The economy may be improving -- inching upward degree by painful degree -- but employee moods aren't following the trend. (And with bleak news bombarding the airwaves daily, it's no wonder.) Perhaps you've noticed that people seem anxious and distracted, either hiding out in their offices or aggressively vying for credit in an attempt to shore up their positions in the organization. It's obvious everyone is worried: Are layoffs imminent? Will I have a job next week? In fact, will the company even survive the year?

If you're like most executive-level leaders, you have a pretty clear picture of the state of your industry, the context you operate in (a.k.a. the external environment), and the financial health of your company. And you've likely wondered: How much should I tell them about what's really going on behind the scenes?

The answer is simple: the more the better. (And there really shouldn't be a "behind the scenes"!)

Leaders have talked about transparency for a long time, but it's never been more important than it is now. Remember, we share information with employees for a couple of reasons: one, it's the right thing to do, and two, it's good for business. And most companies can use every possible edge these days.

If your company doesn't have a culture of openness and free-flowing information, now is the time to move in that direction. Here are some reasons why you should embrace transparency:

• People assume the worst when they don't hear from leaders.

Silence from the executive suite causes a lot of fear and resentment, which certainly doesn't contribute to a productive culture.

Maybe the news is bad, but maybe it's not as bad as they are imagining. And even if it is, once they know the truth they can plan and act accordingly.

• Transparency helps employees connect to the why.

When employees are working in a vacuum, they can't see the financial "big picture," and decisions leaders make may seem ill-advised or unfair or simply inexplicable. Transparency connects them to the why—and that understanding propels them to act.

You can ask people to change their work habits and established processes all day long. But if they don't know why they're being asked to change, they won't change -- at least not for long.

• Employees may not understand how the external environment affects the company.

Senior leaders are aware of new laws affecting their industry, innovations reshaping the marketplace, financial pressures facing their customers, and so forth. It's their job to know. But mid-level managers don't necessarily see the same picture -- and frontline employees almost certainly don't.

Creating a transparent company helps everyone stay mindful of the forces affecting the bottom line. And I think most leaders will agree that those forces have never been more volatile.

• Transparency allows for consistent messaging across the organization.

When you commit to transparency, people don't have to get their (speculative, distorted) news through the company grapevine. They hear what's really going on, in a controlled and consistent way, from their managers. By the way, it's a good idea to train managers in key words they can use to ensure all employees in all departments are hearing the same messages positioned in the same way.

(In other words, you'll greatly reduce the chances of a manager getting frustrated and blurting out things like, "Don't you know we're in financial trouble?!?!")

• This, in turn, creates organizational consistency.

When everyone is hearing the same messages from their leaders, everyone is motivated to respond in similar ways. Employees in Department A get the same kind of leadership and direction as employees in Department B. Everyone knows the rules. And this consistency trickles down to the customers, who get the same basic experience regardless of who they're dealing with.

Consistent companies tend to be healthy, stable companies. And transparency and consistency are two sides of the same coin.

• Transparency leads to faster, more efficient execution.

When times are tough, execution is everything. And the ticket to good execution is good alignment: all sectors of an organization must understand exactly what's required so they act in a coordinated and collaborative fashion. Transparency is what facilitates that kind of alignment. It's all about a shared sense of urgency.

Makes sense, right? When employees know customer spending in the widget industry is down 30 percent and that a new competitor is eating into your market share, well, they tend to get focused fast. And helping them understand the reality that downsizing might occur if sales don't increase can change their behavior overnight.

• It heals we/they divisiveness.

I often warn clients about the we/they phenomenon: the perception that there are separate groups inside a company that work at cross-purposes. It might manifest as staff vs. management, or this branch vs. that branch, or corporate vs. everyone else. (One example: When senior leaders understand the external environment better than managers and supervisors, they may get frustrated and wonder why these groups aren't moving with a sense of urgency: "We are here working hard to save the organization…so why don't they see it?")

In transparent organizations that share common agendas, it's hard for we/they to flourish.

• Transparency keeps good people from leaving.

High performers don't thrive in an atmosphere of secrecy and uncertainty. They want to work for a company that treats them with respect and values their problem-solving skills. Hold critical information too close to the vest and they may assume the company isn't healthy -- and because they often have options in even the worst economy, they may leave for greener pastures.

Obviously, your hardworking innovators are the very people you want to hold onto in times like these. Make sure your culture nurtures them."

• It eliminates Park Ranger Leadership.

If you were lost in the woods a few times and a park ranger always showed up and led you to safety, you wouldn't develop any survival skills. You wouldn't have to. The same is true of employees who wait for their heroic park rangers (senior leaders, that's you!) to lead the organization out of the economic wilderness. This mindset breeds a risky complacency. Far better for employees to pursue their own salvation than to wait passively for rescue…and that means they need to know exactly what threats they face.

When people know what the problems are, they're more likely to come up with creative solutions. They become park rangers themselves. And an organization with 500 park rangers is more likely to make it out of the woods than one with 8 or 10.

• It facilitates the best possible solutions.

In transparent cultures, leaders encourage employees to solve problems themselves. And because those employees are the people closest to a problem, and because they must live with the outcome, they almost always design the most effective, efficient solution.

That's what employee ownership really means. When people are allowed to solve their own problems, they'll do a much better job than if they have to work with a solution imposed from above or outside. And of course, they'll also have instant buy-in.

One more thing: don't think of transparency as a "crisis control" program -- it's a long-term commitment. When the good times roll around again, the strategy will serve you just as well.

Transparency is a way of life, not a stop-gap measure. It shapes your organizational culture and drives results in any economic environment. As recovery gets underway, as long as you maintain your commitment to openness and constant communication, your organization will only get stronger.

A Transparency Crash Course: 7 Steps to Creating a More Transparent Organization

• First, make sure senior leadership is aligned.

Does everyone see the external environment the same way? Does everyone understand organizational goals and plans? Does everyone agree on what success looks like? If not, it's time to remedy the situation.

Alignment is most important at the senior level because all information cascades downward from it. If one senior leader is out of sync with the others, then everyone under her is going to be out of sync. In a big organization, that could be hundreds of people.

• Close the perception gap between senior leadership and middle managers.

Senior leaders generally have a pretty clear grasp of the real issues facing the organization. They are steeped in these issues every day. Mid-level managers -- who, after all, are busy managing -- don't always see things the same way. The only solution is for senior leaders to relentlessly communicate the issues to them.

You can address these issues in supervisory sessions. You can hold regular meetings with mid-level managers. You can send out email alerts that link to news items driving high-level decisions. If you're a senior leader, it's critical to make sure the people under you understand the big-picture issues and their implications. It's one of the most important parts of your job.

• Help people understand the true financial impact of decisions.

Get comfortable framing all major decisions in economic terms. If a manager wants to spend money on something -- a new piece of equipment, a new employee, a salary increase -- she needs to be prepared to explain in financial terms how it will pay off for the company. Employees, too, need to understand the real cost of mistakes or lapses in productivity as well as the potential positive impact of doing things in a new way.

Many of the healthcare leaders I work with use a financial impact grid to educate employees on how certain issues translate to dollars. The idea is to teach everyone to think like the CFO. Educating people in this way can be very powerful in changing their behavior.

• Put mechanisms in place for communicating vital issues to frontline employees.

People aren't going to pick up on what leaders want them to know by osmosis. You need to tell them clearly, succinctly, and often. That means putting in place a system, or a series of systems, to ensure that the transparency value gets translated into action.

• Prepare managers to answer tough questions.

If a manager tells his employees the company is cutting back on overtime, he'll almost certainly hear questions like, "If money's so tight, how can the company afford the new construction project?" Or, "I depend on my overtime hours as part of my salary. Will everyone's salary be cut?" The manager needs to know ahead of time exactly how to answer so that he won't blurt out a we/they perpetuator like, "Sorry, that's the orders from the top."

In a transparent company, there's no reason to hide financial realities from anyone -- but that doesn't mean managers naturally know the best way to phrase their answers. Some are just better communicators than others. Anticipating tough questions, formulating the right key words, and sharing them with leaders at all levels allows everyone to answer them consistently.

• When you have bad news, treat employees like adults.

Once a tough decision has been made, share it with everyone immediately. Don't sneak around behind closed doors and certainly don't lie.

Knowing what's happening, and what it means, is always better than not knowing. And often, what people are imagining is worse than what's really happening.

• Keep people posted.

When something changes, let them know. This builds trust between leaders and employees and keeps them connected to the big picture.

Be sure to share any good news you get. Transparency doesn't mean "all bad news, all the time." When you disseminate positive developments as quickly as you do negative ones, you boost employee morale and reinforce any progress that's being made.

Pass It On Down: 5 Ways to Keep Frontline People Informed

• Strategic Rounding

This tactic is based on a practice from the world of medicine. (Think of a physician making the daily rounds to check on patients.) Essentially, leaders take an hour a day or so to touch base with employees, make a personal connection, find out what is (and isn't) working well, and so forth. Besides being a proven leadership tactic, rounding is a great way to keep people up to speed on changes in the organization's big picture and to solicit any questions or concerns.

• Employee Forums

Hold these company-wide meetings regularly. They are great opportunities to hold financial impact crash courses, to update people on changes in the external environment, and to solicit their feedback and ideas.

• Newsletters

These should not be data downloads or senior leader photo-ops. Rather, fill them with articles about important external changes and the company's response to them. Really connect the dots for readers. And be sure to include tips on what employees can do personally to make a difference in the company's bottom line.

• Communication Boards

Put physical (not just virtual) bulletin boards in a common area that convey an ever-changing snapshot of the company's bottom line. Include monthly and year-to-date financial reports as well as how the numbers break down by department. You can also include info about industry changes, new hires, community impact, and so forth.

• Standards of Behavior Updates

If you don't know, Standards of Behavior guidelines spell out how employees are to present themselves at work: from phone etiquette, to how to respond to gossip, to key words to use when customers ask tough questions. You may already have a Standards contract in place -- but was it written 5 years ago? Maybe it's no longer relevant. Make sure your Standards reflect your company's reality today. If not, ask employees to rethink and revise them. It's a great way to get people deeply engaged in thinking about the new reality and how they can best respond to it.

About the Author
Quint Studer not only teaches it, he has done it. After leading organizations to breakthrough results, Quint formed Studer Group®, an outcomes firm that implements evidence-based leadership systems that help clients attain and sustain outstanding results. He was named one of the "Top 100 Most Powerful People in Healthcare" by Modern Healthcare magazine for his work on institutional healthcare improvement. Studer was named "Master of Business" by Inc. magazine. He is the author of BusinessWeek bestseller Hardwiring Excellence: Purpose, Worthwhile Work, Making a Difference; 101 Answers to Questions Leaders Ask; Wall Street Journal bestseller Results That Last: Hardwiring Behaviors That Will Take Your Company to the Top; and Straight A Leadership: Alignment, Action, Accountability. For more information, visit www.studergroup.com.

Straight A Leadership: Alignment, Action, Accountability (Fire Starter Publishing, 2009, ISBN: 978-0-9840794-1-4) by Quint Studer is available at bookstores nationwide, major online booksellers, and directly from the publisher by calling (866) 354-3473. Copies also can be purchased online through the Studer Group website at www.studergroup.com.

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