Transparency is Hard to Do Well

Transparency builds trust, but only if you do it carefully

Sean Byrnes

Nov 7, 2023

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We all want our teams to trust us, since teams with high trust work better together. Trust smooths over the rough edges of communications and interactions, since you don’t have to evaluate everyone’s intentions whenever they do something. If your team trusts you, you save time which means you move faster and get more done.

Most companies don’t trust their employees, because most companies are paranoid about employees leaving, sharing secrets or undermining leadership. This is especially true with leaders who are insecure in their positions, as they fear everyone is undermining them as some kind of game of thrones. These companies have poor cultures for obvious reasons.

Likewise, most employees don’t trust their employers. Most of that distrust is well founded, as companies often surprise employees with reorganizations, layoffs and other changes. In the worst cases the company lies to the employees, who develop distrust as a survival skill in corporate life.

Trust is hard.

Someone has to take the first step, and that someone is the company. If you want your employees to trust you, you need to trust them first. It’s that simple.

One of the best tools to build trust is transparency. Being transparent about company performance and plans is a great way to show your team you trust them. By giving them sensitive information you make the company vulnerable, unless you trust them. Many people will claim they “trust” their teams, but taking an action like sharing very sensitive information shows you really do trust them.

As a result, transparency has become a popular leadership tool in recent years. This is a good thing! Employees can expect and ask more of their employers than ever before. The more you share the more your team will trust you, right?

Nope.

The problem with transparency is context. You could share every single piece of information about your business with your employees, but without the context to understand it the information is useless. It’s like providing a document in an alien language and not providing a key to translate it. You can claim you’re transparent, but the employees still don’t really know what is going on.

In fact, sharing lots of information without context is worse than not sharing. Employees will jump to incorrect assumptions about the business, which means their expectations and understandings will be all over the board. It’s almost like lying, as they won’t know the truth.

The problem is that the context can be complex. For example, let’s say you share all of your revenue data with the team, including both your revenue targets and actuals. One quarter you miss your revenue target because a large deal slipped to the next quarter. You might know that the big deal slipping is a good thing because you expect to close it for even more money, but how can you explain all of that to your team? How do you explain it to the team in a way they will understand and believe?

And then what happens if you don’t close the deal after all?

Personally, I’ve always believed in transparency so I’ve made the commitment to educate my teams and give them the context necessary to understand all of the information. This means not only explaining concepts like revenue recognition and stock option pricing, but spending the time to answer questions and (in some cases) running classes to teach concepts. It’s time consuming, but sometimes it’s what is necessary to provide the context to understand all of the information.

And I also take ownership of explaining when things don’t go well. It’s hard to stand in front of the company and explain why you missed a quarterly target, and why they should believe it won’t happen again. It’s MUCH easier to just not talk about it. Still, if you want to build trust you need to put in the work.

Even then, perfect transparency is elusive. Do you share everyone’s compensation with everyone else? Most people find that uncomfortable. You can standardize compensation for various positions, so even though you don’t know someone’s specific compensation you know that everyone doing the same job is paid the same amount. That might be better, but some people might still find that uncomfortable. Trust has a spectrum and you choose where you want to be.

Of course, there is no requirement you build trust with your team. Many companies find great financial success in zero trust environments. It’s up to you if it’s worth the effort, and whether it will give you an edge in your market.

For me, leadership is easier when I trust my team so I make the investment to build trust through transparency and education. I see it as both a performance enhancer and an improvement to my quality of life. I sleep better knowing I can trust my team.

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