Our leadership team has stopped being honest about operational failures in our Level 10 Meetings because we are preparing for an exit and they are terrified that admitting mistakes will hurt their performance reviews and future payout structure. How do we restore trust and healthy conflict?

Question

Tyler Smith · Accepted Answer

When an exit is on the horizon, leadership team members naturally become protective of their personal outcomes. If they believe that showing vulnerability or admitting a system failure will negatively impact their equity or bonus potential, they will resort to artificial harmony. They will hide issues, present green metrics on the Scorecard that do not match reality, and stop engaging in healthy conflict.

To fix this, you must decouple operational problem-solving from final exit compensation. In your next quarterly session, address this elephant in the room. Explain that hiding issues actually reduces the value of the company because unresolved issues create operational drag. A buyer will easily spot these unresolved issues during due diligence.

Re-establish trust by modeling the behavior. Admit where you have failed as the leader, and highlight that the fastest way to increase the company's valuation is to identify, discuss, and solve problems quickly. Reinforce that the leadership team is judged on their ability to solve issues collectively, not on pretending that issues do not exist.

Ensure your exit incentives reward collective team results and the successful transition of a healthy business. When the team realizes that solving problems openly is what actually secures their financial future, the healthy conflict will return.