Why companies fear transparency - and how to overcome it

Why is authenticity in communications so hard?
"Is there anything in your sustainability report that demonstrates you are less than perfect?"

That's a question all companies struggle with, and have done in the years since it was first asked by a journalist at the launch of a corporate responsibility report a decade or so ago.

Answering the question should not be that hard. But it remains very difficult for almost all companies.

Yet, admitting challenges and failure publicly on complex, often near-impossible issues such as sustainability, corporate responsibility, ethics etc, alongside, of course, successes, is known to be THE way to build credibility.

Admit mistakes, difficulties, and you seem more human, less arrogant, more, well, real.

And all large companies want to appear to be these things.

That's what the surveys and focus groups and stakeholder roundtables say people want from big firms: To admit they don't know all the answers, and show collectively, that they are as "human" as the rest of us.

I asked Bill Royce, senior vice president, sustainability at Weber Shandwick for a few comments. I've scattered them below.

So why is it so hard to admit corporate mistakes?

I think it's for a number of reasons, six in fact:

1) Middle manager fear

Corporate professionals don't often rightly, see themselves as "lifers" at any company.

So who wants to be that manager who "did" radical transparency, and got fired for it, or moved along, pushed into a corner or gained a reputation as a loose cannon?

This is a very legitimate concern. People have kids to feed.

Is there a solution? Possibly. But any manager pushing alone may end up being too courageous for their own good.

You could take a risk and push it through. But better still to persuade the communications director or a board member that humility and transparency, in the medium to long term, works well for reputation enhancement, at the very least.

You can do this using examples and explaining the risks - and opportunities.

The best case studies are the companies many of you know about: Unilever, Nike, Gap, M&S, Interface, Patagonia etc etc, these companies have all done well from admitting publicly that they don't know how to solve the big challenges they face.

Comment from Bill Royce: "Understand who Boards and CEOs will listen to, and bring in those business experts who will express the value case - even if that's a management consultancy. If they will accept advice from McKinsey's more readily that WWF, bring in the suits to create the mandate."
2) The Luddite Communications director

We've all met these. There are those that believe a corporate twitter account sending out press releases is almost a step too far.

They read about a few screw ups in Marketing Week, or companies targeted by campaigners, and are terrified of disclosure leading to unrest, blame and a mess being laid at their door as a result.

Who wants to be that comms director who's known for screwing up on complicated sustainability transparency? And when its not a huge part of his/her job? The barriers are understandably high.

Is there a solution? Waiting until they leave is one option, but that could take a while, and there's no guarantee their replacement will be any better.

Whilst they will have to toe the line if ordered from above, you may be able to "soften them up" with a sustained education campaign on the value of transparency.

That's not easy, given the paucity of evidence beyond a handful of case studies out there.

However, those that are there are quite compelling. I've mentioned many of the names above. There are many others.

They may be the "same old names" to the sustainable business community, but your communications/external affairs director may not know just how highly regarded they are becoming due to their approach to transparency. How about, for example, a quarterly briefing on trust and how it's being built due to transparency and authenticity? It might work (This is very possibly an extremely obvious point, but I know lots of companies who have never considered this, including some you might know of for good work in the field)

3) The CEO or board member 'heart attack'

No head of CR/Sustainability, or even a Chief Sustainability Officer is always 100% sure their board members and CEO have read every word of the CR report or latest piece of communications and understood what it might mean. Words can be twisted, and board members and CEOs do not like unexpected communications surprises, particularly when it may reveal human failings in the business which are effectively "on their watch".

Is there a solution? This is a tricky area. It's hard to know how senior management, who can be unpredictable, will always react.

As with other bosses, it's likely that the cliche about the lobster not realising it's been slowly boiled (as unpleasant as that is) might apply here. Gradual transparency can come a long way in just a few years.

There are some other classic methods too. The line that goes "If we don't tell our story, others will tell it for us on social media". That will of course, happen anyway. But it's now ever more evident that stakeholders expect authentic communications that address the issues directly when difficult issues are being debated that are connected to the company.

This recent blog post demonstrates this point using the example of Tesco.

4) The Legal worry

Walmart and Gap have had this issue recently. Their lawyers tell them that signing up to the Accord on Fire and Building Safety in Bangladesh will open them up to severe legal risk. Others suggest there's not much evidence for that. No matter: The legal worry angle prevents many a company, particularly in the US, from disclosing much at all, let alone failings. Real or otherwise, the perceived risk is high.

Is there a solution? The cliche that leadership is key is true again here. Ignoring advice based solely on risk management by folks directly incentivised to usually advise negatively (lawyers) is something only a CEO or board can do. What would help senior leaders make the right decision of course, is some research on precedents or better still, examples of when everyone said it would happen, but it did not, and the company was praised as a result (Gap back in 2004 is a good one)

Comment from Bill Royce: "In fairness to lawyers, their job is to advise on risks and mitigation. They should not be ignored, but responsibly over-ruled in favour of value creation by opening up authentically, warts and all".

5) The Employee factor

No head of human resources or internal communications is keen on giving employees another reason to gripe. Even though employees are often the best informed and most sceptical stakeholder group, one can see why a head of HR or internal communictions might block the idea of 'fessing up to getting things wrong in the company by talking about sustainability and community challenges alongside successes and programmes.

Of course, authenticity is not just about admitting to getting things wrong. That humility angle is a major part, but telling positive stories authentically is just as, if not more, important. 

Is there a solution? Showing examples of how good employee engagement has delivered for other companies is the obvious choice. Novo Nordisk is a good example, there are many others. The trick is to show how engaged employees are more motivated to innovate, cut costs and create new business ideas. A couple of other great examples are Alliance Boots, Reed and Life Technologies. We assess these in this new online course. And also in this one, specifically on communications.

Comment from Bill Royce: "The cultural shift can be incredibly powerful. When employees see the company acknowledging mistakes and failures, there is more willingness for them to do the same up the line, surfacing problems earlier, reducing the temptation to bury bad news from senior management, and improving business performance".

6) The Social Media case study fear factor

This one is obvious. A number of companies have been humiliated in social media in recent years. Plenty became case studies of "how not to manage your reputation" in traditional media over the years. The recent story concerning the Abercrombie & Fitch CEO comments from six years ago demonstrate that stories do not go away easily. Nestle has also suffered both traditionally, and somewhat brutally, at the hands of social media (see last few slides).

Is there a solution? Many executives are rightly terrified of what may happen to their brand on social media. We've all heard some of the horror stories. It's particularly hard to work out what to tweet as a B2B company. Who is the audience, what is to be gained? These are legitimate questions. For B2C companies such as Sainsbury's, social media engagement is said to be a success. For B2B companies, this article perhaps offers some evidence, linking social media with sales, which is probably the way to go. Ultimately the old arguments that "we have to be part of the debate" or that "if we don't tell part of our story, others will define it for us" will not always work, but are possibly the best you can use, if the sales opportunity case studies linked to above do not drive internal interest.

Bill's view: "Ignoring the social dimension is like closing down your media relations and external affairs functions - it leads to isolation and disconnection from the real world of  stakeholder conversations".

In conclusion, overcoming these, and other barriers to authenticity in corporate communication is not easy. Thanks to Bill for his comments above.

It's likely that overcoming group think, group edits, legal 'risks', corporate verbiage and dull-speak is one of the principal, yet unrecognised challenges companies doing good work on sustainable business and corporate responsibility face in the next 5-10 years.

The examples of success are growing. Some further ones to those mentioned above are here.

Here's some key take-away tips for driving and maintaining authentic communications in your business:
  1. Leadership is vital (a total cliche, but true) but confidence needs to be built, and kept, that perceived risks around authentic communications (humility and learnings alongside mistakes) works. That's not easy
  2. A brave board is needed, other leaders need to understand the value of authentic communications. Your commitment to transparency has to survive leadership transfers
  3. Confident middle management is important. They must understand what's been achieved, and why it matters, outside the CR department
  4. Partners to speak up for you are vital. NGOs, academics, business partners all add credibility
  5. Bank accounts of goodwill can be leveraged. When communications work, you quickly get recognised as being good at engagement and authentic communications (Sainsbury's a good example)
  6. Independent studies/reports/commentary on performance by outside groups help a lot (SAB Miller, Heineken, Unilever, BP, all good examples)
  7. Measure results of transparency and how they change/improve sentiment. Can you work out which/how authentic communications have improved employee and stakeholder perceptions?
  8. Employee engagement results need constant publicity, inside and outside the business 
Here are three online management training courses that can help you understand, evaluate and successfully implement some of the above:

Getting to Grips with CR: Eight module online management training

Getting to Grips with CR Communications: Four module management training course

Getting to Grips with CR Reporting: Four module management training course
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