Balancing Transparency with Confidentiality in Business

“Transparency” has been a business discussion topic for so long that it is no longer considered just a buzzword. Transparency has evolved into a “permission to play” value that any successful company must embrace and understand. We’ve written about the importance of transparency in business in the past, and it’s a frequent topic of conversation here at Element Three—it’s even one of our seven core values.

In this blog post, we’ll talk about the different types of transparency, where it starts, transparency vs. confidentiality, and how to create a culture of transparency.

Types of Transparency

Transparency can show itself in several ways, so the first step is to understand which angle you are looking for.

Transparency in Business

Transparency in business with prospects and customers is best explained in Patrick Lencioni’s book, “Getting Naked.” Lencioni provides such clarity on this subject in his book that I am going to defer to the expert—go read his book for his angle and perspective on transparency.

Public Transparency

There is also much discussion around the topic of public transparency, focusing on the growing importance and reality of those who don’t even work at your company knowing everything they can about what happens inside your organization. There are many articles written on this topic and I cautiously support some but not all of the views on this. A lot of them focus on social networks and technology, and how to harness them to your advantage.

Organizational Transparency

For the purpose of this blog post, my focus will be organizational transparency, which relates to the single most important segment of any business—the people inside your organization. This is the segment of the population that’s really earned the right to transparency because they have committed themselves to being part of your journey. It seems natural that if you can get transparency right with your own employees, the business and public transparency will happen organically.

Assuming that you have hired the right people, thanks to the transparency in your hiring process, what does this newly earned level of transparency look like? How much information is too much? What is the right delivery method? And when does transparency stop being helpful and start causing damage?

The Start of Organizational Transparency

Taking a page out of the book of Google, a Business Insider article states:

By valuing an open and transparent company culture, Google teaches its employees that it believes them to be trustworthy and have good judgment. That, in turn, empowers them. Having more information also gives each employee more context, which helps them do their own jobs more effectively.

A company that has not operated in the spirit of transparency in the past cannot just decide they are “transparent.” Organizational transparency starts at the top and must be consistently demonstrated and reinforced by the leadership. From here it is intentionally cascaded through the organization and becomes a pillar of your culture.

The top is also where this whole concept falls apart. Without consistent and obvious behavior from the leadership in your organization that establishes, nurtures, and strengthens trust, don’t bother with an attempt at transparency.

Once that trust is established and maintained, it is also up to the leaders in the company to explain, execute and encourage transparency. Absolute clarity and consistency in the messages around transparency for your organization are key. Every single leadership meeting should conclude with a complete review of the cascading messages to ensure they are consistent throughout the organization—you must all be saying the same thing in the same way or confusion ensues.

Balancing Transparency and Confidentiality

This is where organizational transparency can go very right or go very wrong.

Transparency is not a destination. It is a commitment to sharing information as an organization. There is a proper level of transparency that is unique for each organization. Transparency is not sharing all information all of the time—it is an intentional approach to empowering your employees with the information they need in order to be successful.

The Right Way to Implement Transparency

Step one is to provide the tools your employees need to fundamentally understand how your business functions and how every decision that they make impacts the success of your business. Once this is clear, it is up to you to provide your employees with the right details behind the health and direction of the company to help them to understand how what they do every day helps the company to achieve goals.

Clarity is key. Confusing messages and information are the enemies of transparency.

The Wrong Way to Implement Transparency

Mistaking transparency for sharing every detail of your business (daily ups and downs, complex problem solving, confidential employee issues or decisions, rumors or hunches; just to name a few) will backfire. There is some information that simply does not add value.

That said, no amount of transparency is healthy or helpful if you have failed to take the steps necessary to establish a culture of trust.

If you claim to provide open book financials and the information you share turns out to be a false representation of the reality of your business, it does not take long for those smart folks you have hired to figure it out. As soon as they do, word spreads like wildfire and your attempt at being transparent results in a total loss of trust. The logical thought process of your employees now becomes: “If the basic financial information shared is not real, why would we believe that any of the other information shared would be?” Once trust is lost, it is a long road back.

China Gorman, CEO of Great Place to Work does a great job of talking about the importance of trust:

The world’s best workplaces are defined by high levels of trust, pride and camaraderie… and they are starting to see positive results from greater openness. But there’s a secret ingredient to making transparency your friend: Cultivate trust. Do what you say (credibility), treat people with dignity (respect) and treat staff in an even-handed way (fairness). When employees trust their executives and feel empowered by their leaders, good results are more likely in this era of greater openness. In essence, trust and transparency go hand in hand.

Transparency: More Than a Milestone

For some companies, there is not a milestone decision to be transparent. They just are. Transparency has been an understood business practice from the start and it has always been a natural part of the organization.

A graph showcasing lines of communication as organizations grow

The key for these companies is to understand how to scale transparency. When you are a company of 6 people, managing information and messages is easy. When you become 50 people the complexities multiply and from there it becomes more and more challenging to convey information and messages in a way that enhances the clarity instead of causing confusion. It becomes an art form for large organizations.

The one thing that does not change as you grow is the fact that the commitment to creating and nurturing trust and the commitment to transparency in your business must come from the top, or it does not work. How do you know you are succeeding? Check-in on the pulse of your organizational well-being. Your people will help you understand whether or not the information you’re conveying is empowering and clear.