In an age of over-sharing, business owners and leaders struggle with the line between too much information and a lack of transparency. Walking this particular tightrope is especially difficult when transparency runs headlong into privacy rights. I recently talked with business owners about these issues, and a few questions and answers kept reoccurring. I thought I’d share them here so entrepreneurs can understand what a female business lawyer sees frequently and move in the right direction for their own business.
Have you ever experienced a time when leaders weren’t being as transparent as they should have been with employees?
If your immediate thought was, “Heck yes,” you’re right. The way I worded the question answered away. Just about everyone has an example of when a company has been less than fully transparent. Some lack of transparency is necessary. After all, you don’t want to broadcast your business strategy to your competitors. However, sometimes the lack of transparency, however unintentional, can do more harm than good.
Inara’s Fabulous Fabrics (“IFF”) experienced transparency problems when investigating and responding to a discrimination claim. IFF correctly investigated and handled the complaint. The problem arose when IFF didn’t close the loop and let the complaining employee know its action. In other words, the employee wasn’t told the alleged harasser had been disciplined, and all supervisory employers were retrained on diversity issues.
Why did they keep things hidden?
IFF wasn’t trying to keep things “hidden.” It was concerned about maintaining confidentiality, in part, to protect the parties’ reputations and reduce the risk of a later retaliation claim. A female business attorney understands just how important confidentiality is in business affairs. However, this situation took a different turn. After interviewing the alleged victim, the alleged harasser, and more than a dozen other employees and reviewing the phone records, IFF determined that the two employees had engaged in some fairly explicit sexual banter. However, that didn’t mean sexual harassment because the conduct must be “unwelcome,” and the banter went both ways. Making the investigation more complicated, the complaining employee had been less than entirely truthful in her complaint. The text messages she turned to IFF had been altered to remove some of her messages and delete a photo she’d sent the other employee. A photo the other employee alleged was sexually explicit.
IFF ultimately determined that while the complaining employee was less than truthful and had participated in the banter, the other employee who held a supervisory position (although not her supervisor) had violated IFF’s policies and disciplined that employee. IFF intended to follow up with the complaining employee, but because it was in its busy season (dresses had to be made for the spring balls) and failed to schedule a meeting promptly.
How did a lack of transparency negatively affect the company or its employees?
IFF’s lack of transparency caused significant problems regardless of how well-meaning or scatter-brained. Even though the harassing conduct had stopped, the employee resigned because she didn’t feel the complaint was acknowledged. Worse, she sued IFF for discrimination and retaliation (arguing she had no choice but to quit) because she didn’t know IFF had acted on her complaint. Not only had IFF lost a valuable team member, but now it was looking at substantial legal bills and distractions from its business.
What does your organization do to keep employees in the loop?
Balancing transparency and confidentiality is difficult. An experienced female business lawyer would recommend that companies have a designated employee who closely monitors who “needs to know” information and what and how data is disseminated for all communications. How employees are kept informed depends on the sensitivity of the information. For example, promotions can be announced company-wide via email blasts, while the results of a discrimination claim should be delivered one-on-one to the parties directly involved. You can leverage Customer Relationship Management (CRM) or other project management software to designate which subset of employees receives specific updates.
Do you believe there are situations when transparency isn’t the best solution?
Yes. Full transparency might not be in the company’s best interest in some situations. For example, a company’s business review indicates specific structural and financial issues must be addressed. Until the company has determined what steps it will take, the early release of the information might prevent the company from reorganizing as critical employees leave and morale plummets from the uncertainty.
Even in the context of discrimination claims, company-wide transparency is likely harmful. The company must protect a complaining employee from retaliation. The more people know about the complaint, the harder it is to prevent retaliation or defend against a later retaliation claim.
Companies and business leaders continue to make mistakes in transparency, especially when disclosure may conflict with confidentiality. The line between too much information and too little is thin and fraught with difficulty. Errors can be costly in terms of loss of morale, talent, time, and money.
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Balanced and timely transparency is the mantra of the Digital Age. Companies must disclose the right amount at the right time to the right people. Simple, right?
When companies fall off this particular tightrope, they risk losing key employees, clients, and business opportunities. When the information that needs to be disclosed contains or touches on sensitive legal or financial issues, remember to get the advice of the proper professionals (a female business lawyer or accountant, as the case may be) about who should get the information and when they should have it.