Transparency = Trust When Leading Talent

Executives who embrace the need to be transparent are taking advantage of a powerful — but often overlooked — management tool.

Transparency is a word heard a lot these days. The U.S. presidential election in particular has sparked much of its use. Donald Trump, the Republican nominee, is feeling the pressure to be more transparent by releasing his tax returns. His counterpart on the Democratic side, Hillary Clinton, has faced similar transparency pressure this week regarding her health after she was diagnosed with pneumonia last weekend.

In business, transparency is increasingly important. On a macro level, investors are constantly berating public companies to be more open and transparent about their performance for fear that their money might be at risk if they are misled. On a more micro level within companies, transparency has become the rallying cry of employees wanting more out of their work environment.

Many companies, for example, have ditched once-private cubicle farms for entirely open office plans. Conference rooms, traditionally private sanctuaries for executives to come together and make decisions, have in some companies been redesigned as glass-walled meeting rooms in the middle of these open offices. The reason? You guessed it: transparency.

But physical space inside corporations isn’t the only area becoming more transparent. A few firms are taking the transparency mantra to another level by instituting policies where employee compensation information is readily available for anyone to view. Feedback is also getting the added-transparency treatment. Got a gripe about an employee’s performance? Don’t wait until the annual performance review. Be open and honest in the moment.

For old-school business executives, I understand why this push for more transparency can be unnerving. In business, information is power, and for most executives, not all information should be out there. The advantages of keeping a firm’s employee compensation information private, for example, are clear. What determines employee compensation isn’t exactly a hard science; one employee’s salary isn’t always indicative of their value to the organization but more a reflection of their ability to negotiate. Executives don’t want to create a culture of resentment. I get it.

Still, the power of transparency isn’t that it may help correct poor salary practices, which some studies suggest is the case. What I do want to emphasize is that in today’s market for talent, transparency isn’t something that should make executives uncomfortable.

Transparency in today’s talent economy is a powerful management tool. Transparency, when used strategically, is almost like a form of currency, something that builds credibility and commitment among leaders and employees. Employees respect a leader who goes out of their way to be transparent and are more likely to be critical and skeptical of those who don’t.

When CEOs choose to be open and honest about their firm’s financial performance — sharing both good and bad — their employees are likely to feel more connected to the organization, whereas withholding such information is likely to build resentment.

So is being self-aware about the role transparency plays at work. Sometimes the unintended lack of transparency — like when a boss calls an employee into their office and closes the door, even though the information exchanged isn’t sensitive — creates an unhealthy work environment. Imagine the time these employees might spend wondering about the contents of that closed-door meeting instead of getting their work done.

Being transparent, in this sense, is organizational peace of mind, a belief that, even though sensitive information exists and is ultimately exchanged, there isn’t a visible and intentional effort to hide it. Transparency, above all, is about honesty.

Did the company underperform this quarter? Don’t skip that fact in the monthly all-hands meeting. Own it. It works the other way, too. Do employees have reservations about certain elements of a company’s culture? It’s best to speak up, be direct and clear about those feelings.

Transparency doesn’t mean executives or employees have to recklessly divulge every piece of information. It means executives should establish open and clear channels of communication with employees for when information is disseminated, and that there aren’t unnecessary barriers standing in the way.

Because those barriers to transparency, intentional or not, are likely having a more negative influence on your company’s performance than you realize.

Frank Kalman is Talent Economy’s Managing Editor.