By
Elizabeth Pagano
In the wake of recent incidents of corporate misbehavior, the need for greater transparency places new demands on leaders. Today's senior executives must not only become skilled in transparent leadership but also encourage reciprocal transparency from individuals throughout their organizations.
There are hard dollar payoffs to transparent leadership. James S. Beard, president of Caterpillar Financial Services Corp., which won the Malcolm Baldrige National Quality Award in 2003, was described by an award judge as one of the “most transparent leaders” she'd ever seen. Beard is known constantly to ask his team questions like “What's on your mind?” And, the judge said, “He is almost confessional in admitting he doesn't know everything.” Caterpillar employees' perceptions of ethical behavior and truth/liability of leaders are significantly better than the national benchmark. And, since 1998, Caterpillar Financial has increased assets 34% and profit 54%, while industry performance declined 21% and 35%, respectively.
With such bottom line benefits, you'd think managers would be peddling toward transparency with the determination of an Olympic cyclist. And yet, research we conducted with Assessment Plus, a survey and leadership development firm with worldwide clients, shows that business leaders aren't practicing transparency as well as they could and even admit so. Sixty-two percent of managers said in recent assessment surveys that they could improve at admitting mistakes. And only 26% of more than 4,800 employees were highly satisfied with their leader's performance in communicating in a direct and straightforward manner.
Furthermore, leaders' perceptions of themselves and how others see them often don't match. While the vast majority of leaders described themselves as being overwhelmingly honest in assessments, over 50% of almost 13,000 peers and direct reports said their leaders could improve in being honest and ethical.
A crucial element of transparency is figuring out just how open to be—for while there can be too little transparency, there also can be too much. When transparency is employed without a keen understanding of the potential effects of revealed information, it can be unfair and irresponsible both to the organization and to its individual members. Leaders have to have a steady finger on the pulse of their organization and its culture, knowing people's capacity to absorb information and anticipating how it might be interpreted and used. It is in part an artful use of intuition.
The following nine behaviors offer practical guidelines that can help leaders wrestle with decisions around transparency and build credibility.
1. Being Overwhelmingly Honest
Leaders think they're overwhelmingly honest, but many followers say otherwise. When transparent leaders decide not to share certain information with followers—perhaps because they don't yet have all the pieces or because, for whatever reason, they are unable to tell—the unbreakable principle of honesty requires them to say so: “I can't tell you that right now, but here's what I can say.” Overwhelming honesty should be delivered with respect and concern for others. Followers shouldn't be left to wonder about hidden agendas. When leaders drive this core value down through their team, not only is trust built, but another fantastic result also can occur—followers become tolerant of not having all the facts.
2. Gathering Intelligence
In surveys, 95% of leaders were unable to give themselves the highest rating at demonstrating an understanding of their own strengths and weaknesses. Asking others for their opinions conveys respect and shows that they are valued. It also promotes transparency as a reciprocal agreement. When leaders ask for feedback about their own performance and discover how others perceive them, they are better able to align their intentions with reality and develop a plan for improvement. In order to learn and grow, leaders must have self-awareness, which, ironically, requires input from others.
3. Being Composed
Challenges, stressors and obstacles are inherent in any organization and in any leader's path; how leaders conduct themselves during the good times and the bad can be indicative of their character, competence and credibility. While the call for transparency urges leaders to reveal their true opinions and emotions regarding relevant business issues, it does not allow for leaders to irresponsibly let it all hang out. Followers expect their leaders to be composed. And they are always watching. Also, a certain level of predictability builds trust.
4. Letting Your Guard Down
Leaders who maintain a spirit of authenticity while working hard to create meaningful connections with their followers are practicing an important part of leadership transparency that builds credibility. Doing so, however, requires a certain level of maturity and self-awareness and a heightened sense of how people might perceive, dissect and disseminate the information that is revealed. And because authenticity or personal transparency ultimately describes the quality of a relationship, leaders must create opportunities in which to engage with their followers, allowing followers to know them.
5. Keeping Promises
When leaders match their words and actions, they place a high value on their commitments. Promise keeping in leadership is not always clear-cut. Sometimes the best choice is breaking a promise as little as possible. Other times, leaders are forced to reconsider altogether promises made and disappoint followers. Those are the times when transparency is particularly important, because followers who understand the reasoning behind broken promises may be more accepting of the consequences.
6. Properly Handling Mistakes
How leaders handle mistakes actually may be more important than getting things right the first time. Even with its inherent risks—such as appearing weak, incompetent or otherwise less than perfect—confessing mistakes signals courage, accountability and humility. Indeed, mistakes present opportunities to visibly demonstrate a commitment to honesty.
7. Delivering Bad News Well
Delivering bad news can be tricky business. When sensitive, controversial or potentially hurtful information is not delivered effectively, people can feel betrayed and angry. Trust is destroyed and relationships suffer. For most leaders, delivering bad news is hard, and some even opt for silence. Those on the receiving end usually appreciate bad news that is delivered promptly and with honesty, directness and concern.
8. Avoiding Destructive Comments
In developmental assessments, 88% of leaders admitted they could improve in avoiding destructive comments, and 83% of their bosses agreed. Language that divides or is otherwise destructive can undermine the whole reasoning behind leadership transparency—to improve relationships, increase trust and build a credible reputation. Leaders must model and reward language that does not employ inappropriate blame or criticism, “us-vs.-them attitudes” or condescension.
9. Showing Others That You Care
For leaders to be successful at influencing and motivating people, their followers must have a solid answer to the question, “Do you care about me?” Leaders must visibly show their followers that yes, they do care. This is done by developing the followers, recognizing them and seeking to know and understand them. While showing value for employees has lasting, bottom-line benefits in morale, quality and productivity, a leader shouldn't be motivated to demonstrate care and value for the organization's benefit alone. Such a narrow view undermines the formula and ultimately devalues the individual players in an organization. True leadership is built on a kind of social contract that says, “Follow me, and I promise that I will help you to succeed.” When this contract is not honored, the motivation behind a leader's strategy of transparency is put into question, and followers are led to wonder about hidden agendas.
Concluding Thoughts
What people expect from leaders is usually rooted in the basic interpersonal operation of the leader-follower relationship, where personal connections are made through trust, reliability, care and appreciation. Once this platform is built well and maintained, leaders can deliver the rest of what they have to offer—their talents. Trust will return and the business will flourish. And those leaders will experience the power that comes from sharing knowledge—instead of holding onto it—and the success that comes along with a credible reputation.
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Author Bio: Barbara Pagano, Ed.S. and Elizabeth Pagano are co-authors of The Transparency Edge: How Credibility Can Make or Break You in Business (McGraw-Hill, 2004, www.transparencyedge.com ). Contact Elizabeth Pagano at ( 404) 876-8361.
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