Transparency can boost employee satisfaction, as well as customer retention. In fact, 31% of employees feel that more transparency would help them understand their employers’ goals better, and 23% said it would motivate them more.
But with trust in leadership faltering and stakeholders eager for all the details they can get, it’s important to ask: How much transparency is too much? At what point does a company regret telling its team every detail? At what point does utter transparency with consumers backfire?
Here are a few considerations to keep in mind as you think through your policies on transparency:
Understanding Transparency
Before discussing the benefits and limitations of radical transparency, it’s important to be clear about something: Transparency doesn’t solve anything; it simply exposes issues.
Transparency is what brings injustices, inadequacies, and mistakes to light. It can also be an excellent way to help employees buy in to an organization’s vision and goals.
While it has many clear benefits, it’s critical to balance the uses and effects of transparency with its limitations. It’s also important to provide transparency with an attitude of problem-solving and mutual respect rather than manipulation aimed at producing results.
True transparency should always be backed by a desire for the greater good of employees, leaders, and the company as a whole — or its consequences can spin out of control.
When Transparency Is Needed
Employees who have grown up in a world of social media have come to expect transparency from everyone in their lives. This has shifted the tone in the workplace, as tech-savvy Millennials already comprise half of the workforce and the digital native generation, Gen Z, is following closely on its heels.
This multigenerational emphasis on transparency has benefited many areas of business. Getting the word out on corporate social responsibility has encouraged companies to be open and honest about how they conduct themselves, leading to increased brand awareness and customer retention.
Transparency also has desirable effects internally, especially when it comes to areas like collaboration. For instance, online tools and project management software have allowed teams to enhance their collaborative efforts by maintaining open lines of communication, regardless of their location or the project they’re working on.
Transparency also goes hand in hand with building a positive work environment that empowers employees and encourages open, honest, and constructive feedback. This, in turn, stimulates employees to invest themselves in the success of their organization.
Transparency May Create Mistrust
While the concept of transparency might conjure a utopian image of trust, honesty, and openness, unbridled transparency can actually breed mistrust within an organization.
As an example, David De Cremer of NUS Business School points to research about employees’ reactions at organizations that regularly copied team members on emails compared to those in which copying others was only occasionally done.
The results were surprising. Organizations that required the inclusion of others in their communications fostered a greater level of distrust within their ranks. Simply copying people whose input wasn’t strictly required led employees to feel distrusted.
Transparency can also create distrust of leadership. If a company shares its every struggle in a detailed, real-time manner, it can lead to decreased confidence among staff. Employee retention can suffer as a result.
Transparency Timing in Larger Business Activities
But transparency doesn’t just have “soft” consequences. In certain cases, it can have far larger repercussions, for better or worse.
On the one hand, an increase in the quantity of shared information is required at times, such as stock ownership and shareholding reports when a company goes public. The public reporting of information, in many of these cases, is required by law. In addition, transparency is often important when negative news is being publicly reported in order to prevent illegal activities like insider trading — as was the case when Martha Stewart sold her shares of the biopharmaceutical company ImClone Systems before bad news sent the stock value plummeting.
On the other hand, if a company is legally going about an acquisition or making a major internal decision, such as layoffs, there may be points along the way when the open sharing of information may be harmful.
One fictitious yet perfect caricature of this kind of “transparency gone wrong” can be seen at the end of season 5 of NBC’s “The Office.” In the season finale, blundering manager Michael Scott accidentally reveals that a branch is being closed during a company picnic. The announcement, while important at the right time, is completely out of place and creates a huge amount of unnecessary emotional distress.
Legal restrictions and timing, in general, can make it easier to decide what to share when. They also serve to underscore the dangers of recklessly sharing important information without a thought to the recipients. Unrestricted transparency can create unnecessary liabilities and emotional trauma for executives, investors, and employees alike.
How Transparency Can Lead to Pushback
Transparency can be an effective tool when it comes to communicating reasonable rules and restrictions within the workplace. Corporate ethical guidelines and policies can create ground rules for a workplace and provide critical behavioral benchmarks for employees with unique (and often diverse) moral codes.
However, if the leadership of a company uses this transparent standard of corporate virtues to enforce personal ethical preferences, it can lead to pushback from employees.
For example, if a workaholic manager attempts to push excessive devotion to work as an ethical benchmark, he can breed resentment, especially among Millennial employees who prioritize maintaining work-life balance.
If ethics are communicated transparently with the goal of manipulating employees into providing a desired behavior, it can lead to resistance and dissension.
Aiming for Authentic Transparency
It’s also important to draw a distinction between meaningful transparency and information overload. The latter can be financially, culturally, and legally problematic.
If leadership is considering outsourcing a department or laying people off, it doesn’t help to plant undecided or unfounded information in the name of transparency. Deliberately sharing knowledge that doesn’t enhance employees’ ability to do their jobs can backfire.
The bottom line is this: Leaders should ask whether they’re sharing genuinely helpful information or doing so to save face or cover up something.
Authentic communication empowers employees to do their jobs more effectively, but employees may still distrust it if information isn’t shared in a consistent manner. Cherry-picked transparency — such as someone stepping down from a position, when another team member’s departure wasn’t announced — can create confusion.
Transparency isn’t as simple as it sounds. Anything less than authentic, structured, and meaningful sharing of information will undermine trust rather than foster it.
