Leadership Effectiveness: Transparency in Ethics

Ethics and transparency in an organization lead to credibility; metaphorically, they are “lights” shining within the organization.

When leaders in a company are ethical and transparent and are perceived as so, trust is created and enhanced. Think about it. If you are certain you are getting all the information you need when you need it, and you know the information is correct and it is delivered in a way you can utilize, you are likely to feel valued. Working with ethical, transparent peers and subordinates also creates a higher trust level.

Cultural norms deeply influence our beliefs and our actions. Those norms can (unintentionally) lead an organization toward darker, unethical behavior. How employees perceive an organization’s transparency quotient profoundly affects employees’ actions. The degree of perceived transparency reflects core values and is a key success factor for a leader. Three examples of “leading toward the dark:”

Example 1: As a result of pressure from leadership to grow the business by cross-selling, thousands of Wells Fargo employees set up unrequested, unnecessary accounts for clients. Employees believed that leadership’s message was that profitability was more important than ethics. Wells Fargo’s credit rating has now been downgraded and the bank is increasing the amount of money set aside to cover costs associated with the scandal. More importantly, its reputation is in tatters.

Example 2: Volkswagen intentionally cheated on emissions testing. As a result, senior leaders have been ousted; billions of dollars have been set aside to cover the costs of this scandal; and the reputation of the company is badly tarnished.

Example 3: Several U.S. Presidents lied to the American public and to Congress about how the Vietnam War was progressing. While knowing it was going badly, leaders painted a very rosy picture outside the Oval Office. The result was a prolonged, brutal war in which many more people died than might have if ethics and transparency had prevailed. Exposing the deceit was a risky and brave endeavor (see The Post – last year’s historical thriller film directed and produced by Steven Spielberg and starring Meryl Streep and Tom Hanks).

Your actions as a leader tell people what is acceptable. If they see you withholding information or prioritizing the bottom line over values, peers and subordinates will observe and follow those norms and behaviors (with the possible exception of a brave whistleblower or two).

If “dark” has been creeping into your organization, it is essential that you lead the way to the light. Here are some powerful tools you can try:

Modeling the behavior you want to see throughout your organization; for example: candor, transparency, ethics, and authenticity.
Gathering perceptions about trust and transparency, not just by interviewing the senior team, but interviewing or creating focus groups, as appropriate, from the next several layers in the organization and possibly all the way down to the lowest ranking groups.
Engaging the senior team in dialog around the meaning of signals sent by cultural silence, brainstorming possible changes, and consistently and effectively implementing the best ideas.
Holding people accountable – instituting consequences for those people who do not share information appropriately and rewarding those who do.
Building trust.

And, don’t lose heart! Building new behaviors and culture takes time and practice. Three Harvard Business Review articles I recommend you read address outcomes of light or dark cultures, and results and benefits of opening up communication:

What outcomes have you seen of a culture of silence either in your current or other organizations? What steps can you implement immediately to begin to shift the culture to more openness?

Download This Tip