Transparency in Leadership

The word transparency is everywhere.

The demands for increased accountability from statutory compliance and shareholder activists have forced organizations to become more transparent. Political ideology aside, Barack Obama ran a successful campaign championing the need for transparency in response to the government secrecy of the previous two terms. Unfortunately, transparency is fast becoming a buzzword:

Too bad, because transparency is not an act; it is a process. Even better, it is an outlook or state of mind.

Like all processes that create a state of mind, it’s useful to have support at the top. In The Transparent Leader: How to Build a Great Company Through Straight Talk, Openness, and Accountability, Herb Baum suggests that the pillars of transparency are integrity, honesty, quality corporate governance, and effective communication. But he’s not convinced that corporate governance adds true transparency and instead highlights the dangers that excessive compliance can cause at the expense of shareholders, creative risk taking, and innovation.

To me, transparency in leadership is not just about outright lying but also about being frank. Particularly in this tough economy, is it a sin of omission not to tell your team that you too worry about the future? Or is staying optimistic one of the attributes of a strong leader?

This exact debate is the subject of How Frank or Deceptive Should Leaders Be? over at Harvard Business School Working Knowledge. The discussion was prompted by a new book called “Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism” which deals with how leaders should act when they aren’t confident about the future.  Over simplified, leaders are caught between irrational exuberance and self-perpetuating prophecy.

While there are many insightful comments, one of the most amusing comes towards the end:

In the Hindu epic Mahabharata, Krishna knew that Yudhishtira, who was known to always speak the truth, would not be able to lie. A lie was needed to win the war and so he had all the warriors beat war-drums and cymbals to make as much noise as possible at the critical moment, so that only the pleasant part of the truth could be heard drowning the unpleasant bit.

I think this is what is currently required. A leader with credibility should speak the truth, but enough “noise” should be created to communicate confidence and positivity for the future.

An interesting approach. Leaders speak the whole truth but employees focus only on the positive part.

What do you think?

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6 Responses to Transparency in Leadership

  1. Joe April 18, 2009 at 8:43 am #

    I have two underlying concerns with ‘drowning out the unpleasant part’
    1) It could rob managers of the critical insights, talents, and results of the people who work for them. If the people who work for you don’t clearly ‘hear’ your real problems, they can’t work to fix those problems. Fifty years of capitalism has proven a million individually motivated actions work infinitely better than one ‘enlightened’ fiat.
    2) The amount of ‘noise’ employed may become a slippery slope. It is for a war today, a battle tomorrow, a hill top the following week, a desire the month after that. Transparency needs to be a process to achieve the first point/goal.

  2. Timo Elliott April 20, 2009 at 12:18 am #

    Selective truth-telling (and some outright deception) is clearly what most of us decide is the best overall strategy in life (e.g. saying “that’s a LOVELY present — thank you!” no matter how much you hate the gift). It would be strange if this didn’t also apply to the corporate world.

    When it comes to the facts, greater transparency isn’t really a choice — it’s becoming inevitable. Corporate spin has always had its limits, but thanks to the increased power of networks, those limits are dropping fast — it’s now just too darned easy for people to get independent information.

    But that still leaves a lot of scope for leadership “attitude adjustment” — if you can’t find a way to be enthusiastic about what you’re doing, how on earth can you expect anybody else to be?

  3. Dennis Moore March 19, 2010 at 9:28 am #

    Was there some change in leadership somewhere that inspired this blog? 🙂

    • Jonathan March 19, 2010 at 9:40 am #

      Actually, I wrote this in April 2009.

      • Dennis Moore March 19, 2010 at 10:13 am #

        Yes, but you just (re-)tweeted about it today 😉

  4. Aiaz Kazi March 21, 2010 at 2:34 pm #

    IMHO, that transparency has multiple components. Sharing of information is only one part of the equation. 2 other pieces of this puzzle are Trust, and the “Need-to-Know” principle. I agree that a platform of trust must be in place for leaders to earn followers. At first glance, Information Sharing and “Need-to-know seem exactly opposite to each other, but they are not. Need-to-know allows leaders to incorporate context into transparency. This relates to timing, level, and amoung of information sharing (positive or negative information.) In today’s world of instant gratification, when we say leaders should be transparent the implication is that they share more information, share it quicker, and share it equally. Leaders are facing perhaps their biggest transparency challenge – as they have to recalibrate the dials across trust, information-sharing, and need-to-know.

    Now to the question that has been posed – should employees ignore all the negative information, and focus on only the positive? IMHO that an important aspect of being a follower is to trust their leader, and back the leader’s optism with their support. However, followers have the responsibility of understanding the negative information and using it if needed to be able to offer icremental or alternate solutions to move forward. Therein lies the difference between a follower and a “lemming.”

    On the lighter side, it is interesting how “being transparent” has become a virtue from a vice!

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