Internal transparency is a critical element of business success

Significant differences exist between private and public companies regarding legal requirements for transparency, yet leaders of private companies should not take that as carte blanche to create an atmosphere of secrecy. It’s a self-destructive leadership philosophy that will only backfire long term. I encourage private companies to create an atmosphere of internal transparency through free-flowing communication from the top down and the bottom up. It’s an essential means of building trust, getting everyone on the same page, creating esprit de corps and maintaining an exceptional workplace. 

This is the type of transparency my senior executive colleagues and I have created at the private finance and accounting consulting firm RoseRyan. Four years into leading the midsize consulting business, I have found that actively being transparent is the best way to manage. In addition to instilling trust and credibility, it encourages employees to also be forthcoming. Chief executives sometimes struggle with the concept of transparency, particularly when they aren’t compelled to do so. Executive ego can be a contributing factor, as is the inclination not to be questioned, but this is misguided and not in the company’s best interests. 

It does require significant time and effort to develop a more transparent mindset at a company, but there’s a payoff: Employees who are engaged and encouraged to speak up will tell you the truth. And you need the truth to make the best decisions for the business. Here are some ways to encourage more transparency in your organization: 

Make the information digestible. Being transparent does not mean sharing all information all at once — it needs to be the right level of information for the audience. My entire company does not need to see our income statement, but they should know where we are headed. If that direction needs to shift — because of the economy or some other force — they need to know that too.

Actively listen. Tell employees you’re available for an open conversation, and mean it. When my company went through an acquisition last year, the founder, Kathy Ryan, and I scheduled a series of small-group meetings with everyone in the firm to give them a chance to ask us anything. We learned from their questions and they learned from our answers. 

I also hold monthly meetings with the entire firm to keep everyone updated on our projected revenue and actual revenue, and how closely we’re meeting key goals. We use the same charts month to month, so that it’s easy for everyone to recognize and digest the information — they don’t have to waste time trying to decipher what I’m trying to say. They can simply listen.

These meetings are one of many ways our leadership team emphasizes that we want to hear from employees, that we want to hear their concerns, questions and observations in the field. Because we are a distributed workforce, we need such opportunities to check in and compare notes. 

Meet people where they are. Not everyone feels comfortable asking the CEO questions, especially in a companywide meeting. For that reason, I give employees multiple ways to get the answers they need. We solicit questions before meetings, through my chief of staff (she promises not to share the person’s name if anonymity is preferred), and employees are given multiple opportunities to ask questions during meetings. I also let people know I’m open to talk anytime.

Be open to hard truths. When you’re the CEO, sometimes people tend to tell you only what they think you want to hear. That’s not always the truth. What if you work with someone who feels overwhelmed with a responsibility you’ve just handed them? Would you rather they stayed mum and tried to muddle through rather than admit they need extra support? I recently had this experience and I appreciated an employee being brave and trusting me enough to ask for help. 

Let’s say you have an important client who is unhappy, but no one wants to tell you. If the client puts up with this dissatisfaction until the contract runs out, this information won’t be reflected in your revenue for quite a while — yet it’s a serious problem you need to know and address. 

Be consistent. Being transparent has to extend beyond one meeting. Are you willing to work this way over a long period of time? How do you talk to employees now? If the few times you have been forthcoming, and everyone looks at you with shock, it may be time to make a change. 

Moving toward a more transparent mindset

Earlier in my career, when I became the CEO at Hitachi Data Systems, I received great advice: Watch your back. Look over your shoulder and see that people are following you. In other words: Are you guiding your organization forward, and are you an effective guide? Part of being a chief executive involves rallying and guiding others to move with you, as you make progress advancing the company. I believe adopting a culture of transparency will greatly contribute to people wanting to work with you and move with you — while making them feel empowered to speak up if a roadblock is ahead or a detour should be explored.

Now, as the chief executive of a midsized consulting firm, I have more flexibility than a CEO leading thousands. The bigger the company, the harder it is to develop a more transparent mindset throughout the organization. I suggest, however, that the encouragement of two-way communications can help any CEO’s visibility into the business. If you feel the same, be clear about the extent of your availability to employees, and let them know you want to hear from them.

I lean toward viewing myself as one person working for the company and that I’m only as effective as the whole company working together. I want to hear what people have to say. I think that authenticity comes through and, when it does, people are more transparent with me.