| Firms, and the managers within them, are always | | | | commitments become the foundation for bonus goals |
| looking for that next source of advantage over the | | | | and budgets. This information is then becomes the |
| competition, while at the same time struggling to | | | | strategic operations plan shared across the |
| address current internal inefficiencies, conflicts, and | | | | organization to those who "need to know", and |
| performance issues. Having one foot in the present to | | | | becomes the core performance management and |
| address the issues of the day, while planning and | | | | accountability agenda for regular (weekly/monthly) |
| preparing for a successful future, is a constant | | | | management, team, and employee meetings and a |
| dilemma facing today's manager. | | | | key measure for evaluating alternatives in the |
| Historically, transparency has been seen more as an | | | | decision-making process.. |
| ethics practice for third party analysis of an institution's | | | | Transparency in Decision-making and Change |
| finances and practices; however, the more | | | | Management |
| widespread study of business ethics and organizational | | | | The visible outcomes of decision-making at all levels |
| behavior is pointing to operational transparency as a | | | | are very telling about the firm's and individual |
| management practice that can both address those | | | | managers' values and priorities. Although not all |
| daily management issues, and also become an internal | | | | strategic decisions can be played out in a public forum |
| source of sustainable competitive advantage that is | | | | for competitive and confidentiality reasons, the |
| difficult for competitors to imitate. | | | | outcomes of those decisions (changes to |
| This article will explore the concept of operational | | | | organizational structure, design, resource allocation, |
| transparency and suggest management practices in | | | | product direction etc.) should be communicated as |
| the areas of strategy development and | | | | thoroughly as possible including the rationale and criteria |
| implementation, decision-making, and performance | | | | behind the decision to help employees understand the |
| management to achieve transparency, improve | | | | decision and make a better connection between the |
| performance. and create a source of sustainable | | | | firm's espoused values and those used to make |
| competitive advantage. | | | | important decisions. Additionally, those decisions related |
| Transparency | | | | to changes to organizational policy, procedures, and |
| Transparency is a trust building mechanism generally | | | | systems should be folded into a change management |
| used to "open up" the books or practices of an | | | | process that provides transparency to how the |
| organization to stakeholders with a "right to know". | | | | decisions are made, provides for functional area input, |
| Much has been written about transparency in public | | | | and thus builds stronger trust and commitment to both |
| companies and governments, but even with the | | | | management and the decision outcomes. |
| importance of trust in all business transactions and | | | | A best practice in transparent change management |
| relationships, little is published about how to use this | | | | systems begins with executive support and devotes |
| trust building mechanism to improve organizational | | | | an administrator to act as a conduit for proposed |
| performance at the operational level. When employees | | | | changes and facilitate a monthly meeting with leaders |
| know the true how and why behind organizational | | | | of the various functions (internal stakeholders) to |
| strategy, decision-making, and performance | | | | review executive summaries of the proposed |
| management, they generally feel more trust toward | | | | changes and approve or deny the proposed changes |
| the management of their organization and thus can | | | | based on the business merit and impacts on internal |
| become more committed and engaged in their work. | | | | and external stakeholders. The approved changes |
| Although fear of strategic information falling into | | | | then move to a more operationally focused group of |
| competitors' hands from internal sources can limit the | | | | internal stakeholders to discuss at a more detailed level |
| potential for complete transparency, strategic sharing | | | | how the changes would impact their function and |
| and coordination of key internal operating information | | | | identify the tactical plans and resources necessary to |
| can create trust in the system and a knowledge of | | | | schedule and implement the changes as smoothly as |
| how each player contributes and is impacted by the | | | | possible. The executive summaries and outcomes are |
| system. The creation and requirement for | | | | communicated to the internal stakeholders and |
| transparency and sharing of information in strategy, | | | | maintained on an internal website that provides |
| decision-making and performance management | | | | employees with a quick glance summary and detailed |
| establishes an environment where goals, and the | | | | information about coming changes and plans. This type |
| resources and behaviors used to achieve them, can | | | | of system demystifies the origin, rationale, and content |
| be aligned for greater cooperation and performance. | | | | of change, ensures involvement and coordination and |
| Transparency in Strategy | | | | in essence makes change management a transparent |
| Drawing from the resource-based view of strategy | | | | process rather than an unpredictable event. |
| (See Barney 1991) and the concept of strategic | | | | Transparency in Performance Management |
| leadership (See Ireland & Hitt, 2001), managers can | | | | The translation of high level strategies into cascading |
| build a competitive advantage by doing a better job of | | | | goals and performance management has been |
| choosing between competing alternatives and aligning | | | | addressed in models such as Management by |
| internal resources than their competitors. At a high level | | | | Objective (MBO) and the Balanced Scorecard. |
| this breaks down to openly communicating and aligning | | | | However, a primary goal of transparency in |
| organizational priorities, visibility to functional area | | | | performance management is to achieve visibility, |
| contributions to those priorities to those who need to | | | | alignment, and accountability across the organization's |
| know, and a visible connection between each | | | | goals and objectives. This is achieved through the |
| employee's work activities and those organizational | | | | strategy process above where the quality and quantity |
| priorities. | | | | of inputs and outputs required by each of the internal |
| However, this is not solely an executive concern, but | | | | stakeholders to make their contribution to the overall |
| instead, each manager and employee is critical to this | | | | firm goals are negotiated and translated into single |
| strategy's success, and it can be implemented solely at | | | | owner outputs. These negotiated goals form the basis |
| the functional or team level in the absence of | | | | for performance evaluation and goal vs. actual |
| organizational support. However, when each manager | | | | outcome become a priority agenda item at the weekly |
| and employee understands the organization's priorities | | | | management, team, and one on one employee |
| and has specific information about how they contribute | | | | meetings so that issues threatening the agreed upon |
| to them, and those contributions are directly aligned | | | | output can be addressed proactively and teams can |
| with related contributions firms, can achieve improved | | | | work internally and across functions to address both |
| teamwork and performance. | | | | challenges and opportunities related to meeting and |
| Transparency in strategy can be achieved at any time, | | | | improving the related performance. The transparency |
| but the best starting point is during the annual planning | | | | to the specific goals and outcomes and active |
| and budget creation cycle, specifically when | | | | management and communication of those results |
| executives and managers are submitting goals to be | | | | reduces role ambiguity and negative conflict and |
| eligible for quarterly bonuses. All too often, this critical | | | | creates a high performance environment where |
| time passes with a rush of activity, but little sharing of | | | | employees can feel that their contributions are being |
| information or coordination from above or among | | | | fairly evaluated against their performance |
| functional area managers. The worst case result is a | | | | expectations, and those of their colleagues. |
| broad range of unrelated or conflicting goals that do | | | | Conclusion |
| not reflect the organization's stated or unstated | | | | Leaders who can build trust and commitment among |
| priorities. | | | | their employees through effective management |
| A best case scenario would have executives outlining | | | | practices have a definite source of competitive |
| the key priorities and performance objectives as a | | | | advantage. This article briefly discussed some actions |
| team, and then negotiating each functional area's | | | | firms can take to make their key value creation |
| contributions to those outcomes. Critical to the success | | | | processes more transparent and effective. Through |
| of this negotiation is single ownership of goals and firm | | | | the creation of transparent systems and processes |
| commitments from each manager about the inputs | | | | for strategy development, decision-making, and |
| they will provide to the others as a result. A general | | | | performance management, firms can not only achieve |
| example of this would be an organizational priority of | | | | higher levels of performance through alignment and |
| increasing sales by 20%, a sales goal of 1000 units per | | | | accountability, but also achieve higher levels of trust |
| month, and operations committing to processing the | | | | and commitment from employees who will be able to |
| requisite number of sales files to a set standard each | | | | better understand and participate cooperatively in the |
| month. The same process is followed for projects | | | | pursuit of the firm's values and priorities in daily |
| falling outside the core business operations, and these | | | | operations. |