Slowly but surely, US business leaders are realizing that transparency within their companies is no longer an option. Enterprise technology, the expectations of Millennials, and the need for faster, better collaboration have pushed the concept of institutional openness into the mainstream. Our best CEOs are now embracing it as a significant competitive advantage.
These leaders know that transparency isn’t just flashing a revenue slide at staff meetings, or about seeming trendy. They know it’s about a culture change, intended to engage the team and equip them with the information they need to do their best work.
The two sides of transparency
However, the common understanding of organizational transparency—that the CEO and top leadership team will hand down relevant information to employees—leaves out a critical piece of the equation.
For transparency to work at full capacity, relevant information has to flow both ways, from the CEO and to the CEO. When this happens, a feedback loop emerges:
- traditional top-down transparency helps employees see into the core of the business, even as
- bottom-up transparency gives the CEO a clear view of day-to-day operations and the insight of his team.
These two brands of transparency reinforce and supplement each other. By keeping both sides in touch with the reality of the other, they result in a more cohesive, aligned company.
It’s not unlike this recent study from Harvard Business School, which tested food quality in a restaurant based on whether the cooks and patrons could see each other. When transparency was one-way, food-quality ratings increased 10 percent. But when transparency was two-way—when customers and cooks could both see each other—quality ratings went up 17.3 percent and service was 13.2 percent faster.
Who’s responsible for setting up two-way transparency in your credit union? Ultimately, it’s the chief executive. As I wrote in The CEO Tightrope, the best CEOs “set up a communication infrastructure that promotes transparent information flow both from the CEO and to the CEO, and this transparency helps keep the company on course toward its vision.”
Let’s look at four modes CEOs may operate in depending on how well they carry out this responsibility.
The walled-off CEO: No transparency either way
This CEO guards information about finances, strategy, and key decisions like they’re the queen’s jewels, even as he fails to see into the daily operations of his team. There’s a brick wall between the inner sanctum of the CEO and the on-the-ground operations of his team.
This lack of transparency either way cuts a deep divide in the organization. There’s chaos in the rank-and-file, and the CEO tries to lead without the critical insights his people hold.
The giver CEO: Top-down transparency alone
This CEO understands that the modern workforce wants and needs transparency, so she regularly hands out information to the team: company strategy and goals, financial performance, key decisions, etc.
What she’s not so good at is ensuring that she has transparency into how things are proceeding on the ground. She’s basically set up a one-way mirror: the company can analyze her and all her plans and thought processes, but when she looks down into the organization, she sees her own reflection. She’s achieved half-transparency, but she still fits the old cliché about CEOs: she’s the last to know when something goes wrong. Good intentions aside, she won’t be an effective leader.
The surveillance CEO: Bottom-up transparency alone
This CEO demands transparency from his people, but he’s not so good at giving it them. He may set up complex data-collection systems, and want to know what’s on everyone’s plate at all times. And so help him God if he’s not the first to know when a project goes off the rails.
Despite his goal of omniscience, this CEO leaves his team in the dark, reverting to an outmoded understanding of employees as mere ditch-diggers. His team is likely disengaged by lack of clarity on the state or direction of the company, and their efforts are probably diffuse and not well aligned with the CEO’s strategy.
The truly transparent CEO: Two-way transparency
This CEO strikes the right balance. She’s set up systems for sharing the company’s strategy, goals, and performance. She doesn’t just share data; she gives her informed take on what the company is doing right and where it needs to improve. She’s publicizes big wins internally, but is honest when the company faces a material challenge.
At the same time, she’s set up systems that allow her people and teams to share information with her. She regularly gathers their feedback on how they think things are going—and what they expect for the future. She’s trained her employees to not just share data; they give her their honest, informed take on what’s going well and where potential problems are developing.
Knowledge is power. Nowhere is that more true than in a company operating in a competitive, dynamic environment (and how many aren’t?). The most successful CEOs treat transparency like more than just another buzzword; they proactively set up processes that help everyone share honest information about the business.
I founded Khorus precisely to help leaders scale this two-way transparency across the business. Get in touch today to learn how credit unions across the country are using enterprise software to bring more transparency, openness, and achievement to their organizations.