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.

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Kellogg professor Harry Kraemer outlines the four underlying principles of values-based leadership.

Trust as the Essential Ingredient in Influence: A Leadership Perspective

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Contributor / Harry Kraemer
Harry Kraemer Leadership Leadership When one talks about leadership, sometimes people will say, "Well, I’d really love to be a leader, but I don’t have anybody reporting to me."

One of the key things about leadership is that leadership really has nothing to do with organizational charts and titles; leadership has everything to do with the ability to influence people.

And the only way you can influence people is you have to be able to relate to people.

And if you’re going to relate to people, the only way that’s going to happen is through trust.

The more trust that you can develop, the more you’ll be able to relate to people, influence people, and lead people.

And as I always remind folks, the people that are the leaders literally exhibit leadership long before, long before they have anybody reporting to them.

And I often tell the story that sometimes in companies, there’s this view of, "Boy, I’d really like to get started, but I can’t yet. We have to wait for some group of people.” You say, “Well, who do we have to wait for?"

Well, there’s this infamous group of people that seems to exist in most companies that get referred to as "those guys." There’s this magical group of men and women called "those guys we have to wait for."

And as I try to remind people who want to be leaders, when do you become a leader? You become a leader as soon as you realize, "I am one of those guys. I’m one of the men or women who’s going to make a difference.

"Why? Because I’m going to establish relationships based on trust and have an enormous impact on the organization regardless of my level, regardless of my title."

Bumper: 4 Ways to Establish Trust as a Values-Based Leader

From my perspective, if you’re the CEO of an organization—whether it’s 10 people or 50,000 people—you are one of the people (and I stress one of the people) responsible for building trust with customers, partners, suppliers.

As the former CEO of Baxter Healthcare, I would always get asked the question, "Boy, how do you deal with all these stakeholders? You have your team members, you have customers, you have suppliers, you have society, you have shareholders. Boy, there’s got to be a whole lot of conflicts between these."

My perspective is, if you’re a value-based leader and you’re focused on building trust, you actually realize these are not in conflict. In the bigger picture, it’s all in exactly the same direction.

To the extent somebody wants to be a value-based leader and really establish trust, my view is there’s four things that you need to focus on as a leader.

Number one, you need to become self-reflective. You need to start to think about, "What are my values? What do I stand for? What’s my purpose? What really matters?"

Number two, I have to focus on developing a balanced perspective. And when I say "a balanced perspective," many people have very, very strong opinions; the problem is they have virtually no understanding of other perspectives.

But the value-based leaders takes the time to understand all sides of the story. They establish trust because they demonstrate they really care about what each person has to say.

Number three, a value-based leader focuses on what I refer to as "true self-confidence." They know what they know; they admit what they don’t know; they’re a learning person.

And the fourth and final key part of being a value-based leader is genuine humility. In genuine humility, you realize every single person matters.

And if you want to establish trust in an organization, you don’t take the view, "Well, I’m a director level now. Well, these people are below me." No, nobody’s below you.

You as a leader are the person who’s below because you realize every single person matters. That isn’t just a nice thing to say; you actually believe it.

And to the extent you can make progress on becoming a little more self-reflective, establish more balance, have true self-confidence and genuine humility, your ability to build relationships and trust in the organization will truly put you on the path to becoming a value-based leader.

3 Tactics to Create a High-Trust Organization

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Contributor / Douglas Conant
Douglas Conant Leadership Leadership,Breaches,Reciprocity In the spirit of a conversation around building trust, it’s mission critical to understand that it’s not a nice-to-have; it’s a must-have.

If you have low trust, in the fullness of time, you will have low performance. If you have high trust, you have the potential to have high performance.

To deliver on that trust benefit, you have to do three things: you have to do your homework; you have to declare yourself; and you have to do what you say you’re going to do, ultimately, and you have to do it well.

Over my forty-year career and in all my study of leadership, I’ve never seen a low-trust culture perform at a high level in an enduring way.

In my experience, a high-trust culture is absolutely essential to deliver high performance.

Trust is an amorphous thing, but it’s really quite simple. There are two characteristics you need to bring to an engagement to engender trust: one, you have to have competence; two, you have to have character.

Let me dimensionalize that just a little bit: Competence says, “I know what I’m doing.” Character says, “I will do what I say I will do.”

And so, it’s not enough just to be a person of good character; you also have to know what you’re doing.

And so, in high-trust cultures, you have to have a collection of people that know what they’re doing and do what they say they’re going to do. That requires the third C between competence, character—the third C is chemistry.

That requires that they all play together well and work towards a common end. But the notion of trust is all about competence and character dealt with, with beautiful chemistry of a high-performance team.

BUMPER: A CEO’s challenge: rebuilding a low-trust organization

When I went to Campbell Soup Company, I had worked in the food industry for most of my career, I understood the structure of the industry and how it worked.

I didn’t know a lot about Campbell soup. What I did learn was it was an even more toxic and troubled place than I had imagined.

At Campbell Soup Company, the year before I came, they had ousted one CEO, they brought an old CEO back to hold things together, they were under investigation by the SEC and the Justice Department for something called “fraudulent conveyance,” and they had severely downsized the organization.

We actually measured the level of engagement using a Gallup Q12 survey and discovered that it was the lowest level of engagement that the Gallup survey had ever measured in Fortune 500 companies.

So, we had a huge trust deficit. That’s what needed to be addressed.

BUMPER: How trust rebuilt Campbell’s Soup

When we had fully assessed the situation in the first six months of my arrival at Campbell Soup Company, we relaunched the company under something called the “transformation plan.”

And we essentially did three things: We made sure we had done our homework and we had a plan going forward. We declared that plan; we declared ourselves boldly. And then we set about the process of implementing that plan and doing everything we said we were going to do.

I think when you’re running a large organization, it’s important to have a rallying cry or an umbrella idea that holds it all together, because there’s so many arms and legs to running an organization.

We came upon this idea that was brought to life the first hour of the first day I got to Campbell when I talked to the people, and I told them, “My core belief is that we can’t ask you to value our agenda as a company until we’ve tangibly demonstrated to you that we value your agenda as a person.

“In my experience, it just doesn’t work any other way. So, job one is for us to demonstrate to you that we value your agenda as a person.”

The employees helped shape that line, and within a week, we had something called the Campbell promise, which was an umbrella over everything we did.

And it was Campbell valuing people, people valuing Campbell, with acknowledgement that job one was for us to value all of our stakeholders in a tangible way.

And we worked that territory for ten years, and we went from having the lowest level of engagement in the Fortune 500 to the highest. And we went to record heights with our top 350 leaders.

See, I believe when you’re trying to build trust and engagement, you have to lead from in front. So, the leadership team—not just at the top but the next couple levels down—has to be fully engaged in the work and modeling the kind of behavior you’re asking from everyone else.
Implementing trust and transparency into company strategy helps create solutions.

Learning from A Bankruptcy Crisis: Trust and Transparency

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Contributor / Jennifer Thompson
Jennifer Thompson Public Relations Vulnerability,Communication,Transparency I worked with a client that was in a senior-living facility in a very populated metropolitan area who had gone through a number of leadership changes in the past couple of years.

There was suspicion and there was a basic lack of trust amongst “management” for this organization. One of the things that the new management team and the CEO realized quite quickly was that the financial situation of this organization was such that they needed to declare bankruptcy in order to restructure their financial agreements and get themselves out of the rut.

And in doing so, they were quite concerned how the term “bankruptcy” would go over with their residents, senior citizens.

So, our goal in working with the management team and the CEO was to create a situation, which, first, built some trust amongst residents and other stakeholders, and then, second, conveyed the facts about the bankruptcy filing and the new financial structure going forward in a way that would not cause residents to flee in droves and would continue the stability of maintaining majority occupancy of this particular center.

Previously, other management teams had had a fairly generic approach to communication, sending out form letters and such to residents but not really taking the time to engage individually with residents and others that matter.

So, we sat down and I worked with the CEO to map out the universe of folks that “mattered” in this regard — not just the residents but their families, the media, certainly the investors and financial community, and then, to some degree as well, other governmental organizations that may or may not play a role in the bankruptcy filing going forward.

But certainly, first and foremost, were the residents and their families. It was interesting because we found that their families were a key constituency who hadn’t been communicated with prior to this particular engagement.

So, we led up to a town hall meeting, which then served as sort of the anchor to state the path forward, again, conveying facts, first and foremost. The CEO herself delivered the message, stayed available for questions and commentary and interaction with the residents afterwards.

And there was some hesitation at first, but the fact that the CEO was willing to lay everything on the line and put herself in a little bit of a vulnerable position helped the residents and the stakeholders build their trust in her because they say that she was really trying to do the right thing and be open and forthright about everything that was going on with them and would be available to be communicating with them about every step in the process along the way.

The first thing folks are often concerned about is, “Let’s get the press release right, and let’s reach out to our consumers,” potentially, and then the investors, of course, as well.

But oftentimes, as you say, when you dig a little deeper, there are other stakeholder groups out there that can be tremendously influential in helping build and foster the trust that you have with your core constituencies.

Those are relationships that companies and institutions should be building, of course, before the crisis hits because you want to have those relationships in place — and those trusted advisors that can speak on your behalf — before you need them.

For the management company of this organization, I think they came through the experience learning three or four really valuable lessons. First of those is that communication with their residents and other stakeholder groups that is tailored to the specific group is imperative for building trust.

They couldn’t just come in and have a blanket, one-size-fits-all approach to communications in general, which was what previous leadership had done.

The second thing that they learned was that being tremendously transparent, conveying facts, and being open and honest was a way that was very important for them to build and gain trust with their stakeholder groups.

The third thing they learned was that they needed a communication strategy that wasn’t just focused on the bankruptcy filing itself and the immediate days surrounding that event, a communication strategy that continued weeks and months into the future to continually engage with their stakeholder groups.

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