As Netflix Shows Us, Transparency Can Cut Both Ways

At a time when sexual harassment and discrimination issues haunt the business world, “transparency” has become a corporate buzzword that many experts stress is central to shaping an effective and trustworthy corporate culture.

And yet, in a recent article, the Wall Street Journal (WSJ) investigated the inner workings of NetflixOpens a new window , highlighting the potential dangers of an organization that is too transparent.

The story examines the streaming giant’s hyper focus on operational transparency – from allowing most employees access to sensitive company data and analytics (e.g. viewership numbers for specific shows or contractual terms for the company’s production deals) to openly discussing whether somebody should be fired, as well as why a specific staff member may have been let go.

The article found that although this approach is well received by many Netflix workers, it also highlights a culture that to many is “ruthless, demoralizing and transparent to the point of dysfunctional.”

The WSJ paints a vivid picture of the pitfalls that can come with an overly transparent culture. However, it is important to keep in mind that Netflix – a company where radical transparency is an organizational priority – lies on one extreme of the “transparency spectrum,” if you will.

Keep in mind that many companies are focused on becoming more transparent because it’s what the American workforce wants.

After all, companies on the other side of that spectrum often end up dealing with major scandals. Google, for instance, has suffered a serious hit to internal (and external) trust and morale following a New York Times exposé that revealed major payouts were made to company executives accused of sexual harassment.

These types of issues have led American workers – as well as the public – increasingly to demand accountability from companies when they make mistakes or are found to be fostering negative working cultures.

Meanwhile, recent data from BlindOpens a new window , an anonymous social networking platform for professionals, revealed that more than 70% of staff at the top four most valuable US companies agreed that they “don’t trust HR.”

That explains why HR appsOpens a new window like Bravely and We Said Enough, and websites like Blind and Glassdoor, all of which provide social platforms for employees to discuss anonymously workplace issues, have skyrocketed in popularity.

Such issues are arguably why the 2018 Edelman Trust BarometerOpens a new window – an annual study of the trust and credibility in companies, people and institutions – found that building trust is the number one priority for CEOs across the globe.

As such, many HR representatives and consultants would argue that transparency across the board is the fix for any business facing trust issues within its organization.

It’s meant to nurture inclusiveness among employees and help shape a workplace that embraces open dialogue, where anyone can share their ideas and air their grievances. Crucially, operational transparency ensures that workers feel like their employer is keeping them informed about the company and its strategy.

In fact, the trend towards transparent corporate culture is fast becoming the norm. Full disclosure is no longer a strategic choice but, rather, an operational ambition for which most companies feel they must aim.

Clearly though, as we see from the Netflix example, too much of a good thing can have negative effects.

The problems with transparency

Indeed, most relevant studies and data point to a work environment across the US that is begging for more alignment between leadership and staff.

In an ideal world, a transparent work culture is the answer.

In reality, though, there are substantial risks associated with workplace transparency, if not managed correctly.

There are several key problems that arise from radical transparency:

• Too much oversight can increase distrust among staff, and lead to decreased collaboration.
• It can lead to a “blame culture:” Over-the-top transparency will help identify the source of a problem (i.e. what the problem is and who is at fault), but it moves the focus away from why that issue arose in the first place. A focus on outcomes is a sure-fire way to encourage a blaming culture.
• It makes employees overly cautious. A joint studyOpens a new window from the University of Nottingham, VU University Amsterdam and Erasmus University Rotterdam found that people are far more tentative and less willing to take risks when they feel like their decisions are under the microscope.

Striking a balance

Corporate transparency is not for every employee. It caters to specific personality types.

Too much or too little transparency will inevitably lead to turnover. It falls to HR to understand the level of transparency that is most appropriate for their company’s workforce, and to identify which is the most pertinent information to share.

HR must make clear to the C-suite, among others, that transparency is one tool. Every stakeholder should understand why transparency is necessary and how it will be used to contribute to the business goals.