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How Much Organizational Transparency is Sufficient?

July 11, 2014 by Dr. Jon Warner in Business Ethics

How Much Organizational Transparency is Sufficient?

“Organizational transparency” is one of the subjects that tends to demand time and attention (when it does) for two main reasons:

  1. The organization has not been transparent enough and it may have got into trouble as a result, with employees, shareholders or even public bodies such as the tax authorities (think Enron or Worldcom in recent times).
  2. The subject has come up with a few employees, either informally or more formally, such as through the vehicle of an opinion survey, for example.

Both of these catalysts to the transparency debate tend to suggest that the organization is not sharing enough information or that people would like to know more about what’s going on, but this begs the question of this article – how much so-called transparency is sufficient?

This is a difficult question because it partly depends on the size and type of the organization concerned, its overall philosophy and culture and even in what type of industry, sector or geography it operates. However, even more significantly, it may be almost impossible to come to any firm conclusions because the term “transparency” itself is not as ‘meaningful’ as it needs to be and we need to break it down further to make any progress.

According to the dictionary the word “transparency” comes originally from the scientific capacity of light to pass through an object or a filter so that objects can be seen. However, in the business dictionary it means “the relative lack of hidden agendas and conditions, accompanied by the availability of full information required for collaboration, cooperation, and collective decision making.”

Both of the above definitional ideas suggest that transparency is always relative from completely clear (although we are still looking through even a thin surface) to opaque (where we are only seeing shapes and shadows). This doesn’t help us much therefore in determining how transparent we should be then.

If we look further at the root of the modern word “transparent”, we find that it comes from the Latin word “trans” meaning “through” and “Parere” meaning “appear” – so the root suggests that issues need to appear through an intermediary filter – once again suggested that transparency is a relative affair and that we can choose how much light we shine on the information about which we are transparent.

As with many complex concepts in organizational life, such as “success”, “performance”, “diversity” etc. a further complication in any effort to determine best-practice when it comes to organizational transparency is that people tend to have their own personal definitions or even conflate more than one idea under the umbrella of the term. For example, individuals will often take the separate but related concepts of “disclosure” (relating to action of making new or previously secret information known.) and “trust” (relating to truthfulness and reliability) and combine them, often unhelpfully. In other words, senior managers often tend to think more about how much and which information could and should be disclosed (which implies that some information may not be sharable for a variety of reasons) and employees seeking more transparency tend to think more about being trusted with more direct information in order to be able to make better decisions about their work and life (which implies that they do not want to be told direct lies or lies by omission). Once we recognize this separation, we can start to use one of these transparency sub-concepts to inform the other. Let’s therefore look at how this might play out in a little case study example.

In a relatively small but publicly traded organization in California (with just over 400 employees), managers had overwhelming feedback from their recent employee survey that the company had a culture which was “insufficiently transparent” with a percentage score of just 41% (one of the lowest scores in the survey). When this was discussed at a meeting, senior executives worried that they could not disclose a wide range of data, including many ongoing commercial negotiations going on, investments and loans to the business, tax returns, salary data, employee performance appraisal data and many other categories and were therefore somewhat ”boxed in” they felt. However, the HR director pointed out that her understanding of the comments were that employees were worried that they had little or no appreciation of how well the business was performing at any given time and how “secure” their jobs were in the short to medium term. The discussion therefore moved quickly to what extra information employees could be trusted to be given that would help in both of these areas and a new monthly newsletter from the CEO was initiated which contained more disclosure on these subjects, without having to  share any apparently “sensitive” data at a detailed level. In a follow-up survey twelve months later, employees rated the organization’s performance on transparency as “good” at 72% (the third highest item in the survey) and the CEO’s newsletter was cited as one of the most well-received and open communications in achieving this.

Although the above case study is a simplification, it does usefully indicate that our understanding of a concept such as transparency can be usefully broken down before we act on it. The action taken by the above company was to make things “relatively” more transparent by trusting employees with more information about what they most worried about but not by freely disclosing sensitive or commercially confidential information that may have actually done more harm than good.

Summary

In the final analysis transparency in business should be seen as a way to keep employees broadly apprised of organizational activity insofar as that activity affects them and their personal interests. It is a way to maintain trustworthy communication between people and senior leaders in an organization that needs these people to give of their best. The key here is therefore to appreciate how any organizational activity affects different individuals, teams or departments and their interests. Of course, this assumes that an organization is in close contact with its employees and knows their concerns. Few organizations are as close as they should be and may inadvertently keep individuals and whole teams in the dark when they should be aware of what is happening. The first step to being more transparent is therefore to listen to what people need to do their jobs well, and, within the bounds of legality and commercial reasonableness, aim to provide it.

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About Dr. Jon Warner

Dr. Jon Warner is a prolific author, management consultant and executive coach with over 25 years experience. He has an MBA and a PhD in Organizational Psychology. Jon can be reached at OptimalJon@gmail.com

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One Comment

  1. JD EvelandJuly 12, 2014 at 5:56 am

    Part of the problem is that “organizational transparency” is an organizational-level variable. As such, it is the product of a combination of forces, few of them directly traceable to any one individual. Therefore, from a behavioral standpoint, it is practically useless, since it can’t meaningfully be changed by any organizational intervention, except at considerable remove.

    Years ago, there used to be a variable called “visibility of consequences.” Unfortunately, it kind of slipped out of fashion, as variables can do. But it had the advantage of focusing on the consequences of particular behaviors, whether undertaken by individuals or groups or even organizations. To the degree that organizational analysis has substituted nebulous and non-behavioral concepts like “transparency” for variables directly reflecting behavior, the field is robbed of effective theory and rendered increasingly nugatory.

About the Editor and Primary Author

Jon Warner

Jon Warner is an executive coach and management consultant and in the past has been a CEO in three very different companies. Read more

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