Why and how transparency can be detrimental to your workplace

Sharing information fosters employee engagement, but only to a point. How much information is too much? Your culture and your industry are key factors.

Transparency reigns supreme in today’s workplace.

Recruiting, interviewing, hiring, performance management, every process of talent management is being uprooted because of the pervasive need for workplace transparency.

Perhaps the need is warranted. Trust is a key factor in acquiring and retaining top talent, and trust, in one way or another, is built from transparency. Is there, however, such a thing as too much transparency?

If there is (hint: there is), how do we find a happy medium?

After witnessing the poor choices of fraudulent companies in the 1990s, people want to know more about what they buy, whom they buy from and whom they work for.

According to the 2015 Global CSR Study, “global consumers state they have a more positive image (93 percent), are more likely to trust (90 percent) and are more loyal to (88 percent) companies that support social and environmental issues.”

Regardless of whether consumers or employees are doing the digging, people today demand to know what companies today are up to behind closed doors.

The growth of social media has been an integral aspect of transparency, giving everyone a plethora of outlets to share their experiences, good or bad. This leaves little choice for employers who have seen how sites such as Glassdoor, Twitter and Facebook affect attracting and retaining talent.

The benefits of workplace transparency

This recent emphasis on transparency has changed the workplace for a number of reasons, which vary by organization. Here are some notable benefits of workplace transparency:

  • Accountability. Transparent cultures increase employees’ sense of accountability, which fuels engagement. For example, according to Gallup research, employees with managers who know what projects and tasks they are responsible for are seven times more likely to be engaged in their work.
  • Efficiency. Transparent cultures make it harder for underperformers to get away with subpar work, giving employers an advantage in cultivating a high-performing workforce.
  • Reputation. Transparent cultures are something that 96 percent of job seekers see as important in their own career path. This means transparency isn’t just a factor in engagement, but also a vital part of talent attraction and retention strategies.

Transparency is not all rainbows and butterflies, however.

3 risks to consider

Far less discussed are the negative effects associated with workplace transparency. Perhaps it’s because employers believe the benefits outweigh the risks, but it’s better to go at any strategy understanding the ups and downs and an array of possible scenarios.

1. There is a psychology case for transparency: Researchers from the University of Nottingham, VU University Amsterdam and Erasmus University Rotterdam conducted an experiment to test how transparency affects decision making.

In a “Deal or No Deal” simulation, one group of contestants played the game on a lab computer, and the other group did so in a game-show simulation complete with a host, audience and cameras. What they found was a more transparent atmosphere actually increased contestants’ fear of losing, causing them to play it safe when it came to a risky gamble. “In essence, what this means is that our subjects found the limelight constraining and anonymity liberating.”

This tells us that without the right balance of workplace transparency, employers risk having an overly cautious workforce, which in professional service industries such as finance and marketing can be detrimental to future business.

2. Transparency can be a distraction: Excessive transparency distracts in a number of ways. Employers who share too much information about the business run the risk of creating unwanted stress for employees who might constantly be thinking about how their job affects the bigger picture.

Although that mindset is the cornerstone of a valuable employee, it can be disrupted by transparency. Moreover, sharing sensitive information, such as the financial struggles of the business, has instability written all over it and could chase good employees out the door for fear of their livelihood.

3. Transparency caters to specific personality types: As mentioned, imbalanced transparency is an ingredient for turnover. That raises the question, “Is transparency for everyone?The answer is “no.”

According to Ryan Mead, CEO of Vitru, a personality and work values assessment platform used by HR professionals, employees who rank high for stability and structure thrive on predictability, consistency and security and are quick to be lose motivation if transparency disrupts that.

Caveat employer

There has to be some restraint when it comes to sharing pertinent information with employees. Although leaving employees in the dark is a recipe for disloyal, disengaged employees, the same can be said for workplace transparency.

Each company’s level of transparency will vary depending on the culture and personalities making up its workforce, but employers should proceed with caution.

Chris Arringdale is co-founder and president of Reviewsnap, an online performance management system. A version of this article originally appeared on TLNT.com.

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