The Case for Transparency: 10 reasons your company should keep no secrets from employees

May 14, 2010
The economy may be improving, but employees remain anxious and distracted. How much information about the state of your business should you share with them?

The economy may be improving — degree by painful degree — but employee moods aren’t following the trend (and with bleak news filling the airwaves daily, it’s no wonder.) Perhaps you’ve noticed that people seem anxious and distracted, either hiding out in their offices or aggressively vying for credit in an attempt to shore up their positions in the organization. It’s obvious everyone is worried: Are layoffs imminent? Will I have a job next week? In fact, will the company even survive the year?

If you’re like most executive-level leaders, you have a pretty clear picture of the state of your industry and the financial health of your company. And, you’ve likely wondered: How much should I tell them about what’s really going on behind the scenes?

The answer is simple: there shouldn’t be any “behind the scenes.” More information is better for everyone.

Leaders have talked about transparency for a long time, but it’s never been more important than it is now. Remember, we share information with employees for two reasons: it’s the right thing to do, and it’s good for business. And, most companies can use every possible edge these days.

If your company doesn’t have a culture of openness and free-flowing information, here are some reasons why you should embrace transparency:

People assume the worst when they don’t hear from leaders. Silence from the executive suite causes a lot of fear and resentment, which certainly doesn’t contribute to a productive culture. Maybe the news is bad, but maybe it’s not as bad as they are imagining. Even if it is as bad as that, knowing the truth allows them to plan and act accordingly.

Transparency helps employees understand why. When employees are working in a vacuum, they can’t see the financial “big picture,” and leaders’ decisions may seem ill-advised or unfair, or simply inexplicable. Transparency connects them to the “why” — and that understanding propels them to act.

You can ask people to change their work habits and established processes all day long, but if they don’t know why they’re being asked to change, they won’t change — at least not for long.

Employees may not understand how the external environment affects the company. Senior leaders are aware of new laws affecting their industry, innovations reshaping the marketplace, financial pressures facing their customers, and so forth. It’s their job to know. But, mid-level managers don’t necessarily see the same picture, and frontline employees almost certainly do not. Creating a transparent company helps everyone stay mindful of the forces affecting the bottom line. I think most leaders will agree that those forces have never been more volatile.

Transparency allows for consistent messaging across the organization. When you commit to transparency, people don’t have to get their (speculative, distorted) news through the company grapevine. They hear what’s really going on, in a controlled and consistent way, from their managers. By the way, it’s a good idea to train managers in “key words” they can use to ensure all employees in all departments are hearing the same messages positioned in the same way. (In other words, you’ll greatly reduce the chances of a manager getting frustrated and blurting out things like, “Don’t you know we’re in financial trouble?!”)

This, in turn, creates organizational consistency. When everyone is hearing the same messages from their leaders, everyone is motivated to respond in similar ways. Employees in Department A get the same kind of leadership and direction as employees in Department B. Everyone knows the rules, and this consistency trickles down to the customers, who get the same basic experience regardless of who they deal with. Consistent companies tend to be healthy, stable companies. Transparency and consistency are two sides of the same coin.

Transparency leads to faster, more efficient execution. When times are tough, execution is everything, and the ticket to good execution is good alignment: All sectors of an organization must understand exactly what’s required so that they act in a coordinated and collaborative fashion. Transparency is what facilitates that kind of alignment. It’s all about a shared sense of urgency.

Makes sense, right? When employees know customer spending in the widget industry is down 30% and that a new competitor is eating into your market share, they tend to get focused fast. Helping them to understand the reality that downsizing might occur if sales don’t increase can change their behavior overnight.

It heals we/they divisiveness. I often warn clients about the We/They Phenomenon — the perception that there are separate groups inside a company that work at cross-purposes. It might manifest as staff versus management, or this branch versus that branch, or corporate versus everyone else.

One example: When senior leaders understand the external environment better than managers and supervisors, they may get frustrated and wonder why these groups aren’t moving with a sense of urgency: “We are here working hard to save the organization … so why don’t they see it?” In transparent organizations that share common agendas, it’s hard for we/ they to flourish.

Transparency keeps good people from leaving. High performers don’t thrive in an atmosphere of secrecy and uncertainty. They want to work for a company that treats them with respect and values their problem-solving skills. Hold critical information too close to the vest and they may assume the company isn’t healthy — and because they often have options in even the worst economy, they may leave for greener pastures.

Obviously, hardworking innovators are the very people you want to hold onto in times like these. Make sure your culture encourages them.

It eliminates Park Ranger leadership. If you were lost in the woods a few times and a park ranger always showed up and led you to safety, you wouldn’t have to develop any survival skills. The same is true of employees who wait for their heroic park rangers (senior leaders, that’s you!) to lead the organization out of the economic wilderness. This mind set breeds a risky complacency. It’s far better for employees to pursue their own salvation than to wait passively for rescue — so they need to know exactly what threats they face.

Quint Studer formed Studer Group®, an outcomes firm that implements evidencebased leadership systems that help clients attain and sustain outstanding results. For more information, visit

When people know what the problems are, they’re more likely to come up with creative solutions. They become park rangers themselves, and an organization with 500 park rangers is more likely to make it out of the woods than one with eight or ten.

It facilitates the best possible solutions. In transparent cultures, leaders encourage employees to solve problems themselves. Because those employees are closest to a problem, and because they must live with the outcome, they almost always design the most effective, efficient solution.

That’s what employee ownership really means. When people are allowed to solve their own problems, they’ll do a much better job than if they have to work with a solution imposed from above or outside. Of course, they’ll also have instant buy-in.

Don’t think of transparency as a “crisis control” program: it’s a long-term commitment. When the good times roll around again, the strategy will serve you just as well.

Transparency is a way of life, not a stop-gap measure. It shapes your organizational culture and drives results in any economic environment. As recovery gets underway, as long as you maintain your commitment to openness and constant communication, your organization will only get stronger.