There’s an essential management rubric that I go overboard to impress upon newbie supervisors: the No-Surprise Rule.

It’s simple: Don’t let your boss be caught flat-footed by something you should have let him know about. Unfortunately, sometimes the simplest concepts are also the easiest to overlook. I can’t tell you how many managers—myself included—have failed to heed it, occasionally with disastrous consequences.

Today’s object lesson comes from Merrill Lynch CEO Stan O’Neal. He’s getting bounced by his board of directors, essentially because he forgot the rule. As The Wall Street Journal reported, “The 56-year-old CEO was negotiating the terms of his forced departure [Sunday] afternoon in the wake of a multibillion-dollar write-off he announced last week.”

O’Neal seems to have been a difficult person to work for. That’s not uncommon for CEOs, but probably even more the case with large, public companies. “Some former colleagues say O’Neal’s talent and steely drive came with a tragic flaw,” the Journal reported.

“He didn’t much engage in debate, kept his own counsel and had little use for the kind of strong-willed subordinates who might have helped him steer clear of the subprime troubles that brought him down.”

But that’s not what ultimately brought him down. Merrill Lynch announced last week that it would write down $8.4 billion in the third quarter, “$7.9 billion of that connected to its revaluation of mortgage-related assets—the largest loss in Wall Street memory.” The problem is that O’Neal had originally told the Merrill Lynch board that the loss would only be $4.5 billion.

“What bothered the board was that the size of the loss went up at an alarming rate,” a source told the Journal.

“If anything,” the Journal reported, “O’Neal should have ‘over communicated’ with his board about Merrill’s problems, this person said, but O’Neal didn’t walk the board through the reasons for the write-off’s increase as much he should have.” O’Neal also made some other missteps, but it was letting his board be surprised by things like this that did him in.

I’m always surprised when I see veteran managers and executives forget this essential element of corporate survival. I remember starting a job and telling my new boss that I would communicate to her everything I thought she might be remotely interested in until I had a better sense of what she wanted to know. I thought it was better to overdo it at the start, and I was right. We ended up having a great relationship, largely on the strength of our personal communications.

Still, I’ve forgotten the rule at times—always to my regret. It’s never pretty when you do slip up, especially when the boss wonders why she’s the last one to find out something you should have made it a point to tell her. It’s tough to explain away.
Generally, you can’t.

If you’re lucky, you learn from the faux pas and live to manage another day. Stan O’Neal won’t get that chance—not at Merrill Lynch, anyway. But then, he’ll probably get a nice big severance package to ease the sting.