03 Jul 2013  What Do YOU Think?

What Are the Limits of Transparency?

Summing Up: What's the proper balance in an organization between transparency and opaqueness? Many of Jim Heskett's readers would err on the side of management forthrightness.

 

Summing Up


What Is Transparency's "Sweet Spot"?

We generally think of transparency as an admirable organization quality. But commenting on this month's column, Kapil Kumar Sopory summed up a lot of the thinking with the observation that "excess of everything is bad." That apparently includes transparency. The question of course is, "How much is too much?"

There were those who would set what might be regarded as relatively narrow limits on the practice. For example, Traci Li said, "Transparency should be limited in non-public institutions." Ashok Panda suggested that we "share only data, not information among employees/colleagues."

Just where we draw the line on information was the subject of many comments. As Carl put it, "transparency protocols should follow a distinct process matrix to ensure that the appropriate amount of information is delivered." One possible line would include information about a company's strategy. Brad Keller commented that "It takes more than just sharing financials or performance review data… It is really a matter of being open about an organization's intentions and strategies for achieving those intentions. People establish relationships with institutions they trust …."

Gerald Nanninga, in observing that we overdo caution, asked, "How can you expect people to implement the strategy if they don't know what it is?" He continued: "And great strategy should be so entwined into your unique business model that competitors wouldn't be able to readily implement it even if they knew what it was." Khadija Khan suggested that we let the recipient decide, saying that "There is really no need for whistle blowers if the responsible organizations including government organizations disclose information to general public without reservations and let them make use of the one relevant to them."

Walter Blass was among those who would err on the side of more transparency, arguing that "the more that is shared, the higher the likelihood that discretion will be maintained." Phillip Clark weighed in with this view: "Wisdom and trust determine transparency. The comfort and motives you sense from those providing the information determines how much you will believe… Transparency is doomed by paranoia and distrust. That in turn opens the gates for rumors, 'whistle blowing' and reactions counter to the benefit to an organization …" Malabika Debnath opined that "I believe we are gradually as a society moving towards a higher level of comfort with openness as we trade off various levels of privacy for its benefits."

Tom Dolembo cautioned us not to expect too much from a policy of transparency, saying "If the company culture operates better within the founder's vision of transparency, all well and good, be transparent. But to trust transparency alone to engender trust in management and cooperation is a pipe dream."

So where does that leave us? What are the appropriate criteria on which to determine the limits of transparency? What is transparency's "sweet spot." What do you think?

Original Article

Transparency has become a popular concept in management circles in recent years, no matter how little enthusiasm you may have for the word itself. Now the topic has been thrust into our everyday lives with disclosures, or leaks, of alleged US secret intelligence information by Edward Snowdon. Increasingly, we are asking ourselves "How much transparency is the right amount?"

Transparency is given credit for fostering trust among members of an organization, building loyalty among employees, and generally creating better places to work. For many years we observed need-to-know policies (that may have had their origins in the military) among managers of leading organizations. This slowly evolved in some organizations into policies that gave employees much more information about the activities of the enterprise and more voice in determining what they felt they needed to know.

Vineet Nayar, vice chairman and joint managing director of HCL Technologies, an India-based information technology services company, has been one of the most outspoken advocates of increased transparency. He says all HCL's financial information is on the company's internal Web. "We are completely open," he had been quoted as saying. "We put all the dirty linen on the table, and we answer everyone's questions. We inverted the pyramid of the organization and made reverse accountability a reality."

That's not all. Nayar makes his own 360-degree feedback open to 50,000 employees, and 3,800 managers participate in an open 360-degree process. "We started having people make their presentations and record them for our internal Web site. We open that for review to a 360-degree workshop.… What happened? … You cannot lie … You are going to put your best work into it …."

This policy may not be appropriate for all organizations. It has to be aligned with a number of other policies and practices. For one thing, it may repel capable managers who would prefer not to work in a high-transparency environment. Transparency makes some people uncomfortable, although this appears to be more a generational issue. Surveys have shown that younger people have little or no interest in the Snowden affair. They assume that much of what they do will become public knowledge regardless of any efforts to keep it secret.

The late Harlan Cleveland predicted much of this more than 30 years ago when he noted that information is different than material things in that it can be shared, can't be hoarded, and leaks prolifically and naturally. As he put it then: "The information resource … is different in kind from other resources. So it has to be a mistake to carry over uncritically to the management of information those concepts that have proven so useful during the centuries when things were the dominant resources and prime objects of commerce, politics, and prestige."

So as leaders and managers, how much do we share? How do we avoid sharing competitively sensitive (comparable to the government's "top secret") information too widely? If we operate on a need-to-know policy, who decides what employees need to know? What are the limits of transparency? What do you think?

To read more:

Adam Bryant, "He's Not Bill Gates, or Fred Astaire," The New York Times, February 14, 2010, p. B2 (for the Nayar quote).

Harlan Cleveland, "Information as a Resource," The Futurist, December, 1982, p. 37 (for the Cleveland quote).

Vineet Nayar, Employees First, Customers Second: Turning Conventional Management Upside Down (Boston: Harvard Business Press, 2010)

Comments

    • Aim
    • Drilling Engineer, N/A

    If a company/country is resembled a family, then there must be a silent/outspoken agreement between members as to what event goes out the door and which one stays locked. Else, the family heads might see themselves being pointed with fingers, and their kid's being bullied at school for an abnormal event occurring in the family that should have stayed indoors.

    Undoing a government/company activity by so called "blowing a whistle" has detrimental impacts on security/stability of all the citizens/employees.

    This is especially true in the age of globalization where barriers of entry to another country are significantly lowered thereby making it extremely difficult to differentiate ill-intent "tress passers" from genuine-friendly visitors.

    Having said that, there is also a significant potential of the employers/government to inflict damage to activities of its employees/citizens i.e. Patriot Act. Thus, a national debate must be held as to what threshold a certain policy/protocol should be applied. This in turn will be able to define true democracy protectors from traitors.

    Best,

    Aim

     
     
     
    • Ashok K Panda
    • Principal, MIPS, MITS Campus, Rayagada, Odisha, India-765017

    Share ONLY DATA NOT INFORMATION amongst employees/colleagues and no Information should be as important as to be remembered-NOT DATA." and " All are( man & machine) of same importance and priority". Like ...... " There should not be any distinct differentiations between conversations on information NOT DATA" " names be forgotten rather than tasks". Our WOM be same for one and all. So on...

     
     
     
    • Khadija Khan
    • President, Pakistan Evaluation Network

    There is really no need for whistle blowers if the responsible organizations including government organizations disclose information to general public without reservations and let them make use of the one relevant to them. People have the right to information particularly that affect their life and important political, social and economic decisions. The state government has the obligation to make sure that the right to information is respected, protected and fulfilled. Regarding international and bilateral relationships and the host of international political and diplomatic issues, the UN is required to open its forum for debate on the changes that have taken place in the last few decades in communication and space technology as one of the key factors. There is no way to turn your eyes away from the problem. The international and regional relations, rights and obligations of States have to be redefined in the light of those development.

     
     
     
    • Kapil Kumar Sopory
    • Company Secretary, SMEC(India) Private Limited

    It is aptly said that excess of everything is bad. If you disrobe entirely, watchers would be forced to close their eyes and shun you. HCL CEO is reported to be revealing ALL. He may be taking pride in it but in my view some matters would still be there which are extremely confidential and sensitive and need be shared only with a select few and not the entire staff. As a principle, transparency is essential. However, there has to be a deep study of matters that would disrupt operations if all are made totally and openly aware of those. And, there may even be no purpose to tell everything to everyone. This applies to all sorts of activities - personal, social, political or commercial- and hence decisions be taken accordingly.

     
     
     
    • WALTER BLASS
    • Retired Director-Strategic Planning, AT&T

    I worked at AT&T and its NY subsidiary for 25 years and heard a number of briefings where we were told unequivocally that this information had to kept inside the company. To my knowledge, nothing ever leaked. On the contrary, I believe it was precisely the act of sharing the information with everyone at middle management level and above that maintained this esprit de corps. Managements have a lot to gain from sharing information with employees who can give feedback, if the feedback is listened to; if it's not heard, that company is in trouble anyway. If NSA had some sort of Ombudsman to whom Snowden might have reported his doubts without a risk of punishment, senior management might have been forewarned that their own employees were dubious about policies. I don't admire Snowden but I believe NSA is hung on its own petard.

     
     
     
    • Gerald Nanninga
    • Principal Consultant, Planninga From Nanninga

    I am a big fan of openness, particularly as it relates to strategy. How can you expect people to implement the strategy if they don't know what it is? And great strategy should be so entwined into your unique business model that competitors wouldn't be able to readily implement it even if they knew what it was.

    I speak more about this here: http://planninga-from-nanninga.blogspot.com/2013/06/strategic-planning-analogy-505-secrecy.html.

     
     
     
    • Michael Darmody
    • Principal, Darmody & Company

    Professor Heskett has correctly touched on the key difference between information and other types of resources, and to delude oneself that in this Internet age, any information can be truly 'protected' over the long term is somewhat naive.

    But more importantly, Heskett's work on corporate culture shows that a strong and adaptive culture correlates highly with business success.

    High adaptivity requires trust, and therein lies the value of transparency. When employees believe the company is forthcoming with facts, it becomes easier to risk making mistakes in the interest of quickly adapting, innovating, taking calculated risks.

    Transparency invites healthy dissension, implies that perfection is a myth, and builds trust over time. So transparency facilitates adaptive cultures, and adaptive cultures reduce any risk in greater transparency. A positive feedback loop.

    And in an organization where trust is high, should some patents, formulae, strategic practices require protection, employees will not only understand and accept that, but will no doubt loyally protect them too.

    I suggest discomfort with transparency could reflect challenges with ego, trust, and/or ethical behaviour. Discussion of, and reflection on, those topics will eventually move an organization forward, toward more transparency and an adaptive culture.

     
     
     
    • David Gebler
    • President, Skout Group, LLC

    One of the most important aspects of transparency is not just in the dissemination of information from the top down. Organizations that institutionalize transparency will see that more junior employees will feel safer to raise issues, ask questions, and then take risks without fear of retribution. Radical transparency creates a culture where it is OK to not have to know everything and to be able to learn.

    David Gebler www.skoutgroup.com

     
     
     
    • Traci Li
    • MD, Hospital

    What are the limits of transparency? "Transparency" was used during the presidential campaign in 2007. "Barack Obama promised to run the most transparent White House in history--disclosing donations, shunning lobbyists, and broadcasting important meetings on C-SPAN. Transition captain John Podesta reiterated the point Tuesday when he said Obama's would be "the most open and transparent transition in history."

    This campaign "promise" (cross your fingers please) is a broken promise. The Obama White House is tightly controlled. When the citizens don't know what is going on in government, they don't have to be responsible to the citizens.

    Transparency should be limited in non-public institutions.

     
     
     
    • Carl
    • L& OD Consultant

    Transparency should be viewed, as: a proficient method of maintaining substantive knowledge of an organizations' - strategy and requirements for decision making (short & long-term). Hence, transparency protocols should follow a distinct process matrix to ensure that the appropriate amount of information is delivered; connecting employees with the core dynamics of an organization's communications infrastructure.

    On the other hand, sharing too much information that does not result in, or provide, direct synergy between its distribution and interpretation (ROI) - may result in transparency doing more harm, than good. The fact of the matter is: there are absolute degrees of separation between "needing to know" and what the appropriate oversight should be surrounding the dissemination of sensitive and confidential information.

    In this day and age - transparency should be a fundamental business consideration; utilized for the scalability of an organization (e.g., ease of information transfer). However, when the provision of: trade secrets, intellectual property or non-compliant business practices become the main impetus for information disclosure; the organization may face the fact that it is experiencing larger problems than (whether it should be transparent, or not -case by case determination).

     
     
     
    • Nkululeko Moyo
    • Financial Controller, Imbizo Agribusiness, Zimbabwe

    Coca Cola would not be a great company had it not kept it's formula for decades. In business, in order to maintain the competitive edge you will need to be secretive, even to many of your employees. Reality is that not all employees would be able to keep and shield key information of the organisation from predators.

     
     
     
    • Waseem Al-Herwee
    • Managing Director Assisstant, Abdul-Wadood Al-Herwee Trading Houses

    Article is so helpful , That's so true, by sharing the need to know information to concerned employees, this gives a clear vision to them of the organisation's goals and responsibilties to be achieved and get them do their best.

     
     
     
    • Tom Dolembo
    • Founder, New North Institute

    George Pullman envisioned a utopian, egalitarian company in the late 19th Century and wound up being deeply buried in a concrete vault to avoid being disinterred by angry workers. Transparency as a theme is popular, but it is illusive. As "House" said, "Everybody lies." If the company culture operates better within the founder's vision of transparency, all well and good, be transparent. But to trust transparency alone to engender trust in management and cooperation is a pipe dream. The scuttlebutt mills have ginned up presentable truths for generations, and facts aren't policy. Boards and CEO's are currently so grossly imperial that the lessons of the Hapsburgs will not be learned simply by opening a window or two.

     
     
     
    • Malabika Debnath
    • Strategy Consultant, Social Business Transformation, IBM [ these comments are my personal opinion and do not represent an official position]

    Great article and likely to provoke some thoughtful exchange. The key question here is " If we operate on a need-to-know policy, who decides what employees need to know? " . How much do we trust the intellect and intentions of employees and what is the cost of NOT trusting them? This is a period of change and I believe, we are gradually, as a society, moving towards a higher level of comfort with openness as we trade off various levels of privacy for its benefits. My personal opinion- make all information (or data) available internally unless there are legal reasons why they can't be shared, watch the access gates for sensitive information and remind employees of usage guidelines and at the point of access, leave room for opting out - if a group/individual is not comfortable with sharing they may choose to not do so, though, I suspect, the 'system' will convince them over time, through the cost of exclusion. Sharing outsi de the corporate firewall- now that's a different level of discussion altogether.

     
     
     
    • Anonymous

    Transparency is one of the new busswords of our society. Every right, may be we can say everything has certain limitations - total liberty would evidently to chaos. Total transparency cannot exist particularly in this present world of ferocious competition and greed for power. However, should an organization and any government provide/publish maximum information on its activities/decisions transparency would not become an issue though there always will exist rooftop shouts about hidden agenda! H.K. Samboo from Mauritius

     
     
     
    • Brad Keller
    • Market Research & Innovation, UnitedHealthcare

    It strikes me as important to arrive at a shared understanding of what we mean by transparency. The term is oft-used, but in many instances it seems to mean different things to different organizations or constituencies. In my view, transparency is more than sharing internal information that might previously have been hoarded by senior management. It is really an matter of being open about an organization's intentions and strategies for achieving those intentions. People establish relationships with institutions they trust, and a strategy predicated upon values that include openness and empathy is more likely to be met with trust. Alignment around that ideal across the operating functions within a given business seems an important ingredient in successful performance. It takes more than just sharing financials or performance review data.

     
     
     
    • Natrajh Ramakrishna
    • KPMG India Country Head, Audit,, KPMG

    Business Intelligence invariably should not be up for sale or free distribution. For example, Professional Services Firms invariably deal with client MIS and "Best Practices" that represent intellectual property developed through great effort, cost and management time. These are shared with only a select few clearly on a "needs basis" and with a clear understanding that it is client priveleged. I am yet to come across companies that that share business intelliegence such as potential client lists, pricing strategy and margins they earn on select customers on the internal web!

     
     
     
    • Baboloki Boniface Reetsang
    • General Manager, Benefits Administration, Botswana Public Officers Pension Fund

    In my view every entity or organization have structures with specific mandates meant for regulatory purposes. Every structure is accountable for what is within its scope or area of responsibility, hence the need to avoid sharing all the information. Organizations should ensure that at every level the information to be shared should be such that it does not become detrimental to the operations of the other entity. Therefore transparency is essential as long as it is managed to suit the intended objective.

     
     
     
    • Atul Guglani
    • Director, Mantex Technologies

    Transparency : There is very little you can hide, almost everything is known to everyone , including the security at the gate. Beyond a certain size of company, transparency is generic. The systems automatically take care of it. The problem is not about Transparency . It is more on the understanding of the subject, data, issues and numbers. The complexity at each level grows and not everyone understands it correctly. This then leads more to lose talking and distorts the core value of the company. There transparency is more about the simplicity of business, its operations, goals, ethics and strategies. Not everything needs to be known to everyone. Specially the salaries of one another, the redundancy plans, divisional mergers, phasing out products etc etc. These issues are carefully handled and better opaque.

     
     
     
    • Praveen

    Transparency is a very well mis-understood word. There are many advocates of transparency but how many of them would disclose their own salaries/earnings or anything personal publicly? I particularly liked the analogy of "If you bare all, people close their eyes in disgust" !! There is a lot of hypocracy around this and we really need to be clear when we say everyone needs to know everything - does that really help, is that really useful to anyone? As they say "Ignorance is bliss" - it is true more often than not. But surely people who mis-use information/data should be punished, like one would be if they mis-use say a knife. I am not against transparency but I am happier to know what I need to and I dont need to know everything.

     
     
     
    • Phillip Clark
    • Clark & Associates

    Wisdom and trust determine transparency. The comfort and motives you sense from those providing the information determines how much you will believe. If you feel any of the above violated. Transparency is doomed by paranoia and distrust. That in turn opens the gates for rumors, "whistle blowing" and reactions counter to the benefit to an organization, government or individual.

    It usually isn't the big actions that tip the balance. As an example, if your manager say they cannot fill a position because of the budget, but then you find out they get a bonus for controling expenses....you no longer will trust them. If a company touts its profits, but fails to reward employees...the company sets themselves up for reactions from the employees. What many miss is the fact that the reaction may not occur immediately, but eventually there will be a "tipping point" where the employee will act.

    Human nature treats secrecy as bad. Do you have something to hide, a dark past, a hidden desire, etc. Our language portrays secrecy as belonging to the dark side. Read literature, watch the movies. Why would you expect that to change?

     
     
     
    • SRILA RAMANUJAM

    In one of the ancient scriptures on Hinduism, it is stated that the safe and sound way to dissipate information will be based upon these three factors namely - what is spoken, meaning the essence or content; to whom it is said to, meaning the audience which is receiving the set of information and....where and under what circumstance whatever is being shared is rendered, meaning its contextual significance. And really to reflect upon this will reveal that changing any of these factors will have a different impact and truly "transparency" will become such a relative concept, in that it is probably one of the fast changing constants of today's BIG data World of knowns and the unknowns!