Overview of Organizational Transparency
Traditionally businesses have operated on a need-to-know basis. People had access only to information that was deemed essential by their managers. Other “more sensitive” information was protected and hidden.
Organizational transparency is the practice of sharing information regarding the organization’s operations to its people with the intent to create clarity, trust, and accountability.
Lack of organizational transparency was widespread in the corporate world because management was concerned with the improper use of the information.
The result? Lack of trust.
People knew that their managers were withholding the truth from them and didn’t trust everything they were presented with. As a result, employees were hiding their real thoughts and feelings on matters.
So organizations were losing insights on things that could drive company performance, like creativity, innovation, and productivity. People just weren’t engaged enough.
In other words, lack of transparency handicapped people and cultures. However, this approach doesn’t fit in today’s world.
People don’t tolerate the traditional way of communicating and handling information anymore. And we’re not just talking about Millenials or younger generations.
Even older generations experience the bad side of the lack of transparency. They realize that today’s companies can’t survive operating like that. The pace of change is too great.
Leaders recognize the need for change. Organizations without trusting cultures can’t unlock their adaptive capabilities.
So what can leaders do to develop trust and improve their organization’s transparency? And what should they avoid?
In this article, we’ll discuss the following topics:
- Organizational transparency definition
- Why organizational transparency is integral for businesses
- How lacking organizational transparency destroys workplace culture
- How to improve transparency in an organization: The 3 biggest mistakes
- How to improve transparency in an organization: 3 steps
- The 3 most impactful benefits of transparency in an organization
Organizational transparency definition
Leaders attempting to build transparency within their organization are usually making one fundamental mistake. They treat transparency as a “modernization” of their culture, as a buzzword they need to “have.”
Instead of enabling their people to bring the company’s strategy to life by offering clarity, they hinder their work by treating transparency as another task on their to-do list.
Transparency is not an element of culture. Trust is.
Transparency is a facilitator of trust. Only when transparency aims to develop trust and clarity can it become a strong asset of the organization’s culture.
Why organizational transparency is integral for businesses
The world has changed dramatically in the last decades.
In the past, organizations have utilized a top-down internal structure to operate. At the top, there is strategy development. Once the plan is ready, it’s communicated downward to the rest of the organization.
On each level, though, some pieces of information are filtered out. So when the information reaches the frontline, it’s just the bare minimum. Frontline employees are given a set of instructions to follow without understanding why.
“The customer is always right” is the motto and yet employee feedback is largely disregarded. Organizations aren’t concerned with employee satisfaction since there is no real fear of losing them.
At the same time, it was easier, traditionally, to contain information. Bad news couldn’t travel internationally easily. That meant that problems could be isolated and solved without getting too much exposure.
These operating policies were serving big corporations well.
However, two things have changed since then.
The first is that people have a lot more opportunities for employment. As a result, if they are disappointed or even bored with their job, they look for other places to earn their living.
Globalization might have brought access to fresh markets and new streams of income for many corporations; however, it has also brought similar access to employment opportunities to people. Geographical bounds fell apart.
Since the pandemic’s boom in work-from-home practices, transparency in business has become a necessity. People need it to align their work focus. If business transparency isn’t present, people leave, even if it means their paychecks are shortened.
The Great Resignation, as this period has been labeled, has many causes, but two stand out. First, people didn’t like how their employers treated them during the pandemic, and second, people went on to explore opportunities for their “dream jobs.”
The second change that renders the traditional model useless is the incredible increase in communication channels. Technology has made it easier than ever to share information with peers.
The ease with which news travels around the world makes it nearly impossible to keep certain things hidden.
Conversations between people inside companies are happening, whether companies like it or not. So, why should corporations care and how is organizational transparency relevant?
How lacking organizational transparency destroys workplace culture
No matter how great or prosperous a company is, there is one universal truth: strategies are executed by people.
In a world of Netflix's, Airbnb's, Ubers, and Patagonia's, companies can’t afford to stay stagnant. Kodak's, Blockbuster's, Nokia's, and Blackberry's are a reminder of the need to be adaptive.
Adjusting your strategy quickly and executing it accurately demands a disproportionate focus on people.
Organizations that don’t focus on taking care of their people will struggle to adapt and keep up with the world’s disruptions. Organizational transparency plays a key role in that focus.
Here’s what companies should expect if they don’t have a transparent work culture.
Employees today demand trust. They may not ask for it directly, but if they don’t find it, they leave.
It’s not enough to say that you trust your people to perform. You have to prove it. Big, public gestures are helpful but not sufficient. Trust inside a culture is built over time.
Remember, every decision, no matter how small, is a piece of communication. Hiding important updates and decisions regarding the company’s direction indicate that you don’t trust your people.
You can’t create a culture of safety if leadership hides its mistakes and missteps. This behavior sends the message that it’s not OK to fail and your employees will start hiding and lying. Workplace transparency starts at the top.
People nowadays avoid toxic environments and prioritize their mental health. If they feel they can’t achieve their goals or that their work lives are unsustainable, they’ll drop their two-week notice.
Companies that can’t keep their employees spend around $1000 for every new hire and can’t attract top talent.
A big part of successfully adapting to market trends is alignment in the execution phase. For example, if a large corporation predicts a market trend, shifts its strategy accordingly, but fails to align all its people, it will never lead the ride of the wave.
Organizations that aren’t transparent with their strategic objectives and intentions end up with a fractured execution of their strategy. Some teams might focus on the right metrics and actions, while others stay on their previous trajectory.
Lack of organizational transparency warrants the development of silos. As a result, each siloed department’s performance is treated independently from the organization’s performance.
This invites conflict. For example, the marketing team is obsessed with bringing new leads but doesn’t care about their quality. The sales team will get frustrated because it’ll be impossible to hit their marks, wasting so much time on uninterested contacts.
In the end, the company will suffer, but the marketing team will be performing well.
If there is no transparency inside the organization, unaligned teams will work to advance their metrics without the proper context.
Silos bring us to another disadvantage of the lack of organizational transparency.
When the strategic plan is fragmented across various static tools like Excel and PowerPoint, it’s impossible to get a clear picture of its performance.
It makes answering the simple question of “How are we doing against our strategy?” a serious challenge. Collecting all of the current projects, the relevant reports, and information takes forever. The process is a mess with countless emails and wrong versions.
By the time you get everything together for the review, most of it is outdated. It’s impossible to report on the strategy’s performance and cultivate accountability with a bunch of static tools.
Even if people have the best intentions, it’s hard to drive accountability in large organizations. Keeping up with the changes in the plan while maintaining clarity on who owns what isn’t possible without transparency.
Organizations that keep their strategic plans secret from their people struggle to assess their performance and develop habits that reinforce accountability.
How to improve transparency in an organization: The 3 biggest mistakes
Transparency without limits
Many leaders try to counter covert practices by going to the extreme and exercising unconstrained transparency.
For example, exposing all the internal information to everyone while inviting feedback from all over the organization is extremely ineffective.
The first undesirable outcome is that the decision-making process is dragged for too long. Well-intended but poorly informed feedback adds to the noise and delays the processes. Decisions that should be taken in a day take weeks to be implemented.
Transparency with no guidelines
Sharing information with no clear guidelines on how it should be used or even how to navigate it, is extremely detrimental to your people’s focus.
If you inform your people about the condition of the company by bombarding them with announcements, you’ll destroy their concentration. They can’t keep up with every single event AND maintain their focus on what matters.
A bombardment of announcements and meetings with no clear prioritization adds to the noise and creates anxiety. People feel like they have to keep up with everything and get stressed when they fail to.
Organizational transparency doesn’t apply only to pleasant news and situations. If you require your people to share their mistakes to prevent catastrophes, so must leadership.
Bad news can’t remain buried nowadays when so many avenues exist for sharing information at light speed. Pretending that nothing is wrong will destroy people’s trust in leadership when the truth comes out.
Leadership with no credibility will find it very difficult to implement its strategy because people will challenge and resist it.
How to improve transparency in an organization: 3 steps
Let’s get something out of the way. Technology alone can’t create organizational transparency, but it can be a great enabler.
Specifically, technology is a multiplier. If your culture isn’t based on trust, technology will fail you no matter how awesome it is. Organizational transparency drives company performance when it’s in tune with the company’s culture.
On the other hand, if your culture values safety and trust, technology can do wonders for transparency in large corporations. Organizations that enjoy the benefits of lasting transparency have installed various tools and practices.
Expose your strategy
Most companies and leaders desire transparency. They want their people to know the strategy.
They realize that traditional tools fail to do that. Presentations and static documents don’t scale well with respect to clarity and transparency. But leaders see the need to share their strategy with their people. That’s why they preach overcommunication of strategy.
However, they don’t succeed. It either takes too much time, or they simply fail to bring their people up to date with current priorities on time.
What if there was a better way of educating your people about your company’s strategy? What if, instead of just presenting your company’s strategy once every quarter or so, you had it exposed constantly?
Strategy execution platforms, like Cascade, solve the problem of communication of strategy. Your people can view and interact with strategy in real-time, getting context on their decisions whenever they need it.
A digital environment for your strategic plan enables every employee to navigate through it easily and find the information he needs to educate his decisions.
To make your strategic plan easier to navigate, it needs to be well-structured and clear. If you’re unsure how to develop it, try the free strategic planning template that was built based on hundreds of successful strategy implementations.
At the same time, the employee updates the progress on the part of the plan he’s working on, keeping it up to date for the rest of the team.
Exposure: Curse or blessing?
Now, as we’ve mentioned, this alone can’t create a transparent culture.
If your company or team faces unhealthy competitiveness and employees fear management, then such a practice can’t fix that.
In fact, it will only make it worse because people will treat this exposure of the plan as another way for management to check up on them. Thus such a practice will either never stick or be misused.
On the contrary, cultures founded on trust and honesty will embrace the practice of strategy exposure as a blessing. Its people will engage with the strategic plan, challenge it and offer their sincere feedback.
People in safe cultures take on the opportunity to clarify their responsibilities and build accountability. So instead of resisting the digital transformation of their company’s strategy, they welcome it.
Corporations benefit from strategy execution platforms when they trust their people and empower them meaningfully.
Have candid conversations
Even for organizations with safe and trusting cultures, the transition of strategic processes from static documents to a digital environment is tough. But, like any change, it’s possible with the right approach.
When the objectives, the goals, and the projects of every team and department are available to everyone in the organization, people start feeling uncomfortable.
Clarity is forced upon every project and metric. Everything gets a clear owner, which might be daunting at first if people aren’t used to it.
It’s important to set the tone and the aim of this new tool. Discuss offline how you are going to use it and what strategic processes your approach will facilitate.
Use the exposure of the strategic plan as an opportunity to discuss and clarify ownership of projects and the context of certain decisions (e.g., deadlines). Allow the digital to become the gateway to the physical.
A common concern that pops up whenever a company adopts an exposure-of-strategy policy is whether the plan needs to look perfect all the time.
How bad is it to have some projects and goals fall behind? As good as transparency may be, managers might feel uncomfortable seeing certain goals fall behind.
This is a valid but easily solved concern. Again, take the discussion offline and take the pressure off from your people. Fluctuations are normal and focusing on particular projects will leave other goals behind.
To determine whether that’s desired or not, you need to…
Commit to regular reporting
Transparency benefits an organization as long as there is a review process.
Digitizing your strategic processes facilitates reporting and saves time from collecting and visualizing all the data because you have one single source of truth for your strategy.
Develop the habit of assessing the progress towards your goals at every level of the organization. A simple discussion on what’s important or what’s working or not goes a long way in keeping the progress transparent and the work focused.
An assessment habit deals with goals that consistently fall behind and raises questions like, “Why can’t we keep up with this goal?” “Is it still relevant to our strategy?”
Essentially, assessing the performance of your strategy identifies the gap between where you want to go and where you are today. To get you started on your internal analysis, make sure you use this gap analysis guide to define and close that gap.
Transparency builds accountability and gives people the opportunity to challenge current priorities and the relevance of the projects. It enables the adoption of more bottom-up communication practices.
The 3 most impactful benefits of transparency in an organization
Choosing to expose your strategies to your people forces you to clarify ownership of goals and metrics.
When for every project and KPI there is a specific person that is responsible for its progress, then that person narrows its focus to that.
People willingly show up to drive progress on their individual goals and take great pride when the needle moves in the right direction.
That’s why it’s important to choose the right metrics and KPIs. To make sure you drive progress towards what really matters, follow this 4 step approach on how to write KPIs.
When your people know the strategic priorities of their company, they align their decisions with them.
With a clear view of the destination, people overcome obstacles and find solutions to problems faster.
In large corporations, where communication across departments and teams is hard, transparency provides much-needed context. People understand the strategic plan deeper and execute it aligned and focused.
One of the most underappreciated benefits of transparency is the stream of new ideas and improvements that flow from the people.
Transparency introduces better bottom-up communication approaches and enables innovative ideas and feedback to flow from the front line to the top of the company.
When you develop organizational transparency, you build trust and empower your people to speak their minds and bring forth problems early on. The culture becomes proactive and creative.
Organizational transparency is not a luxury anymore. Companies can’t develop trusting cultures and keep their employees engaged and satisfied while keeping them in the dark.
Here are the key takeaways from this article:
- Transparency is not another task. It’s a catalyst for developing trust.
- Lack of transparency drives away employees and destroys the execution of strategy
- Transparency is destructive without limits or guidelines.
- Expose your strategy to communicate it.
- Use technology to enhance transparency, not build it from scratch
- Involve the human element in your approach. Transparency is built both online and offline.
- Develop an assessment habit to best utilize transparency.
Build your strategic plan inside Cascade and make it available to your people whenever they need it.