How to Be a Transparent Leader (and Why)

How to Be a Transparent Leader (and Why)
Studies show that 57% of employees who quit their jobs are fleeing a bad leader. Another 32% are seriously considering quitting because of their manager.
Are your people ready to quit you?
Sadly, the old-school authoritarian method is still common despite decades of proof that it doesn’t work well. Lots of managers expect their teams to follow orders without asking questions. That kind of management makes it hard for a team to do their best. There’s little room for innovation or creativity. Employees feel it when their leaders don’t trust them, and they resent being treated like misbehaving children. On the other hand, effective leadership boosts morale and productivity. Great leaders inspire trust, shape culture, and bring out the best in their teams. Transparent leadership means leading with openness and honesty. These types of leaders keep their team in the loop, share information freely, and invite open communication within their companies. It’s one of the most powerful leadership qualities in your toolkit. Transparency helps you build trust with your team and promotes creativity, teamwork, and loyalty. It’s also one of the most difficult leadership habits to learn. We’re here to help. In this article, we explain why transparency is so important. We’ll help you understand what it means to be a transparent leader and start you on the path to get there.

Why transparency is an important part of leadership

Transparent leaders are open and honest with their teams. They want their people to have input on important decisions, and that means they need to share information freely so everyone is informed and involved. That does not mean that transparent leaders tell their team everything, all the time. You wouldn’t want to share details about someone else’s performance review, for example. However, there are very few secrets that you really need to keep from your team. It’s hard to get out of the habit of thinking “that’s none of your business” and start speaking openly. But it’s worth the effort to learn. Here’s what you get when you develop the habit of transparency:

More meaningful relationships

When you’re the kind of boss that people can be honest with, good things happen. People start to open up and you really connect. Those connections bring your team together. Work life is more pleasant and your team  is more effective. It’s a win-win.

Empowered teams

Have you ever managed a team where everyone needed your help to do everything? It’s exhausting. If you’re the only person who knows about the company’s strategy and goals, your team has to come to you for help. But if they know pretty much everything you know, they can make smart decisions on their own.

Efficient problem resolution

When your team can make decisions on their own, they’re better and faster at solving problems. You hired your people because they’re competent and capable. If they have access to all the relevant information, they’re likely to come up with effective solutions that move your business forward. Keep in mind that no part of your business exists independently. Every individual job is part of the bigger picture. Employees who have a wider perspective are more likely to make decisions that are good for your entire business.

Higher employee morale and job satisfaction

Transparency shows your team that you trust and value them. They feel important and that their work is meaningful. Employees are much more likely to stick around in this environment. The energy they invest in their work feels worthwhile. That brings us to the most obvious benefit of transparent leadership:

Higher workplace performance

It all boils down to results. Transparent leaders find it easier to get the best out of their team. In an open, trusting environment, teams are more productive. They innovate more because they have better information and feel safer making risky decisions. People are more likely to take the initiative. They’re more committed to the company’s mission. Communication is better and faster, and that creates a better end product. Let’s talk about how to get these results.  

How to be a transparent leader

Transparency can be hard. Leaders often worry about the way their team will react to certain types of information. Real transparency often means sharing uncomfortable truths. Excuses like “it will start rumors” or “people might panic” are common. Here’s an uncomfortable truth for you: If you assume that your team can’t handle information as well as you can, you’re treating them like they’re inferior. You either believe that you’re smarter and more stable than they are, or you’re worried that being transparent gives you less authority and power over your team. Both of those beliefs are symptoms of a deeper problem — but that’s another article. Treat your team like they’re just as mature and capable as you are. If you can handle it, your team probably can, too. Transparent leadership is tough, but it pays off. Consider these 2 examples:

An example of non-transparent leadership:

Jessie is the CEO of a small software company with 25 employees. One of their top clients just cancelled a big contract, which means the company is under some financial stress. Jessie decides not to tell the team right away. The news might spark rumors about budget cuts and layoffs, even though that’s not an immediate risk. That kind of gossip could damage morale and cause important team members to quit. Instead, Jessie decides to cut the marketing budget to make up for the shortage. She pushes the sales team to follow up and close more deals this month. The budget will be a little tight until some new clients sign up, but there’s no reason to tell the team and get them freaked out over something minor. The team can sense that something is wrong, but they don’t know what it is. Of course they know that a client just cancelled. That doesn’t seem like a big deal. However, Jessie’s closed behavior makes them wonder if the company is in serious financial trouble. The rumor mill goes crazy, but nobody goes to Jessie with concerns because it’s clear that the topic isn’t open for discussion. Just as Jessie gets close to signing a big new contract, a top developer quits to take a job at a bigger company where she feels more secure. This puts extra strain on the rest of the team. Other projects start falling behind, which causes more clients to cancel. Ultimately, Jessie needs to lay off two more people when real financial problems set in. Morale and productivity continue to fall. The loss of one big client seems to have thrown Jessie’s company into a downward spiral.
Who do you think Jessie blames?
Leaders like Jessie are likely to misdiagnose the problem. They might think that the rumor mill got out of control and caused people to leave. Perhaps they blame the sales team for closing deals too slowly. They might blame their team for losing the big client in the first place. In reality, the problem here is leadership. If Jessie had been more transparent about the loss of an important client, the team might have recovered.

An example of transparent leadership:

In this case, CEO Terry faces the same problem, but she commits to a policy of transparent leadership. Terry is uncomfortable telling the team that the contract was cancelled, but she starts the conversation anyway. The developers want to know what they could have done differently to keep the project, and they discuss the reasons the client said they weren’t satisfied. This leads to some suggestions for process improvements. A recently hired marketer asks about his job security. Terry explains that they’re going to have to make a few budget adjustments until they rebuild their portfolio, but she doesn’t expect that anyone’s job is at risk right now. The marketing team brainstorms ideas to attract new clients with a reduced budget, and the sales team agrees to focus more on existing leads. For a few weeks, the team focuses on providing better service to their existing clients while the marketing team puts extra effort into lead generation. Everyone is sensitive to expenses like overtime hours. When a new client starts, the team feels more secure, and they’re confident that their new processes will help them grow even faster. Within a few months, the team is ready to hire more people to meet their increasing demand.

What’s the difference?

In the first example, Jessie made the decision to keep the company’s financial standing to herself. She didn’t trust her team to face bad news with maturity and optimism. The team felt that something was wrong, and they reacted defensively. In the second example, Terry was committed to transparency, even though she worried that the team wouldn’t take the news well. Her trust paid off. The team came up with solutions that addressed the immediate challenge. Those improvements led to growth. Here’s how you can be more like Terry.

Step 1: Share information about your company and projects

The more open you are about the current status of the company and its future, the more your team will trust you. They’ll be better equipped to weigh in on important decisions. Plus, you’ll get better insights and smarter suggestions when front-line employees can see the big picture while they’re engaged in everyday details.
What kind of information should you share? The short answer is this: as much as you can.
Some transparent companies even publicly share salary information. If you’re new to transparency, that’s probably a step too far for you, but other financial information can and should be accessible to your team. Don’t worry about whether or not everyone on your team is experienced or educated enough to understand your financial statements. People are usually smarter than their boss expects. After all, if they can manage their household finances, they can probably read a profit and loss statement. In addition to your finances, talk openly about your strategy and goals. Explain your reasoning for decisions. Share the challenges you want to solve, including things like low productivity or high turnover. Ultimately, the goal here is to stop making closed-door decisions. Respect your team enough to share your vision for the future and all the information that informed that decision.

Step 2: Be consistent and honor your commitments

Nothing destroys trust faster than a broken promise. If you say you are going to do something, make sure you do it. Be careful that your behavior doesn’t tell a different story than your words. For example, many leaders like to think they have an open-door policy. But those leaders aren’t available to listen when someone has a concern. They criticize employees who “complain” about their job. There’s no time for people to step away from work to talk about bigger issues. The actions don’t match the words. Most of the time, leaders don’t intend to break their promises. Here’s a common example: You really mean it when you say: “I want you to have a life outside of work. You shouldn’t take work home with you.” But you also send emails at 2 AM. You reward the people who put in lots of extra hours instead of praising those who turn off their notifications to spend time with their kids. When it’s time to consider someone for a promotion, you choose a person who lives at the office instead of someone with commitments and priorities outside of work. You say (and believe) that you value a healthy work-life balance. But your actions prove that you really value an over-the-top commitment to the job.
There are three important steps to get better at this:
  1. Ask for help seeing your blind spots.
  2. Monitor your words.
  3. Modify your actions.
The first step is the hardest. Ask your team to tell you when you contradict yourself. At first, they’ll hesitate to tell you when you’ve said one thing and done something different, but as you build trust, they’ll feel safer being honest with you. As you get better at recognizing your blind spots, pay attention to the things you promise. Think about what it means before you say it. For example, let’s assume you want your team to share more ideas. You say: “I don’t believe in titles. Everyone has an equal say here.” What does that mean in other situations? Is it really true, or do you just want your team to participate more in brainstorming? From there, monitor your own behavior. Nobody ever reaches perfection, but your team will see that you’re trying and trust you more for it.

Step 3: Create spaces for individual and collective feedback

Honest feedback is hard. Your team worries that they’ll be misunderstood or hurt your feelings, and that may affect their jobs. Leaders often have huge blind spots because they don’t know what their team is thinking. Being transparent with your team helps them feel safer being honest with you. You’ll also earn trust when you honestly listen and act on the feedback they share. You have to prove that it’s worth the risk to tell you hard truths. To get your team to start talking to you, you have to ask for feedback a lot. Get in the habit of asking people what they think. This is especially important when leading remote teams. After all, it is easy to forget to check in when you rarely see your employees. For example, when you assign work to someone, ask them how they feel about their workload, the value of the project, and what priority they would assign to this task. When you check in for a progress report, ask if your normal procedures are working well. As projects get turned in, ask what you could have done differently to make the job easier for your team. Asking for input regularly is just the beginning. Once you’ve built more trust, your team will start coming to you on their own. Create safe places for honest feedback. You might consider:
  • Dedicated office hours when your team can initiate 1-on-1 conversations
  • Public Slack channels for feedback or ideas
  • Anonymous feedback tools that allow employees to send you messages without having their name attached

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