Leadership and Transparency

This morning, while reading the Economic Times, I came across this quote from the global HR head of one of India's leading Consumer Products & Services companies: "In turbulent times there is a need for greater transparency at the workplace, which will lead to higher accountability, responsibility and responsiveness on [the employee's] part". This struck me as a very powerful idea, one that I believe needs to be implemented urgently by all companies.

Whether your company has just lost a big deal, or has run out of working capital in a recession year, or is facing a hostile takeover by a rival organization, be transparent - go ahead and tell your employees all about it. Also tell them the short-term and long-term impacts of the problem. Normally, whenever a company faces tough times, the natural reaction of the leadership is to shut themselves off from the employees. They feel that, by not conveying the bad news for as long as possible, they can protect the employees from demotivation and low productivity. But we need to realize that such an information blackout normally has the opposite effect on our team. An employee who knows what is going on is more secure mentally, since there is no uncertainty about the situation of the company. Such an employee has two straightforward choices - either stick with the company and help it tide over the bad times, or leave immediately for greener pastures. On the other hand, an employee who is kept insulated from the bad news will soon realize that something is being hidden from him but at the same time will not be sure as to what that hidden matter is. This uncertainty will keep preying on his mind continuously, thereby reducing both his immediate productivity and his long-term engagement with the organization.

Another aspect of transparency is to treat all employees equally during a crisis. If you apply one set of rules for some employees, and another set of rules for others, you run the risk of alienating both groups by making each think you favored the other. For instance, if you implement a cost cutting drive, ensure that applies to everyone, including the leadership team. If the leaders don't lead by example, they will find it difficult to push through any unpopular measures in their respective departments. Or else, if there is a cash crisis and salary payments are delayed, ensure that all the employees are paid at the same time or nobody is. If you decide to pay the junior employees first, saying that they are more dependent on salary income, the seniors will definitely support you. But somewhere in their minds, they will feel betrayed and the first thought of quitting will begin to arise. A third instance where transparency is needed is during appraisals. When one employee gets a good rating, or an award, or a promotion, it is your responsibility as a leader to explain to the rest of the team why that person is getting the special recognition. This will guard against bad blood and allegations of favoritism.