Why Transparency is Critical to Creating Trust in an Organization

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CONTRIBUTOR / Andrew Swinand

CHIEF EXECUTIVE OFFICER
LEO BURNETT, NORTH AMERICA / Leadership

They say knowledge is power, but it’s only as powerful as it is widespread. In this video, Andrew Swinand shares this perspective and his belief that transparency is what enables employees to work harder, be more loyal, and have a greater shareholder return. Transparency isn’t just advised when it comes to good news, though. Swinand cites research that demonstrates children’s stress levels increase when they believe they’re being falsely reassured. While bad news may create challenges, it is worse for employees and external stakeholders when leaders say nothing. For Swinand, these principles guide his approach to building trust both internally and externally.

Transcript

I believe a culture of trust today is more essential than it’s ever been. And we live in an interesting time. With digital technology we basically have full transparency to information. And I think there’s a higher expectation amongst individuals to know, to be included, to basically be part of the conversation.

"So I think as leaders today, more than ever, we need to have transparency to build trust in the organizations we lead. when I was starting out, you know, basically as an employee you had very little access to information.

Companies would do annual reports or their shareholder newsletter.

And I think that today, to attract and retain the best talent, people need to understand decisions."

Corporations need to embrace a greater level of transparency in terms of sharing information with their employees. companies that basically share this information are going to have greater loyalty, greater shareholder return, and harder working employees.

Bumper: Bad News: Painful but Necessary

If information is power, why would I not want to give more information to my people to make them as powerful as possible, to help our businesses grow, and to help succeed in the marketplace.

But then you have the converse, what if it’s bad news? What if this quarter what we’re sharing is potential layoffs or potential down side?

There was actually a child psychology study where they looked at children who were told and aware of issues, and then they had the parent come in and lie to them and basically tell them everything was okay. Everything’s fine, don’t worry about it.

And they studied and looked at actually children’s stress levels during this experiment. And ironically, when given reassurance, stress levels spiked. And the reason is people, children, are perceptive. They know when bad is happening. They see it in your face. They see it in how the organization carries. And what the study basically found was the spike was an erosion of trust.

People are aware of the bad. And if you’re not, as a leader, communicating, telling the story, managing information, people are gonna make up stories on their own. So my experience is while you do create distraction when bad occurs, it’s infinitely less than the distraction that would naturally occur in saying nothing.

Bumper: Embracing a culture of transparency: Listening to Employees

One of the ways we’ve actually tried to embrace a culture of transparency is to actually create and use tools to bet…get better input. And one of the things we’re using right now is actually a tool called Tiny Pulse. And Tiny Pulse is literally just that. It’s an electronic survey that we take on a weekly or biweekly basis of all our employees. And it’s questions of how happy are you, what’s preventing you from doing a good job, what are the things that basically give you energy

I think transparency is a two-way street. So using a tool like Tiny Pulse actually allows us to literally take the pulse of the organization and see what’s on people’s minds, what’s their concerns. The whole thing is anonymous. And for me as a leader to have the ability to then be able to address specific needs—you know, I think about it as sensing and responding to employees’ needs, wants and desires versus just announcing from a bully pulpit what I think is important.

The idea there of people sharing information, but then you as a leader responding to information with truthful, honest feedback creates actions that build trust, build longevity and build loyalty

I think that organizations that practice transparency, that earn trust, actually have a little bit more leeway to basically learn and evolve. So again, yes, there are challenges and there’s investment required to build trust and transparency. But the commitments in brand loyalty and employee loyalty I believe, and have seen, far outweigh all the investment that’s required.