Transparency in organizations

“We chose steel and extra wide panels of glass, which is almost like crystal. These are honest materials that create the right sense of strength and clarity between old and new, as well as a sense of transparency in the center of the institution that opens the campus up to the street.”

-Renzo Piano

What is Transparency in the context of the organization?

It is the deliberate attempt by management to architect an organization that encourages open access to information, participation, and decision making, which ultimately creates a higher level of trust among the stakeholders.

The demand for transparency is becoming quite common. The users of goods and services are provoking the transparency question:

  1. Shareholder demand for increased financial accountability in the corporate world,
  2. Increased media diligence
  3. Increased regulatory diligence and requirements
  4. Increased demand by social interest and environmental groups
  5. Demands to see and check on compliance based on internal and external policies
  6. Increased employees’ interest in understanding how senior management decisions impact them, the organization and society

There are 2 big categories that organizations must consider and subsequently address while establishing systems in place to promote transparency.

  1. External Transparency
  2. Internal Transparency

 

External Transparency:

Some of the key elements are that organizations have to make the information accessible while also taking into account the risk of divulging too much information, make the information actionable, enable sharing and collaboration, managing risks, and establishing protocols and channels of communication that is open and democratic.

For example, it is important that employees ought to able to trace the integrity, quality, consistency and validity of the information back to the creator. In an open environment, it also unravels the landscape of risks that an organization maybe deliberately taking or may be carrying unknowingly. It bubbles up inappropriate decisions that can be dwelt on collectively by the management and the employees, and thus risks and inappropriateness are considerably mitigated. The other benefit obviously is that it enables too much overlap wherein people spread across the organizations may be doing the same thing in a similar manner. It affords better shared services platform and also encourages knowledge base and domain expertise that employees can tap into.

 

 Internal Transparency:

Organization has to create the structure to encourage people to be transparent. Generally, people come to work with a mask on. What does that mean? Generally, the employees focus on the job at hand but they may be interested to add value in other ways besides their primary responsibility. In fact, they may want to approach their primary responsibility in an ingenious manner that would help the organization. But the mask or the veil that they don separates their personal interest and passions with the obligations that the job demands. Now how cool would it be if the organization sets up a remarkably safe system wherein the distinction between the employees’ personal interest and the primary obligations of the employee materially dissolve? What I bet you would discover would be higher levels of employee engagement. In addressing internal transparency, what the organization would have done is to have successfully mined and surfaced the personal interests of an employee and laid it out among all participants in a manner that would benefit the organization and the employee and their peers.

Thus, it is important to address both – internal and external transparency. However, implementing transparency ethos is not immune to challenges wherein increased transparency may distort intent, slow processes, increase organizational vulnerabilities, create psychological dissonance among employees or groups, create new factions and sometimes even result in poor decisions. Despite the challenges, the aggregate benefit of increased transparency over time would outweigh the costs. At the end, if the organization continues to formalize transparency, it would also simultaneously create and encourage trust and proper norms and mores that would lay the groundwork for an effective workforce.

Reputation is often an organization’s most valuable asset. It is built over time through a focused commitment and response to members’ wants, needs, and expectations. A commitment to transparency will increasingly become a litmus test used to define an association’s reputation and will be used as a value judgment for participation. By gaining a reputation for value through the disclosure of information, extensive communications with stakeholders, and a solid track record of truth and high disclosure of information, associations will win the respect and involvement of current and future members.

Kanter and Fine use a great analogy of transparency like an ocean sponge. These pore bearing organisms let up to twenty thousand times their volume in water pass through them every day. These sponges can withstand open, constant flow without inhibiting it because they are anchored to the ocean floor. Transparent organizations behave like these sponges: anchored to their mission and still allowing people in and out easily. Transparent organizations actually benefit from the constant flow of people and information.

 

Plans to implement transparency

Businesses are fighting for trust from their intended audiences. Shel Holtz and John Havens, authors of “Tactical Transparency,” state that the realities associated with doing business in today’s “business environment have emerged as the result of recent trends: Declining trust in business as usual and the increased public scrutiny under which companies find themselves thanks to the evolution of social media.” It is important, now more than ever, for organizations to use tools successfully to be sincerely but prudently transparent in ways that matter to their stakeholders.

“Tactical Transparency” adopted the following definition for transparency:

Transparency is the degree to which an organization shares the following with its stakeholder publics:

▪   Its leaders: The leaders of transparent companies are accessible and are straightforward when talking with members of key audiences.

▪   Its employees: Employees or transparent companies are accessible, can reinforce the public view of the company, and able to help people where appropriate.

▪   Its values: Ethical behavior, fair treatment, and other values are on full display in transparent companies.

▪   Its culture: How a company does things is more important today than what it does. The way things are done is not a secret in transparent companies.

▪   The results of its business practices, both good and bad: Successes, failures, problems, and victories all are communicated by transparent companies.

▪   Its business strategy: Of particular importance to the investment community but also of interest to several other audiences, a company’s strategy is a key basis for investment decisions. Misalignment of a company’s strategy and investors’ expectations usually result in disaster.

Here are some great links around transparency.

According to J.D. Lasica, cofounder of Ourmedia.org and the Social Media Group, there are three levels of transparency that an organization should consider when trying to achieve tactical transparency.

▪   Operational Transparency: That involves creating or following an ethics code, conflict-of-interest policies, and any other guidelines your organization creates.

▪   Transactional Transparency: This type of strategy provides guidelines and boundaries for employees so they can participate in the conversation in and out of the office. Can they have a personal blog that discusses work-related issues?

▪   Lifestyle Transparency: This is personalized information coming from sites like Facebook and Twitter. These channels require constant transparency and authenticity.

 

Create an Action Plan around policies and circumstances to promote transparency:

Holtz and Havens outline specific situations where tactical transparency can transform a business, some of which are outlined in this list.

▪   Major Crises

▪   Major change initiatives

▪   Product changes

▪   New regulations that will impact business

▪   Financial matters

▪   Media interaction

▪   Employee interaction with the outside world

▪   Corporate Governance

▪   Whistleblower programs

▪   Monitoring corporate reputation internally and externally

▪   Whistleblower programs

▪   Accessibility of management

 

Posted on October 26, 2012, in Corporate Social Responsibility, Employee Engagement, Employee retention, Leadership, Learning Organization, Learning Process, Management Models, Organization Architecture, Risk Management, Social Dynamics, Social Systems, Walled Garden and tagged , , , , , , , , , , , , , . Bookmark the permalink. Leave a comment.

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