"Openness" vs. Value

Thursday, January 31, 2013

The Wall Street Journal reports that what Frank Furedi has aptly called the "cult of transparency" has spread into the business world.

[A] small but growing number of private-sector firms are letting employees in on closely held company secrets: revealing details of company financials, staff performance reviews, even individual pay--and in doing so, walking a tightrope between information and TMI...
For reasons I have discussed here before, this is a terrible idea, essentially for the following reason:
Since communication would be impossible without concepts, any attempt to completely record every detail of even a single meeting[, for example,]  will necessarily leave out non-essential details on top of any honest mistakes on the part of the recorder. In addition, some details, like what the participants are actually thinking, are impossible to obtain, anyway. To top all of this off, for such a record to be of a readable length, it must be delimited to its essentials, which requires some accounting for who the intended audience of the report is, and how this audience may use it. ("Anybody, for any purpose whatsoever", is an impossible editorial standard.) These facts alone make such records wide open to misinterpretation, deliberate or not, by third parties...
And yes, even in an employee-owned business, there can be "third parties" with respect to certain matters, like your pay and performance reviews. The article goes on to provide several examples of "openness" slowing down, impeding, or otherwise affecting decision-making in unintended ways.

Attracting new hires, for example, is made problematic -- and potentially much more expensive for customers -- by the fad:
[P]otential recruits saw the salary figures as a starting point, and bargained for pay beyond the fixed limits. Mr. Akhmechet also found he couldn't hire prized applicants without raising everyone else's salaries or getting them to agree to exceptions, he says.
Left unmentioned in the article is another obvious pitfall: It's easier for a disgruntled employee to harm a company by passing information -- that would and should ordinarily be unavailable to him -- along to a competitor.

In business, every decision has to be made in the context of the following question: "How is this decision adding value for our customers?" It is interesting to observe how omitting this consideration with regard to a general internal policy regarding who is privy to what information can cause serious problems for a company.

It is likewise worth noting that in some cases, companies may have stumbled on finding new kinds of internal disclosures (e.g., pertaining to the company's bottom line) that can be beneficial. These counterexamples don't mean that there are "pros" to treating "openness" as intrinsically good. Rather, they underscore the point that one must always ask, "Of what value is it to broadcast this information?"

-- CAV

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