Is a Corporate Culture of Transparency Always The Best Policy?

A magnifying glass highlights Culture of Transparency

Do You Want a Corporate Culture of Transparency?
In general, a culture of transparency and high information flow is a solid building block of a high performance culture.  High performance cultures outperform their competition in terms of revenue growth, profitability, customer satisfaction and employee engagement.

Research About A Culture of Transparency
Our organizational alignment research found keeping important information accessible and flowing within and across an organization fosters clarity and trust.

  • 81% of respondents who reported a high level of alignment agreed or strongly agreed that information flow was timely.
  • Conversely, only 6% of companies who reported a low level of alignment agreed that information flow was timely.
  • And, whereas 53% of respondents from poorly aligned companies did not know their company’s key financial metrics, only 26% of high alignment companies did not know.

It seems clear that the more timely and transparent the information flow, the greater the alignment and performance across the organization.

Is a Corporate Culture of Transparency Always The Best Policy?
The answer is not so simple. It seems to depend…on your unique corporate culture.  In general, when the facts are there for all to see, there are no hidden agendas or opportunities for deceit.  But sometimes the facts don’t tell the whole story…or they may tell a story you don’t want to hear.

Culture of Transparency Example – Police Body Cameras
Let’s take an example from the recent news. There has been growing public distrust over how some police officers use force against citizens. Consider the rash of problems in the way police target, seize, treat and incarcerate alleged law breakers.

In some instances, incidents have led to fatalities at the hands of the very people we entrust with protecting us all.  Experts offer a number of solutions from better training of the police force to the one that has gained enormously in popularity…the wearing of body cameras.

A Police Culture of Transparency Seemed So Simple
Cameras would show the facts and we would then have an unbiased record of what actually “went down.”  But as this practice of body cameras has been introduced there have been some unintended and undesirable consequences. While the videos may record what apparently happens in confrontations, it also records:

  • upset victims
  • grieving family members
  • innocent bystanders
  • those exercising their right to free speech and demonstration.

Unregulated release of these videos can threaten the right of a person’s privacy.

The answer is not as simple as we at first thought. The benefit of preventing bad police behavior has to be weighed against the potential loss of privacy.

Making Compensation Transparent
We experienced something similar in our firm a few years ago.  In an effort to improve clarity, accountability and transparency, we collectively decided to make performance bonuses public within the company. It sounded good at first.

Transparency would support accountability, and there would be no secrets on a team that valued pulling your own weight, team work and being recognized for your contribution. But there were unintended consequences. Not everyone on the team liked having their compensation be public knowledge.

Instead of spurring team members to greater effort and performance, the opposite was true. There were:

  • incipient signs of jealousy
  • a need to make excuses
  • unnecessary competition that hindered team and client success

This was a group who held themselves to their own standards.  Even though performance targets and bonus plans were public, they did not want to explicitly and publicly share compensation information.

The Bottom Line
First, you need to know what approaches would work best to drive positive performance consequences in your particular culture. Would transparency encourage greater levels of engagement and performance? It would in some environments…but not in all.

Second, learn and adjust.  The culture changes you make…whether toward a culture of transparency or away from it…must fit with the way you do business and the cultural norms you have established.  When your culture is strong and healthy, don’t let unintended consequences of a new policy undermine it.

To learn more about a culture of transparency and information flow, download Information Flow and Why It is Critical to Organizational Performance

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