If you're CEO of a business that has more than one employee, I have some unsettling news for you. There's a conversation going on in your company, and you're not part of it. What's more, the conversation is about you. Like it or not, your employees are analyzing your decisions, your actions, and your statements. They're speculating about your motives. And you have no idea what they're saying. From time to time, you probably tell your employees what you think of them, but they have no obligation--and perhaps no opportunity--to tell you what they think of you, and so you operate in the dark unless you happen to get lucky. I got lucky recently.

Every year I speak at a conference in St. Louis called the Gathering of Games. It's for practitioners of open-book management and is hosted by my friend Jack Stack, the CEO of SRC Holdings. This past year, I decided that the attendees would be more interested in hearing from my employees than from me. At previous Gatherings, I had talked about the importance of putting employees first, and I'd described the various things we've done at my records storage company, CitiStorage, in our efforts to make it a great place to work and to reward employees for all they do to make the business successful. I figured that the attendees might be curious to find out how it looked from the employees' point of view. Had our programs made a difference? I certainly thought so. I believed there had been a fundamental change in the company's culture since we'd begun implementing them. (See "The One Thing You Can't Delegate," April 2006.) But did our employees agree?

My wife, Elaine, our vice president of human resources, agreed to organize a panel of three employees who had worked for us long enough to remember when our culture was not as warm and fuzzy as it is today. My only responsibility was to show up, listen, and keep my mouth shut until the very end. I had no idea what they planned to do. But as the conference drew closer, it occurred to me that my presence might create problems for the employees on the panel. Not that I thought they would fear retribution, but I was afraid that they might not feel free to be candid. So before the session was to begin, I took them aside and told them I was giving them complete amnesty. They could say whatever they wanted, and nothing would be held against them. We'd brought them to St. Louis, I explained, to give the attendees a different perspective. I told the panelists that I didn't want them to hold back.

In fact, the presentations they had prepared did not contain many surprises for me. All of the panelists recounted their experiences in the company, with emphasis on the programs that they had been involved with or that had touched them directly. Sherry James, who started in customer service and is now an accounting manager, discussed our tuition-refund program, whereby we cover the cost of any course an employee takes as long as she or he gets a grade of B or above. She said the program made a big impression on her 11-year-old son. When he saw that his mother was getting straight A's while working full-time and raising a family, he decided that he should be getting good grades, too.

Mike Harper explained the games we have that award bonuses based on the number of boxes put away. He also talked about our policy of promoting from within. He had started out doing special projects off-site and then transferred to the warehouse, which I was overseeing at the time. He said people had warned him about the perils of making such a move. "Man, you don't want to be around Stormin' Norman," they said. "He's the Terminator." Somehow Mike survived and is now our account services manager.

Then there was Bruce Howard, who had started in an off-site warehouse, left the company, and later returned. He talked about the introduction of the drug-testing program and how it had forced him to make a critical decision that had turned his life around. (See "Just Say Yes," November 2004.) Among other things, it had allowed him to move up and take on new responsibilities. Today he is our file operations manager.

Mike Harper had been warned when he joined the company: "Man, you don't want to be around Stormin' Norman. He's the Terminator."

What they said was often quite moving. But it was during the question-and-answer period that they really opened up, and I learned for the first time about the impact of some of the more controversial decisions we've made. Especially revealing were the answers to one question: When did they come to believe that the culture was really changing and that Elaine and I and the other top managers really meant what we said?

Sherry said that it was when we fired "Carlotta." You may remember my column about that ("Firing Carlotta," May 2005). In it, I told the story of a longtime employee--I called her Carlotta--who had violated our rule against hiring friends or family and then tried to cover it up by lying to her supervisor. We'd found out about it and had to decide what to do. After much agonizing, the senior managers had decided to let her go--a decision that I agreed with, although I'd said it was theirs to make.

After the column appeared, I got a ton of mail from readers who criticized both the rule and the decision. Even at Inc., some staff members said they would never look at me the same way. For Sherry, however, the decision had been a turning point. Like everyone else in the company, she knew we had a rule against hiring friends. She also knew that Carlotta had broken the rule and lied. Then again, Sherry said, Carlotta was known to be a favorite of management. Most people figured we'd just sweep the incident under the rug. So Sherry was taken aback when we let Carlotta go. She said it proved to her that we meant what we said about everybody living by the same rules, and it gave her faith in our fairness. To me, that was a revelation. I believed at the time that it was important as a matter of principle to stick with the rules, but I didn't realize just how closely employees were watching us and how much they were judging us on what we did.

Insisting that everyone follow the rules was also a factor for Bruce. He said that he knew we were serious when we fired another longtime employee--another favorite--because he'd flunked the marijuana test twice and then turned down an offer to keep his job open if he went for treatment and kicked his habit. Bruce had expected that we would find a way to keep the guy even though he'd broken the rule. Because we didn't, Bruce decided he had to take what we were saying seriously. That played a role in his decision to change his life and pass the test, another revelation to me.

But Mike had noted a change: "It's like a hurricane being downgraded to a tropical storm."

But what had the biggest impact on me was Mike Harper's answer to the question. He said that he knew we were serious--and that the culture was changing--when I changed my behavior. Not that I suddenly became a pussycat. "It was more like a hurricane being downgraded to a tropical storm," he said. Elaine tells me the real change was that I stopped bypassing the supervisors. Before, when I saw people shirking their duties or doing something wrong, I would take immediate action, reprimanding the employee directly and taking whatever actions I deemed appropriate. I've stopped doing that, or at least I've cut back drastically. I couldn't profess my support for the new culture and keep acting the way I always had. This was incredibly hard for me. After all, I couldn't change my personality. I couldn't stop myself from getting furious when I saw someone malingering or otherwise taking advantage of us. But I've learned to contain my anger long enough to find the offender's supervisor.

A few weeks ago, for example, I saw an employee playing solitaire on her computer. Now, the mayor of New York, Michael Bloomberg, has been known to fire a city employee on the spot when he finds one playing solitaire online, and there was a time when I would have done that, too. The truth is, I really wanted to confront her, but I managed to hold my tongue and go to her supervisor. I said, "Is that young lady on her lunch hour?" He said no. I said, "Well, I just caught her playing solitaire on her computer."

"What should I do about it?" he asked.

"I think you should send her home for the rest of day," I said, and he agreed. A few minutes later, he came back and said she claimed she hadn't been playing solitaire. I said, "Excuse me?" I walked out to where she was sitting. "I understand that you say you weren't playing solitaire a few minutes ago."

The people around us were now watching. "That's right," she said. "I was working."

"That's not true," I said. "I saw you. Don't call me a liar." She repeated that she was working, not playing solitaire. I walked back to the office. "That's it," I told her supervisor. "It's one thing to play solitaire. It's another thing to lie about it. She has to go." He went out and fired her. Based on what I learned in St. Louis, I have reason to hope that other employees got the message: Whatever you may have done, you'll only make things worse by lying about it. Then again, I suppose some of them would say that, while Norman isn't stormin' as much as he used to, he's still the Terminator.

In any case, I've decided that we need to introduce a new program at CitiStorage. We're going to try to come up with a mechanism for getting candid feedback from employees on a regular basis by holding "amnesty sessions," where they can speak their minds and comment on our actions without fear of consequences. I'll let you know how it goes.

Norm Brodsky (brodsky13@aol.com) is a veteran entrepreneur whose six businesses include a three-time Inc. 500 company. His co-author is editor-at-large Bo Burlingham.