When you're running a business, it's critical to be transparent and honest with your employees, even when things aren't going well. Lots of people want to shield their employees and investors from bad news or challenges of running a business, but these constituents aren't children, and they can handle the truth.

The holiday season drives revenue and increased customer contact for all kinds of businesses, beyond the easily imagined retail rush. House cleaners, salons, and restaurants all cash in on our loosened purse strings between Thanksgiving and the New year.

Increased volume can mean increased stress, scheduling headaches, supply shortages, and other frustrations. But it's also a time when owners might be hesitant to share these frustrations with employees. When good cheer is the expectation, candor can seem a buzzkill. But putting on a brave face, then putting on a show, isn't putting your business on the best path forward.

Anyone who spent a lot of time trying to contact or catch Santa will tell you that understanding the nature of the problem is paramount. If your employees don't have a view of how the business functions, they can't help you solve problems as they arise. If they're listening for hooves on the roof or a man in the chimney, they're going to miss the realistic signals that someone -- and not a jolly old elf -- is breaking into the house.

Trust takes time to build.

Being consistently honest about matters, whether of little or large consequence, pays dividends in relationships.

I don't teach my kids about Santa, partially because I fail to see the value in the myth, but mainly because I don't want to abuse their trust. For the same reason, the Tooth Fairy hasn't visited our house either. I do believe there is a time and place for telling a lie to a child, to protect them from information they may not yet be ready to handle. My father recently died, and my three-year-old hasn't asked about it yet but when he does I will not be explaining the circle of life to him, despite having watched "The Lion King" excessively in recent months.

My truthfulness about Santa now sets a precedent for later; when I explain to my children the repercussions of unprotected sex or drug use they will listen because they can trust I won't misguide them.

I take the same approach with employees and Kabbage's challenges as with my kids and Santa Claus. I tell them the truth and they know they can trust what I tell them. I don't try to sell them a story or protect them from necessary realities so we are equipped to tackle real challenges together.

Trust can be lost in a moment.

In 2018, Elon Musk conjured a controversy with his tweet claiming he could take Tesla private at $420 a share, apparently by magic. Not only did this result in SEC fines but Musk is currently being sued by countless investors for the public and outright lie. He lost his board seat, along with much of the autonomy he had previously exercised in his business.  

I owned my second clean-diesel (TDI) vehicle when the story broke that Volkswagen had been "rigging diesel-powered vehicles to cheat on government emissions tests." They knew customers like me were trying to do the right thing for the environment and to capture those good intentions, they made their vehicles appear to be cleaner than they were.  

Coming back from such stark dishonesty such as these examples isn't impossible, but it's a difficult road. That unnecessary work, if not your principles, should convince you to build trust with customers by being honest from the start.

The metrics we rely on for success, both personal and corporate, depend on transparency. 

The cross-industry trend toward reporting profitability, rather than growth, for example, requires companies to give shareholders and stakeholders new kinds of information. Explaining not just what your metrics indicate, but also why you chose those metrics, requires transparency and self-awareness. Teaching people what to pay attention to and what they should care about, as regards to your business, is an invitation to share what matters. Don't be tempted to misdirect.

Among your employees, you must not only act transparently but make that transparency explicit and welcoming. Leaders practicing transparent management are seen as more trustworthy and more effective. Employees who can clearly see their role in the organization and the path to advancement are more focused and more productive. 

Performance management is another key area where transparency is both difficult and critical. A tradition of being discreet with employee feedback has sometimes mutated into secrecy, keeping an employee in the dark about things that impact them directly. If the employee isn't allowed to see the true record of their performance, they can't improve or adapt. The results of dishonesty -- inefficiency, waste of time, lack of accountability, mutiny, loss of talent -- are worse than the discomfort of honest reviews and all but the most confrontational feedback.

There are times when people and pressures will allow you, even encourage you, to lie. The health of your business, the security of an employee's role, the long-term threat assessments: the most important truths to share may be difficult or unwelcome ones. Share them anyway. Radical honesty, even at a high cost, pays off.