The billionaire who built the world’s largest crypto exchange likes to publicly call out his employees’ mistakes
Changpeng Zhao, CEO of the world’s largest crypto exchange Binance, has a piece of advice for managers: Give feedback “whenever and wherever the thought occurs.”
For him, that often means with many spectators.
“I actually prefer to give feedback in large groups so that other people can also learn and I don’t have to repeat myself many times,” Zhao wrote in a blog post last week. “Many people told me that they were shocked the first few times when they received such feedback, but they eventually got used to it.”
The blog post in which the billionaire, who goes by CZ, revealed his leadership style was part of a multi-thousand-word book unpacking Binance’s principles. Another management swears by: little or no positive feedback.
Zhao is not the only crypto boss to implement unconventional management strategies. Coinbase CEO Brian Armstrong once responded to an employee petition calling for three executives at the company to be ousted by saying, “Quit and find a company to work for that you believe in.” And then there’s Kraken’s former CEO Jesse Powell, who stepped down last month. A few months before he left, the company released a nearly 4,000-word document about its corporate culture — which, for once, banned employees from calling speech “racist.”
These examples show how managers in the deregulated financial space tend to adopt many of the “direct” old-school management techniques from the world of regulated finance.
“Giving feedback in group settings allows teams to coordinate more quickly and avoid repeated messages,” Zhao said Fortune. “It’s about getting on the same page and being constructive, not calling people out. Every organization operates differently, and transparency and efficiency are super important at Binance.”
Zhao said he learned leadership from taking away No rules Rulesa book written by Netflix CEO Reed Hastings about the company’s culture, and decided to implement it because he wants to build a “sincere feedback culture” at Binance.
“I feel like 99% of people don’t give enough feedback to others,” Zhao wrote. “When we work remotely, we don’t get body language feedback in physical meetings. We have to overcompensate for this by giving direct and honest feedback.”
Leadership experts generally preach a more sensitive style.
Dr. Gleb Tsipursky, CEO of the future employment consulting company Disaster Avoidance Experts, told Fortune that giving feedback to individual employees in large groups shows a lack of empathy and undermines employees’ psychological safety.
“In a large group, the vast majority of employees will be reluctant to share their side of the story and get to the root of the problem,” he said. “Zhao’s shocking criticism creates a Band-Aid that causes short-term compliance but fails to cure the underlying problems.”
In addition, he said, it encourages a “shoot-the-messenger effect” in that poor performance may not be brought to the attention of a CEO for fear of criticism from large groups. This dynamic will, in turn, allow problems to be raised rather than being raised.
Rebecca Starr, an area president for Gallagher’s human resources consulting practice, said Fortune this risk comes with giving feedback to an individual employee in a group context.
“If all employee feedback is only given in group settings, the manager must also realize that their audience expands to everyone in the room; and the other employees who do not receive direct feedback may now hesitate to try something new or take a risk, realizing that their actions will be shared publicly for all their teammates to hear,” she said.
Alissa Schepisi, executive vice president of employee experience at Edelman, a global communications firm, said Fortune that the key to giving feedback is to do it in a way that allows people to receive it and inspires them to act on it – which usually requires a high level of trust and psychological safety between giver and receiver. So if trust is high in a group setting, this feedback can be useful in allowing others to learn and create a sense of accountability – but the same cannot be said if trust is low.
“If psychological safety or trust among the group is low, the recipient of the feedback may feel attacked or embarrassed,” she said. “These negative emotions make it difficult for positive change to take hold and can lead to a culture that is risk-averse or fearful.”
Starr echoed Shepisi, saying there’s no one way to deliver feedback — it doesn’t always have to be “praise in public, scold in private,” she said. But that doesn’t necessarily mean that group settings are the way to go.
“Knowing how an employee might react to the feedback can determine how a manager chooses to deliver the feedback,” she said. Some employees may not mind getting feedback in front of others, but some may actually need a one-on-one setting to listen and process the feedback, Starr said.
“[If] negative feedback is given in a publicly shaming way, employees may not feel able to contribute to anything other than the status quo of getting the job done, she added.
This story was originally featured on Fortune.com
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