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In today’s ever-evolving business world, debating whether to embrace transparency is no longer simply a best practice, it’s a requirement for success. Sharing timely, relevant and accurate information with employees is an ethical and respectful practice that can help steer a business or organization toward success.
Employees seek and appreciate leaders and managers who freely share information. A recent study conducted by TINYpulse analyzed data from approximately 300 companies and more than 40,000 responses found that management transparency was the top factor when determining employee happiness. The more transparent leaders were, the more employees trusted them.
In the quest to garner greater trust, engagement and productivity, many businesses utilize progressive transparency initiatives and programs. For example, to reduce employee frustration, Buffer reveals the salaries of each employee by name. Whole Foods, now owned by Amazon, labels its food products so customers can identify if a product is genetically modified. Zappos promotes an extranet that gives vendors complete visibility into their business to improve the lives of their sellers and supporters.
Transparency pitfalls
Sharing information with employees and customers can enable workspace awareness, build trust and help companies achieve goals. Moreover, transparency can enable better leadership and decision making. But transparency also has an opposite side—a “blind side” of excessively sharing critical information that can backfire and threaten to cause more business pain than gain for everyone.
For example, managers and leaders who excessively share too much “what” and not enough “why” often create a blaming culture that discourages employees and diminishes motivation. Too much transparency of employee errors can also result in people hiding innovative ideas. Elevated levels of visibility of mishaps can also reduce creativity as people fear the watchful eye of their superiors.
In addition, managers who consistently use transparency to punish unruly behavior and recognize excellent work may also communicate moral standards that are impossible to meet. When employees have this impression, they are motivated to resist, resulting in less citizenship behavior. Even the best employees can and will occasionally make mistakes.
Transparency in digital communication
Many managers and employees use widespread methods of electronic transparency within their daily interactions, including the common use of email. Many operate under the assumption that if more people are involved, the smarter decisions will be and the greater the buy-in. The problem is that it typically takes longer to reach a decision when several people are included in long email chains.
While transparency in digital communications is not the panacea, there is no doubt that organizations are operating in an expanding universe of information technology. Shareholders, employees and the public live and work in a world where, on average, more than 2.5 million users share content on Facebook, 350,000 tweets are sent and 270,000 snaps are shared every minute through Snapchat. As a result, employees and consumers in the current marketplace expect more transparency and disclosure.
Another seemingly sincere attempt to exhibit transparency is when managers and employees include everyone involved in email correspondence. David De Cremer at the University of Cambridge recently studied organizations in which CC’ing others on email was the norm and those in which colleagues were only occasionally CC’ed. De Crèmer found that distrust was significantly higher in the organizations where CC’ing was the norm. De Cremer’s results indicate that people evaluate this practice as signaling distrust, which reduced their trust in and commitment to the organization. Conversely, those organizations where colleagues almost never CC’ed others were held to be the least distrustful.
How to avoid transparency breakdowns
For transparency to serve as a catalyst for sound ethical decisions and subsequent actions, leaders need to distinguish why they should share information and how to balance transparency against risks related to privacy and confidentiality. They also need to know how to responsibly share information, especially when using emails and other messaging services to communicate with employees and the public. Behind every email is a person. Thus, the biggest risks are not emails and browsing websites, but how people in organizations use these technologies.
Transparency in the workplace can be a double-edge sword that cuts both ways. The lack of an effective transparency strategy can hinder rather than help effectuate organizational objectives and employees’ abilities to fulfil the core business needs. On the other hand, transparency reveals a silver lining regarding ethical practices. Transparency can help businesses and organizations become more responsible and respected corporate and social citizens. The key is for leaders to balance the right amount of transparency to foster innovation and productivity.•
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Westerhaus-Renfrow is a clinical assistant professor of business law and management, and faculty chair of the undergraduate program at the Indiana University Kelley School of Business at IU Indianapolis.
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