Transparency in Leadership: A Business Leader’s Double-Edged Sword

“Transparency breeds trust, and trust is the foundation of leadership.” – Unknown.

Wikipedia describes a critical moment in the history of drug manufacturer Johnson & Johnson under the title “Chicago Tylenol Murders.” In 1982, the tampering of Tylenol containers with potassium led to the death of several people. The incident led to the development of tamper-proof packaging and anti-tampering laws. It also highlighted the importance of leadership transparency. James Burke, the CEO at the time, assumed responsibility, combined the need for openness with timely actions, and engaged in open communication to deal with the situation, which allowed Johnson & Johnson to survive the crisis.

“Double-edged sword” is a metaphor for something with positive and negative consequences.

This quote from Merriam-Webster is a good example: “Still, the growth in telecommuting could be a double-edged sword, Kolko said. For job seekers, remote work gives them a wider swath of places to apply and, for employers, it offers a large pool of candidates to choose from. However, being at home could ‘reduce productivity in some cases,’ he said.”

It is an excellent metaphor for leadership transparency, which needs to be used with skill and care.

Transparency and Authenticity 

Transparency is often confused with authenticity. They are not the same.

Transparency is about being open in sharing information and straightforward actions and decisions.

Authenticity, on the other hand, is about being true to who you are and your values.

You could be transparent, for example, in sharing information, though the information you share doesn’t reflect your values and hence is not authentic. You could be authentic but may not openly share information, which makes you non-transparent.

Honesty is the foundation for both authenticity and transparency.

Leadership Transparency 

“I’m not upset that you lied to me, I’m upset that from now on I can’t believe you.” ― Friedrich Nietzsche.

Transparency is about being open and honest. A transparent organization makes it easy for people to deal within it and with it. There are no hidden agendas. Openness permeates decision-making, communication, and all business dealings. A transparent leader sets the tone for the organization by modeling it.

The benefits of transparency are many. Being transparent builds trust among those we deal with because they know what to expect from us. It also facilitates communication since we speak what we know.

Transparency During Crisis Management 

“I think you want to show a level of transparency that breeds trust. You don’t want to show a level of desperation that breeds concern.” — Dave McClure.

Earlier, I mentioned the Tylenol incident and how James Burke dealt with the incident with transparency. Handling the crisis posed a tremendous challenge to his leadership.

The New York Times obituary of Harold Burson, an expert in public relations and crisis management, said :

“After consulting Mr. Burson, the company’s chief, James E. Burke, announced a recall, ordered new tamper-resistant caplets and packaging seals, and mounted a campaign that acknowledged the facts, stressed safety measures and eventually restored his company’s credibility. ‘Basically, I served to help him think through problems and reinforce his own instincts,’ Mr. Burson said of Mr. Burke.”

Burke’s instinct told him to be transparent and take the actions necessary to deal with the crisis. The Wikipedia article mentioned earlier says:

“Johnson & Johnson received positive coverage for its handling of the crisis; for example, an article in The Washington Post said, ‘Johnson & Johnson has effectively demonstrated how a major business ought to handle a disaster’… While at the time of the scare the company’s market share collapsed from 35 percent to 8 percent, it rebounded in less than a year, a move credited to the company’s prompt and aggressive reaction.”

Being transparent alone doesn’t help in a crisis; it needs to be coupled with quick actions and excellent communication.

Lack of Transparency and Oversharing  

Yahoo’s former CEO, Marissa Meyer, implemented the “stack ranking” performance system, and the lack of transparency about how it was done created dissatisfaction among employees and distrust, which affected Mayer’s ability to turn around the company. On the other hand, there are instances when transparency can be a problem.

Transparency must be accompanied by discretion. There are instances when too much transparency could lead to side effects that a business cannot survive, such as information a competitor could leverage or sensitive content that could compromise security and privacy aspects.

There have been many instances when leaders thought they were being transparent but were oversharing, creating problems for some leaders. For example, the 2018 tweets from Elon Musk about taking Tesla private and saying that he had funding to do so resulted in a lawsuit. In 2013, remarks made by T-Mobile CEO John Legere about AT&T resulted in strained relationships between the two companies. Leaders must heed regulatory compliances and respect privacy laws.

When it comes to being transparent with employees, a delicate balance between transparency and protectiveness comes into play. In town hall meetings, if an employee asks about a pending merger, the leader may have to limit the amount of information shared for fear of jeopardizing the transaction.

The Double-Edged Sword of Transparency 

Being transparent has consequences, both favorable and unfavorable. In leadership, using transparency is not a black and white decision. It is much more nuanced. Wise leaders weigh all consequences before deciding how to be transparent and to what extent. They combine clear communication with other actions as needed before doing so. Transparency and honesty go hand in hand. If you cannot be transparent completely for a valid reason, it might be good to say so. For example, a leader might say, “I am able to share only limited information on this topic due to its sensitive nature, but share more at the appropriate time.”

Today, more than ever, transparent communication has become crucial. The workplace and society demand it. A lack of transparency is looked upon as a lack of accountability. Due to technological advances, stakeholders have access to more information, and discovering some facts hidden by the leaders could diminish their trust.

Transparency does not mean more information. It is about understanding the audience, considering specific needs, and promptly fulfilling them.

Use the double-edged sword of transparency judiciously in your leadership journey.

Written by Shantha Mohan, Ph.D.
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