It's easy to be transparent and tell the truth with your staff and customers when business is growing. Who wouldn't want to go into a meeting with managers and staff to share great news? "Customers love us. Sales are up. And, we're hiring." CEOs and department heads enjoy delivering the news people want to hear. Not only does it feel good to make others feel happy and secure, there's an element of ego too. Good news updates (either directly or indirectly) validate great leadership and decision-making abilities.

To be truly transparent in good times, though, leaders must do more than just get the headline right: You must also share your analysis of what went right (and how it went right), plan how you can keep doing well, and share the credit and rewards with those who deserve it.

But, what about when times are tough? Sharing customer complaints, sluggish or down sales, and impending lay-offs is obviously more difficult. When the present is bleak and the future is uncertain, delivering the bad news headline is tough enough. Having to explain why things are bad on top of that can seem like an impossible task. But great leaders are committed to sharing the news, context, and their explanation of why, no matter what.

And how did these leaders come to learn the importance of transparency in managing a company or team? Was it something they believed in all along or was it something that evolved over time, with tough lessons learned?

I had the opportunity to interview Andre Durand, the CEO of Ping Identity, and asked him exactly that. Ping Identity is Andre's third venture, and he's led the company for 15 years. According to Andre, he made many mistakes early on, and learned a lot from them.

He shared a story that illustrates the often tumultuous experience of working in and leading a start-up and the difficulties that adds to being transparent with staff. The product is new and evolving, the staff is growing, investors are coming and going, and the market is shifting.

In Andre's words, "In terms of transparency: It was a word that didn't mean much. Then something happened that put meaning to it for me. About 4 years ago, we shifted from traditional licensing to a subscription model. After we'd made the change, we realized how much capital we needed to manifest the model to make this happen."

The pursuit of investment capital changed the dynamics in the office, of course. Running the business while seeking investors was a challenge. There was interest in their business, and with that interest came a steady stream of questions on their operations.

As a consequence of all those questions, Andre discovered that the business wasn't run as tightly as he'd thought it was. They'd been succeeding almost in spite of themselves. The relationships between the managers and Andre were solid. However, the teams were inwardly-focused and operating in silos. In the office, there was a prevailing idea that details didn't matter and it wasn't important to share information with one another. The investors' questions pointed to the need to change and become a more sophisticated operation.

When met with resistance from the old guard, Andre replaced people in a number of key positions to create a solid foundation built on trust--and transparency. Andre sees these two qualities as inextricably linked. "When things change, teams can be blindsided unless they have an extremely transparent environment with really forthright conversations and a sufficient level of detail so that companies can understand the risks. A lot of times, you have a leader who thinks it's their job to keep noise out of the system." That's when problems are swept under the rug.

What does Andre do differently today?

  1. When team members bring up the things that aren't working well, he makes a point to acknowledge it and thank them for bringing it to the surface. He then facilitates a constructive conversation about how to fix it. Andre understands that, f you have a company culture in which the first mistake gets somebody fired, people won't bring up important issues. If you build a culture on fear, you'll never get full transparency. "You tend not to hear about things until they completely crash and burn," he says.
  2. He tries to lead by example. At times, he gets to share with the whole company. When something isn't going well and everyone knows it, there is no better time to talk about it than at a company all hands meeting. That way, everyone can ask questions and discuss the best ways to keep the present issue from coming up again.

While it's easy to be transparent when business is good, it's even more important when your business is struggling or anticipating a big change. Transparency builds trust and helps leaders identify and solve problems before they become unmanageable.