How transparent should you be as a leader?

Two things I’ve found helpful to consider when trying to decide what to be transparent about with my team – and what to keep to myself.

How transparent should you be as a leader?

This is a question many leaders struggle with — including myself. Do you share financials with the company? Or how about salary? How open should you be about why someone was fired?

From open-book management to making compensation public within the company, the concept of transparency in the workplace is more popular than ever.

Understandably (and rightfully) so. As a concept, transparency makes sense: If you want your team to behave the way that you would behave, they need access to the same information that you have. And, the more transparent you are, the more you’re likely to build trust within your team.

But what about the unintended consequences? Can transparency backfire? Do you inadvertently cause panic in a company when you reveal what the monthly burn rate is? Do you encourage resentment from more junior employees when you reveal how much senior employees in the company are making?

As a leader, how do you decide what to share with the rest of the team and what not to?

A few months ago, I spoke with the insightful Des Traynor, Co-founder of Intercom, on this topic. For Des, deciding how transparent he should be was one of the hardest lessons to learn as a leader. And as a CEO myself, I couldn’t agree more.

In our conversation, Des shared with me two things to consider when deciding how transparent you should be in your company:

Transparency requires context.

“The key thing people forget in transparency is it’s not about opening up the Google Drive and making sure that everyone can read everything,” says Des. “It’s about transparency of context as well.” Many of the CEOs who are a part of our leadership community in Know Your Team, The Watercooler, echo this sentiment as well. One CEO remarked how he had shared revenue numbers once, and “things had gone sideways with individuals who just don’t understand or appreciate all that goes into starting and operating a business.”

In other words, the negative reaction came from the lack of context about the revenue numbers. What that CEO wished he would’ve done was share more context. If you share revenue numbers without context of monthly spend, people start wondering, “Where’s all that money going?” So for example, at my company, we share revenue numbers, within the context of also our profit margin and expenses — so it’s understood how revenue supports our business as a whole, and not just “here’s the pile of money we’re making.”

Transparency is a spectrum.

Transparency isn’t all or nothing — things don’t have to be either completely open or completely a secret. Des emphasizes this, saying, “I think it’s worth having a critical threshold to decide what’s actually good for everyone to know, what’s not a secret but needs context, and what actually genuinely might be a secret because you don’t want everyone panicking about something.” Transparency is a spectrum, and if you indiscriminately just make everything 100 percent public, you could be wasting people’s time, confusing them, or causing them strife. Everyone has a capacity of information, and overloading folks with every detail of what’s happening in marketing, support, design, engineering — it can be too much. As a leader it’s important to ask yourself: In what cases is transparency appropriate and helpful, and in what other cases is it distracting or a burden? Are you being transparent, just for the sake of being transparent, or are you truly trying to help people make better decisions, and feel a greater sense of trust?

At the end of the day, transparency is truly a positive force. When it does backfire or causes fallout, it’s often because a leader hasn’t often taken the time to consider these two things: Transparency requires context, and transparency is a spectrum.

As you think through what you should be transparent about in your company, keep in mind these two things. Hopefully, they’re things you won’t have to learn the hard way.

This article was originally published for Inc.com.

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Written by Claire Lew

CEO of Know Your Team. My mission in life is to help people become happier at work. Say hi to me on Twitter at @clairejlew.

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