CEO Transparency: Why it Matters

When the CEO withholds information, people create their own.

This is a lesson countless leaders learn the hard way. They aren’t transparent about something—the state of the business, why the CFO was let go, what that all-day executive offsite was about—only to find that employees have created their own narrative about it. And it’s usually a negative narrative, fueled by fear and rumor.

This is why great CEOs aren’t just honest with employees; they are proactively transparent. They nip speculation in the bud by telling people about issues that affect the company, both positive and negative.

I recently got a great demonstration of how perception distorts reality in the absence of the truth. I was working with an executive leadership team of a midsize company when the subject of the CEO’s salary came up. People got a little tense. And it gave me an idea.

With the CEO in the room (and with his permission), I asked people to write down on a sheet of paper what they thought he made per year. On…