Because of the perpetuation of harassment law to the point where anything that might possibly offend someone is a sue-able offense, I can't see where frank conversations could lead to anything good, except for opening up more positions to meet diversity targets for an employer.
That aside, how can there be a frank and honest conversation when the likes of Shirley Sherrod is bellowing without any cause or proof that Andrew Breitbart wants to see all blacks back in slavery, where the President of the United States, without knowing the facts of a case of a run-in between a black colleague and the police automatically called racism on the white officer, where the former head of the U.S. Civil Rights Commission says that 'tainting the Tea Parties with charges of racism' is a good strategy for the Democrats.
The problem with frank conversations, is that someone is liable to get their feelings hurt if they get told something that they don't want to hear. I think that this is part-and-parcel of the victim/oppression mentality indoctrination that leads to things like the Duke Lacrosse brouhaha (see Durham in Wonderland for full coverage). Since the society as it has evolved under the liberals, wants to perpetuate victim mentality, if someone hears something they don't like, they can take it up the line and get the person reprimanded or even fired or they can take a person to court and will probably win a hefty lawsuit.
There has to be a level of trust between folks to have an honest conversation. There has to be an understanding that you might be told something that you don't want to hear, that you might say something that the other person doesn't want to hear, but that maybe at the end, as adults, you can work through to an understanding. At this point and with the rules in place, that trust cannot exist and so those conversations cannot happen 'around the water cooler'.