How to tell when your company’s transparency goes too far

As we near the end of another year and decade, most of us are reflecting on this past year’s performance. For managers and CEOs, there’s a recurring question we probably grapple with: how much information should we share with our teams?

I’m a big proponent of employees knowing our strengths and weaknesses. I want everyone to feel invested in our company, so together, we can celebrate our victories and rally after our defeats. I know that I’m not alone in my lean toward transparency. According to a Robert Half study, from 2012 to 2016, the percentage of private companies sharing financial data with their employees more than doubled from 24% to 56%. And CEOs have seen positive results across various measures.

Tom Szaky, the founder of TerraCycle, did a transparency 180° in the course of his leadership—from minimal sharing to divulging as much information as possible. He included monthly invoices, changes with clients, and biweekly master reports comprised of feedback from every employee.

As Szaky wrote in a 2011 New York Times post:

“The benefits of this method have been astronomical. All of our 100 employees know exactly what is going on and can learn from what other departments are doing. It has created a feeling of ownership and trust, and it has fostered communication. It also brings issues to the forefront much faster than ever before and serves as our critical feedback engine.”

There is immense value in being transparent. For starters, it can inspire loyalty and engagement, and attract like-minded talent, who identify with a company’s explicitly expressed values. But like anything, too much of a good thing can turn bad.

When transparency goes awry

Before you launch a company newsletter detailing everything about your organization, keep in mind: there is such a thing as being too transparent.

Transparency can result in confusion, especially if you present facts without context. Writes David De Cremer for Harvard Business Review: “[L]eft to stand alone, facts don’t create a culture that seeks to understand why something happened. Instead of figuring out why a mistake was made, you only know what the mistake was — and who made it.” Without this context and the “why,” employees may fixate on the “who” and get derailed from their actual work.

Overzealous information sharing can also inspire resistance, as people compensate to protect their personal boundaries. If you, for example, divulge private information about an employee’s goals or personal matters, moving forward, that employee will probably be much more guarded about sharing their goals.

Here’s the thing: everyone needs their privacy, no matter how collegial and collaborative your culture may be. Take open offices—they were supposed to serve as a bastion of workplace transparency, but many managers have found that these layouts ultimately have the opposite effect (among many other shortcomings).

One multinational company unveiled a new open office plan in the hopes that the increased transparency would improve ethical decision making, collaboration, and creativity. Instead, managers found that employees shared fewer ideas, and the ideas that they did share were less creative.

That’s why it’s crucial to be deliberate about your approach to transparency. Here’s how to get the balance right.

1. Give context

When you communicate with your organization, consider what that information means in the larger picture and how to communicate that to your audience. If it’s a goal, include the reasoning and some KPIs. If you’re sharing results, speak to what went well and why. It’s also important to share what didn’t go well and why that might have happened.

For example, when one company decided to share its employee bonus targets, they went one step further. They tied those targets to (explicitly stated) goals that the entire organization was aware of.

That same company also shared its goal for operational savings generated by employee ideas. The response was overwhelming—employees were eager to suggest cost-cutting ideas.

2. Emphasize learning

When you share negative results, it’s important to nip any doubts in the bud to avoid sparking a blame game among colleagues. That’s why you need to emphasize the goal of publicizing that kind of information. If you’re like me, that’s usually learning and correcting our course.

For instance, with my online form company, after the long-anticipated release of a new product, we initially faced subpar user reviews. I shared this with my teams not to discourage them but to encourage them to keep digging and figure out what went wrong. It turned out that users didn’t particularly dislike the new product—they just preferred having a choice between that and our previous version. So we gave it to them, and users thanked us for it.

3. Be authentic

Sometimes leaders venture to share about themselves to connect with employees. If you do this appropriately, this can be effective, but overselling or sharing overly personal information just to make a point will have the opposite result.
As Harvard Business Review cautions:

“If it’s something that you’d be thankful to hear, chances are your reports will feel similarly. If it’s something that would give you pause, err on the side of caution. Be curious about your own intentions. Are you sharing from a place of authenticity, or are you trying to fabricate a connection with others?”

4. Respect others’ privacy

And finally, don’t forget to draw a definite line at divulging personal information about employees. It’s incredibly crucial to create a culture where people feel comfortable sharing their goals and concerns with management. That’s why I have an open-door policy at our office. However, respecting people’s privacy is a requisite.

The right amount of transparency can increase employee engagement and boost performance going into the new year. If your organization has unique values, publicly promoting your culture can attract like-minded talent. Just be thoughtful about how you’re sharing—be sure to do so from a place of authenticity. Even if it means admitting that you don’t have all the answers, people will appreciate your genuine transparency.

Aytekin Tank is the founder of JotForm, a popular online form builder. Established in 2006, JotForm allows customizable data collection for enhanced lead generation, survey distribution, payment collections and more.