to be neutral it needs to report on both favourable and unfavourable aspects of the entity's service performance in an unbiased manner. 

So back to my enlightened funder friends; they are realists and hence they want to see the real story. They will not "mark organisations down" just because they show some bad news as well as the good - as long as it is clear that the organisation has got value from their negative lesson and hopefully can improve their future experiences as a result. 

So don't be afraid of bad news. There is nothing wrong with it as long as it can be explained and contextualised, and the organisation can show what it has learned and hopefully will do differently as a result in future. 

Interesting resources

If you want to explore this topic further, the following link from a coffee chat with a Be Accessible team member and founding member of the Fail Club may assist you in further peeling the onion of failure: 
https://www.admittingfailure.org 

 

Learn more about Craig Fisher here.
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