The Hidden Cost of Half-Transparent Leadership
One of the most challenging areas we coach the founders we work with is the level of transparency in play across their company. We believe that most founders / MDs are being too selective with their transparency. They are willing to share good news and the headlines, but much more reluctant to share when times are tough or complexity exists. Whilst this behaviour can be understood on a self-protection level, it actually aids nobody. The founder/MD feels isolated and the team feels uninformed and therefore disengaged. Transparency is challenging to embed but once in place there is a deeper level of conversation that can be had and a greater range of inputs into how organisations can progress and improve.
And transparency is one of those areas where a little transparency is actually more damaging than no transparency. It is something you need to be 100% committed to.
“When leaders are transparent, they invite trust. And trust is the currency of effective leadership.”
Reframe: A little bit of data is worse than none at all.
If, as the founder or MD, you feel misunderstood or unsupported (as your team doesn’t act in line with your expectations) you probably, without intending to, created this situation by being ‘selectively transparent’. You feel frustrated and isolated but that is of your own making, as they don’t know what you know, so their views and decisions are very unlikely to align with your own.
The reframe needed is the understanding that it is actually more damaging to give them too little information to make decisions on that too much information. If your aspiration is to have ‘them’, and in particular the senior leadership team taking on more of the operational decisions then you need to give them enough information on the financial impact of those decisions that they can make ones that are commercially sound.
For instance if a sales team is just incentivised and aware of revenue targets they are unlikely to generate the maximum gross profit as they will sell at a price that gets the order irrespective of the actual profit generated. If on the other hand they know the cost of sales and cost of delivery are incentivised the gross profit generated rather than revenue, their behaviour will change and they will make better commercial deals.
If you want your team, and in particular your senior leadership team (SLT), to adopt an ‘owner’s mentality’ and consider all the stakeholders' needs you need to give them a similar level of information that you have at your disposal. Selective transparency doesn’t serve them or ultimately you.
Rethink: Have I educated them well enough?
I appreciate we would say this but we see training and coaching as a medium term investment not a short term cost. There is no return on a cost, whereas a good investment will show a return. So a question to consider is whether you have invested enough time and money into developing and educating your leadership team so that they understand the numbers, the strategy, the market, etc. Are you too busy being busy?
Traditionally technicians become managers, and managers become leaders, but there is often not the investment made by the company to make that transition as smooth and effective as possible. The Founder/MD approach will be to tell them as little as they feel they need to know, rather than being 100% transparent. Understandably they feel uncomfortable sharing too much as they feel they may be judged on their performance as the MD.
But without full clarity, SLT members start filling in the blanks themselves, often creating misalignment across departments. Decisions made in silos, duplicate efforts, and defensive leadership patterns emerge as people try to protect their piece of the puzzle.
It is your responsibility to give them enough clarity to perform at the optimal level, irrespective of how uncomfortable that might feel. Invest in them. Train them, educate them and then empower them.
Refocus: Consistent communication is now an expectation.
Expectations have shifted and most employees now expect to be kept fully informed of the progress of the company they are working for. It is not enough just to pay them and give them good working conditions if you want them fully involved and committed. We live in a 24/7 news culture and that sets the expectation in relation to the level of transparency and information people (i.e. your employees) now expect.
Without full transparency employees begin to question what they’re not being told. Morale drops, psychological safety erodes, and performance dips. Suppliers, unsure of the full picture, operate more cautiously or disengage. It is not just your shareholders or board that expect to be kept fully informed, it is all your stakeholders.
And no we are not advocating you share all your financial information and future plans with all of your stakeholders but we are advocating you sharing enough of each to ensure there is no void created which will allow others to create their own narrative which is potentially far more damaging.
The logic underpinning this principles of Full Transparency is that you need your team to trust you, and the company, but to build trust you need to first demonstrate trust. If they feel you trust them enough to share information and performance data then their trust in you will be enhanced. And if there is greater trust across the company morale and performance will improve. Full transparency will build this trust.
Time to get comfortable being uncomfortable?
