319. The Harsh Reality Of Truth, Trust And Transparency
Truth, trust and transparency will transform your team into a powerfully productive and efficient workforce. It all starts with a Ponzi scheme.
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William Miller was a 21-year-old bookkeeper in 1899 when he started his investment firm, the Franklin Syndicate.
He claimed to have insider knowledge of companies and their stocks. This insider knowledge led to a remarkable 10% weekly return for his investors and earned William the nickname 520% Miller (cause there are 52 weeks in the year… get it?)
Needless to say, the Franklin Syndicate’s business grew pretty darn fast.
When growth leveled out, as it always does, Miller began having trouble paying his investors their weekly interest. Nobody knew why - except William.
You see, William Miller wasn’t telling the truth.
He hadn’t been making stock investments at all. Instead, he was simply using new investments to pay off the previous investors. The Franklin Syndicate was a castle of cards, and a tornado came a-blowin’.
Miller was arrested and convicted to ten years in prison, at which point his nickname should’ve been downgraded to 0% Miller. #lostopportunity
You’ve probably never heard of William until now.
But 20 years later, an Italian American in Boston ran the same scheme as Miller. His name was Charles Ponzi.
You’ve heard of him.
And that’s how the Ponzi Scheme came about.
Facts Are Fundamental
As a leadership coach, I deal with truth and communication issues all the time. One of the most common communication issues at companies of all sizes is a lack of transparency.
Contrary to what many leaders think, transparency isn’t just about being nice, it’s a requirement to build a productive, inspiring, and high-growth company.
In fact, employees in transparent workplaces have up to 6x more job satisfaction than others.
Simply put, happy employees are more productive employees.
So if you want your team to be productive and high-performing, which I’m hoping you do, it’s time we took a little look at your fluency with transparency.
This seems like a good time for a poll.
In The Absence Of Facts
Sure, William Miller’s failure to be truthful might be a bit of an exaggerated example. After all, you’re not running a Ponzi scheme, right?
Right?!?!
Please tell me you’re not running a Ponzi scheme.
Anyway, my point is that bad things happen when transparency is missing.
Let me give you a real-world example.
One of my clients, a $50m service company, laid off 5 employees for performance and restructuring reasons. They only had about 50 people at the company, so this represented a meaningful 10% reduction in staff.
The firings coincidentally coincided with the departure of one of their mid-sized clients. The two things had nothing to do with each other.
Normally, in a culture of transparency and truthfulness, these coinciding events wouldn’t cause any issues. That’s not what happened here.
The leadership team was scared to scare the staff, so they weren’t transparent. Nobody in leadership talked to the staff about the layoffs. Nobody talked about the client who left.
No notice, no announcement.
Nothing.
It felt like a cover-up.
Naturally, the staff started freaking out.
In the absence of facts, humans will make up their own stories, and they’re rarely ever good.
The staff attributed the firings to the loss of the client, and they made the (incorrect) assumption that the company was a sinking ship. Everybody was scared that they would be the next one to be fired.
Within a month, nearly half of the employees were actively looking for jobs. The company culture, which was already teetering from a lack of transparency, took a nosedive.
That’s when I was brought in. To fix it.
And that’s when I instructed the leadership team that transparency and truthfulness are critical components of a healthy work environment.
And that leads us right to your leadership style.
Truth, Trust, And Respect In Successful Leadership
There are two important pillars of successful leadership: trust and respect.
Trust is built from transparently telling the truth.
But that’s where things can get a little murky.
It’s easy for me to sit here on my couch and say, “Be transparent and tell the truth.” It’s not always easy to actually implement it effectively. I get it. I see you.
Maybe your fear of conflict makes it hard for you to tell the whole truth.
Perhaps your desire to be liked by everyone impacts your transparency.
Or there’s a chance your poor decision-making process changes how you talk about the facts.
Whatever the issue, if you can’t tell the truth, you won’t get the trust. And if you don’t have their trust, you won’t have their respect.
According to Harvard Business Review, employees in low-trust companies are 74% more stressed, 76% less engaged, and 50% less productive than workers in trusting environments.
[Editor’s Note: whoa!]
Here’s the bottom line: If you don’t have their trust, you have a bad work environment.
The 3 Ways To Build A Culture Of Transparency And Trust
As it turns out, there are three ways to build a culture of transparency and trust. These are three things that you can start doing immediately. No additional training is needed. Here they are:
1. Always Explain The Why
Helping people understand what needs to be done only gives them a longer to-do list, but helping them understand why things need to happen leads to ownership and inspiration.
No matter the decision, no matter the ask, make sure your team understands the why.
2. Document It
Documenting important decisions, goals, and expectations shows commitment, trust, and transparency.
As the saying goes, “What gets documented gets trusted.”
[Editor’s Note: don’t want to document yourself? use granola.ai]
3. Create A Safe Environment To Question
Make it safe for your employees to challenge your beliefs and make it ok for them to ask you to clarify your reasons. Heck, maybe even reward people for raising concerns and being curious.
How You’re Going To Build A Culture Of Trust
Without facts there is no truth, and without truth there is no trust.
William Miller’s investment activities represent a failure of truth, trust, and transparency in their worst state.
It should act as a lesson to all of us that unless you communicate transparently, the trust in your leadership will erode.
I said it up above, but it’s worth repeating:
Without facts, there’s no truth. Without truth, there’s no trust.
So I dare you to ask yourself these three questions:
How clearly are you communicating your decisions?
Does your team understand the “why” behind your actions?
Are you consistently truthful, even when the truth is uncomfortable?
If you start taking one small step to improve transparency, you’ll create a better, more inspiring, more productive environment.
I guarantee it.
Have communication issues at your company?
I will help you fix them
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Great article! Reminds me of Ray Dalio’s “Radical Transparency Model.”
Also the power of “why” can’t be underestimated. “I need you to do this because I said so,” is a far cry from, “I need you to do this, it came out of nowhere and I’m finishing up the annual reports for the deadline, thanks so much.”
Do you NEED to give an explanation, maybe not. Does it make a difference… ALL The Difference!
My two favorite points: 1) "In the absence of facts, humans will make up their own stories, and they’re rarely ever good." Put this on the door entering your leadership office. 2) The Harvard Business Review study findings about how much more stressed employees become. That's a critical finding.