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In Praise of Privacy

These days, transparency is all the rage. But businesses need a little privacy -- and sometimes a lot of it.
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We live in a world that puts more and more value on the idea of transparency. Cutting-edge architects urge CEOs to transform their workplaces into open "ecosystems," free of doors and other trappings of hierarchy. Consultants preach the gospel of open-book management. Even fancy restaurants now grill their free-range chicken in open kitchens, in full view of their guests. Revealing everything has become a marker of honesty and authenticity. People behave as though they're entitled to know almost anything about everything.

For a business, that can be a problem. Companies need a little secrecy -- in fact, sometimes they need a lot of it. Sure, in these days of Sarbanes-Oxley, public companies have an obligation to be Saran-like. But private firms don't, and that's an advantage we shouldn't be so quick to squander.

The way I see it, information is a commodity that needs to be carefully rationed based on the strategic goals you're trying to accomplish. Indeed, telling everything to everyone is a leadership cop-out. Leadership is about making tough decisions, and that includes being willing to keep certain things to yourself -- even if that means you're behaving more like an old-school boss than a new-age buddy.

This is especially tricky when it comes to financial issues. To be sure, your employees require a fundamental where-do-we-stand grasp of the company's finances. You want people to be accountable, to feel as if it's their money on the line, and that can't happen if you've imposed a total information embargo. But there also is such a thing as too much information. I refuse to broadcast, for example, how profitable my clients are relative to one another. I don't want people focused on client profitability. I want them focused on client success. If I choose to work on a reduced margin -- or even at breakeven -- with a client, that's a strategic decision best kept to myself.

Then there's the problem of confidential company information being shared with clients. In my business, many executives develop close relationships with their clients. And that's a good thing. But such intimacy can result in the exchange of information that a client doesn't need to know. I once received a call from a client, nervous because he had heard that another client was considering leaving our firm, a move that would have forced us to shed staff. What, the worried client wondered, would this mean for him? After reassuring him that all was well, I discovered he had heard the rumor from his account executive, with whom he had a close relationship.

Clearly, if your employees don't know this stuff in the first place, there will be no temptation to spill the beans. The same is true with respect to matters of overall competitive strategy. A startling amount of proprietary information gets casually transferred within a company. And when people leave, they take it with them -- I don't care what documents they sign. And don't even get me started on the issue of emotional sharing. If I'm stressed or in a lousy mood, I'm going to keep the reason to myself, lest I pass my anxiety on to the company as a whole. Leadership stoicism may seem a quaint notion. But it is required more often than not.

The problem is, once you start down the transparency road, it's hard to turn back. Your team quickly gets used to the full information monty, and they'll turn hurt and sensitive if they feel shut out.

The open-book approach may work for some people. But it's not for me. Business culture needs to be a carefully calibrated balance between creating a participatory ethos and preserving your need for -- and right to -- privacy. Supreme Court Justice Louis Brandeis famously said that "sunlight is the best disinfectant." Then again, there is the risk of CEO sunburn -- and no amount of corporate Coppertone will lessen the sting.

Adam Hanft is founder and CEO of Hanft Unlimited, a Manhattan-based consulting, advertising, and publishing firm. Read more from Adam Hanft in the Marketing Resource Center at www.inc.com/keyword/hanft.

Last updated: Mar 1, 2005




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