Why Is Transparency Such a Vital Part of Leadership?

Business colleagues collaborating and discussing project plans

As an entrepreneur or business owner, you are expected to lead your team from the front. If you want anyone to follow you, though, then you will need to demonstrate one vital quality above all others: transparency.

Of course, trust and loyalty can not be built in a day. As with all other aspects of your relationships with your employees, it takes time to develop. Having certain traits in your leadership style can accelerate this process, though, and transparency is the most crucial one.

The Importance of Transparency in Leadership

For a business leader, transparency is all about honesty and openness. It involves sharing all important and pertinent information with your staff, subject to certain reasonable restrictions. The key word here is reasonable, however: you would not share sensitive trade secrets or high-level intellectual property secrets with the entire office, as it is not relevant and does not negatively affect anybody's ability to perform. Therefore, with this in mind, what does being transparent involve?

In times of relative normalcy, it means constantly communicating with your staff, whether it is about the ongoing plans of the firm, what you expect from each member, or, indeed, how the company is performing overall.

Conversely, in times of stress and adversity – such as during political instability, economic downturns, or global health pandemics – it means not keeping people in the dark about any bad news. If your business is in trouble, then your employees deserve to know about it as soon as possible, especially if their jobs are at risk.

On the whole, it involves keeping your staff in the loop, both in good times and bad times. Clear and efficient communication lines are essential for this type of leadership.

Accepting responsibility for mistakes is also a powerful indicator of transparency in leadership. In many companies, senior levels of management often shift the blame to subordinates, which destroys morale and drives people away. Taking the lead when things go wrong is not only a sign of strong leadership; it also inspires loyalty among your team.

So, how else can transparency benefit your organisation?

The Benefits of Transparent Leadership

The importance of transparency can be easily gauged from the many positive changes it can bring to the workplace, such as:

1. Improved Morale

In the absence of transparency, your staff will encounter unpleasant surprises or shocks, which will have a severe demoralising effect on the workplace. A lack of trust breeds uncertainty, which, in turn, breeds stress and negativity.

However, when you are candid and forthright with employees, they will be more willing to stand by you during times of crisis. This increase in trust leads to a healthier, more positive workplace, which improves morale overall and ensures that everybody is on the same page.

2. Reduced Attrition

Poor leadership is often a compelling reason for individuals to leave a company and seek employment elsewhere. Secretive, opaque management practices leave staff feeling undervalued or unappreciated, thus making employee retention harder.

This isn't just about keeping secrets from people, either. As an example, an employee may not have a clear picture of their prospects within your organisation because you haven't been clear about your plans, either for that individual or the department they operate in. This might lead to frustration about a perceived lack of career growth, with the employee in question moving on when a more transparent approach would have mitigated any discord.

When you are open with your employees, they will be happier and less likely to leave. Even in adverse situations, they will be more willing to stay and try to save the company, as long as they know they have a leader they can trust.

3. Improved Resilience

Firms with transparent leadership policies tend to be more resilient in the face of adversity. With higher morale and better workplace relations, teams are better equipped to deal with any problems that arise.

On the other hand, leaders who hide problems from their staff are robbing themselves of possible solutions. Why try to solve things on your own when you can harness the collective brainpower of the individuals that work for you?

4. Improved Productivity

Several contributing factors can come into play here. Workers are more productive in a happy, positive workplace environment. Transparency leads to a meeting of minds between your staff and your company leadership; people know exactly what is expected of them and what needs to be done.

Popular leaders are also much better at building teams that get work done. Employees feel valued and are willing to work harder for the business, which has a direct impact on the overall productivity levels. Keeping employees motivated is not easy, but transparency can contribute to that.

5. A Positive Reputation

Firms that lack transparency in leadership often have a poor reputation in the marketplace. This can adversely affect your ability to recruit talent and attract new clients (which is a particular concern in the B2B segment).

6. Stronger Leadership

Transparency helps legitimise and reinforce your position as the leader of the workplace, too. When your employees feel that you are fair and honest, they are more willing to accept your authority. They are also more likely to respect you as a leader.

The Futility in Maintaining Secrecy

Managers and owners often withhold bad news from their employees, either to avoid scaring people or, in more sinister cases, as part of a coverup when mistakes are made. In both instances, this is not a very viable tactic in a closed setting, such as a small startup.

The grapevine tends to be very efficient in smaller businesses, and bad news travels fast no matter how hard you try to suppress it. If you have made a mistake, or you need to deliver bad news, it is far more preferable – and professional – that it comes from you, rather than through an inaccurate rumour mill.

Such an approach also indicates that you do not have much faith in your staff, which will reduce employee morale and affect your authority. In the long run, such approaches are simply not worth it.

Practising Transparency as a Business Leader

Regardless of your chosen approach to your leadership and management style, transparency should be a key part of your persona. This is easier said than done, though; bringing transparent leadership into a business requires a lot of effort and patience.

Changes in certain management policies can make a quick and significant impact. For example, a company policy that demands clear internal notifications whenever key business decisions are made would be ideal.

This can be further reinforced with frequent staff meetings to bring people up to speed, and ensure that everyone is on the same page regarding the current status and direction of the organisation.

Creating some form of upward communication system will also help improve transparency. This could be in the form of complaint boxes, feedback surveys, or private one-to-one interactions with the management.


Ultimately, it is always the best course of action to be honest with your employees, even if something happens that is detrimental. People are always more willing to forgive errors when they are admitted to, while the more people there are that are privy to a problem, the more likely you will be to find a solution.

Therefore, if you are something of a closed book as a leader, try opening up a little more to your staff. They will certainly appreciate it, and your business will only benefit in the long run.

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