Is a Corporate Culture of Transparency Always The Best Policy?

Is a Corporate Culture of Transparency Always The Best Policy?
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Do You Want a Corporate Culture of Transparency?

We know from our organizational culture assessment data that a corporate 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 Corporate Culture of Transparency
From a neuroscience perspective, a lack of transparency leaves employees to worry and guess what is happening in a way that can trigger a “threat state” in the brain. This causes unhealthy rumors, back-channeling, and workplace politics.  When you trust employees with the big picture, they in turn report more trust in their leaders and higher levels of employee engagement.

Our organizational alignment research found keeping important information accessible and flowing within and across an organization fosters clarity and trust.  The more timely and transparent the information flow, the greater the alignment and performance across the organization.  In 410 companies across eight industries,

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

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, people like it when the facts are there for all to see because there are no hidden agendas and less opportunities for deceit and workplace misalignment.  But sometimes the facts don’t tell the whole story — or they may tell a story that people 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, and 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 people 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, cultural accountability and transparency, we collectively decided to make performance bonuses public within the company. Companies like Whole Foods have done the same.  It sounded like a good idea 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 as 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, and unnecessary workplace competition that hindered team and client success.  Even though performance targets and bonus plans were public, they did not want to explicitly and publicly share compensation information.  Everyone was surprised by how the increased transparency made people feel.

Creating More Transparency at Toys ‘R’ Us
After bankruptcy and under new ownership, Toys ‘R’ Us is opening twelve new stores in next year.  From a workplace culture perspective, there is one big change. Toys “R” Us employees will now meet formally with top executives as part of a “mirror board” to create transparency, share key information, and encourage candid feedback.

Employee advocates believe that the model of transparency and feedback is a step in the right direction that will give workers a greater voice and more influence on how employees are treated and how work gets done.  It will be interesting to see if the increased workplace collaboration and transparency results in greater employee engagement, performance, and retention.

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? Decide what should and what should not be transparent for your unique situation.

Second, make sure you are ready to monitor, learn, and adjust.  The culture changes you make — whether toward a corporate culture of transparency or away from it — must fit with the way you do business and the cultural norms you have established.  The results may surprise you.

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

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