An amplified focus on Environmental, Social, and Governance (ESG) factors, the rise of social media and instant communication resulting in the rapid and easy spread of good or bad, accurate or inaccurate information, and the effect of the pandemic where leaders had to communicate effectively in rapidly changing and difficult to predict circumstances has led to an increase in businesses now opting to choose transparency over opacity.
According to Edelman’s 2021 trust-barometer CEO’s credibility was at all-time lows in several countries, including Japan (18 per cent) and France (22 per cent), when leaders were, and are facing acute global business challenges, impacting engagement, loyalty and retention. Research by Sprout Social found that 86% of respondents believe transparency in business is “more important than ever before.” One survey found that workplace transparency is the number-one factor in employee satisfaction. A 2020 study by The Conference Board revealed that companies with high levels of transparency and accountability were more likely to outperform competitors in terms of financial performance.
Thom Dennis, CEO of culture change and leadership specialists, Serenity in Leadership explains: “Whilst not all information in business can be readily available to anyone who may desire it, the most obvious example of which is as part of compliance during mergers and acquisitions, many business leaders are increasingly choosing to share more information to build or in some cases rebuild trust. The old-school mindset that information should be provided on a need-to-know basis is increasingly being replaced with a mantra of ‘let’s be transparent unless we really can’t”. This means the door is open unless there is a good reason for it to be closed, not vice versa.
“Many businesses are opting for a new transparent business model. B-Corps are very likely to be more open as they prioritise their social and environmental performance and their guiding principles are of continued improvement and balancing the interests of shareholders with the interests of their workers, customers, community and the environment.”
If we are fearful about what is going on behind closed doors then work efficiency will be impacted. If we are worrying about job security and whether we are going to be able to pay our bills then productivity, creativity and retention are likely to unravel. Fear of the unknown often has a greater detrimental impact on employees than bad news. Surveys have repeatedly shown that employees would prefer to work for a company that values open communication and transparency, even if it means sharing bad news. 86% of respondents in the Sprout Social survey said they would be more likely to give a business with a good history of transparency a second chance, and 89% said if a business was completely transparent about a mistake they could still regain their trust.
Dennis says: “Secretiveness fast-tracks workers to be more wary and suspicious, and encourages them to make assumptions, jump to conclusions, ruminate or hypothesise. Conversely, if leaders are clear on the company’s purpose, and employees are part of what is going on, morale and communication will likely be stronger.
“Information is power so there is always the possibility of the abuse but there are countless benefits to better transparency including fairer pay and reduced miscommunication. When there is a withholding of information, assumptions will be made but with transparency comes fewer barriers, better inclusion, improved reputation, more accountability amongst leaders, and improved loyalty and credibility. Enhanced psychological safety is another benefit with employees feeling an increased sense of security whilst organisations that prefer opaqueness create silos which lead to poor communication.
“Through being open and honest, and sharing information at all levels, transparency can help foster a culture of accountability and responsibility and trust. It can then pay off at an organisational level by reducing interpersonal conflicts and is a critical factor in creating an inclusive work culture.”