Leadership: The Importance of Transparency in the Workplace

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In any organization, there is information that should not or cannot be shared liberally. It could be information about private personnel matters, sensitive financial data, or trade secret information, for example.

In other instances, there might be information that isn’t necessarily sensitive for any of these reasons, but companies might just prefer to keep it under wraps to avoid disruption or anxiety in the workplace.

In this post, we’ll propose that companies should err on the side of transparency with employees to the extent possible.

Employee Morale

It’s human nature to expect the worst when information is being withheld. If it were good news, they’d just want to tell us right away, right? Even if the truth isn’t necessarily positive, it’s often going to be less negative than what gets conjured up in employees’ imaginations.

For example, a company that is facing tough financial news might be contemplating a raise or hiring freeze. But employees might jump to assuming that massive layoffs or even bankruptcy is in the works. This can devastate morale and even lead to large-scale employee turnover as staff, assuming job loss is imminent, start looking for opportunities elsewhere.

Wasted Productivity

Decreased morale frequently means lowered productivity. Additionally, employees who sense information is being withheld from them naturally start to speculate and gossip, using up work hours that could be better spent on productive tasks.

Loss of Message Control

People crave information, and if the organization isn’t providing it, that gap is almost always filled by rumor and speculation, resulting in the company’s losing control over the message. This control can be hard to regain even after the company begins to embrace transparency.

Transparency Builds Trust

So far, we’ve talked about the downsides of not being transparent. But on the flip side, there is a benefit to consistent transparency: It builds trust with the organization.

Most businesses cannot be entirely transparent with all levels of the organization. Often, companies simply do not even know all the information yet, and situations can change day to day or even hour to hour. And some information needs to be kept from employees due to regulatory, privacy, trade secret, or other reasons.

But to the extent possible, companies should think of ways to be as transparent as they can with their staff to avoid the pitfalls of withholding information and to build organizational trust.

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