17 October 2019 13:56:29 IST

The CEO and co-founder of TalentEase, Fernandez is a thought leader in education and a consultant and coach to school heads, teachers and parents. He has 18 years of outsourcing leadership experience in the Asia Pacific, consulting with and servicing global and regional clients. He was previously partner/managing director with Accenture, Singapore. He was the COO with Hewitt Outsourcing APAC, and President India Life Hewitt. He has overseen teams in sales, operations, client and account management, technology, finance and HR, and has extensive experience working with multinational clients across a wide industry and geographic spectrum. He is a sought-after speaker at education and industry conferences and is a columnist with Business Line on Campus .
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WeWork IPO disaster highlights outcome of opaque work culture

A good leader should, under all circumstances, ensure transparency in the company, no matter what

Recently, the National Security Adviser, Ajit Doval, while addressing the inaugural session of the National Conference of Chiefs of Anti-Terror Squads, organised by the National Investigation Agency (NIA), made an interesting observation. “Media is a very important organ to fight terrorism.” he said, “Why do terrorists kill? As Margaret Thatcher said, if a terrorist take(s) action and the media is quiet about it, terrorism will end. They do it for publicity, because then only you can terrorise people.”

It is a compelling argument. Starve terrorists of the publicity they crave, and you could dry up the oxygen they survive on and, hypothetically, end terrorism. Charles de Gaulle, in his memoirs, wrote: “There must be something that others altogether cannot fathom…Nothing enhances authority more than silence. It is the crowning virtue of the strong, the refuge of the weak…the prudence of the wise and the sense of fools.”

This is an interesting leadership dilemma. We’ve heard that ‘sunshine is the best disinfectant’. That transparent and open communication is an important requirement from a good leader. That a good leader trusts her team. But here is a contrary argument, that stifling information can be good in certain circumstances. In a broader way, the argument is — does the end justify the means?

In the business world, this has often been used as the justification to hide information from customers, shareholders, suppliers because the belief is that “We know better how to handle this information than they would.” “It could cause a panic.”

What if it was me?

The argument fails the moment we switch places with the people we’d like to keep the information from. If I was an investor in a company, would I like information that impacted me being withheld from me? If I was a customer, would I be okay with not being told about a quality problem that could impact my deliveries — even if that quality problem has been fixed? If I was an employee, would I be okay with not knowing that the owner was pledging shares like they were casino tokens?

Most of the recent frauds in the NBFC and public sector banks have, at their root, this tendency. Fraud begins with hiding information. The justification can vary from — “we’ll deal with it ourselves.” to “this is too small an issue to bother the regulator or the public with.”, to more nefarious motivations. Whether it was Vijay Mallya, Mehul Choksi, Nirav Modi or the countless scams-in-progress — leaders are looking out for nobody but themselves. Business leaders chose to conceal rather than communicate.

Slippery slope

The argument also starts to collapse when we start extending it. If this bit of information can be held back for Reason A, why can’t we also hold back another bit of information for Reason B? Before we know it, the system can get used to an operating culture of secrecy, deceit and eventually, outright lies.

If we take a look at countries that follow this philosophy — China, North Korea, Myanmar, Saudi Arabia — we see an underlying commonality — dictatorships or authoritarian, and often paternalistic, regimes in charge. What starts off with innocent protestations of good intentions gradually morphs into a police state. The same happens in business. Information concealment masks a desire for no accountability.

Not only does the business or organisation believe that there is nothing wrong with this approach, they can even convince themselves they are being free and fair. Consider this statement from Larry Wu, second Secretary for Science and Tech at China’s Embassy in Washington.

“We don't have censorship of the internet. Generally, the Chinese government is for the full exchange of information. We have full freedom of speech, freedom of the press. However, we have our own understanding of what is a limitation of the freedom of speech. So, we do use techniques to block certain websites, as well as we try to block spam.”

The slippery slope also happens when the censoring of information happens inconsistently to suit an agenda. In India, the film censor board loses credibility by being completely inconsistent and biased. Indian movies with overloads of violence and sexual content are delightfully given PG certifications, because political and other pressure is easily applied and succumbed to, while often harmless Hollywood movies — Transformers 5 , La La land , Fast and Furious 6 — are slapped with an A or R certification. Companies when they do this find the lines blurring between what they call a small issue, a moderate concern and a devastating crisis. Where it suits them, they disclose, where it doesn’t, they conceal.

Short-term gain, long-term implosion

Business giants such as Google, Amazon, Facebook, Apple and several Indian business houses are already operating in grey, sometimes black areas where this is concerned. Leaders are making decisions to filter information to the public, employees, shareholders and customers.

Consider the WeWork IPO disaster. Led by its rock star CEO, Adam Neumann, and with a ridiculously lofty mission of ‘elevating the world’s consciousness’, We was once valued at $47 billion. It was eventually forced to cut expectations to $10 billion and then decided to delay its IPO. At its core, the disaster was a transparency failure. Adam, for example, sold the trademark “We” to his own company for $5.9 million. Financials were floating around in murky waters. Kyle Jensen, associate dean at Yale School of Management put it nicely, “Neumann wanted, and his investors gave him, both his cake and the right to eat it. When public investors pulled up to the table, they realised there was no cake for them.”

Sunshine makes business sense.

According to a recent study by Label Insight, up to 94 per cent of consumers surveyed indicated that they were more likely to be loyal to a brand that offers transparency, and 73 per cent said they were willing to pay more for a product that offers complete transparency. The lack of transparency can badly impact hard business results. Glaxo ended up paying $3 billion for concealing information on the clinical trials of its drug Paxil.

The disinfectant approach

The Roman Catholic Church has been a huge culprit especially with regard to the child sexual abuse scandal that enveloped several countries. The overriding concern has been protection of reputation over protection of the child. But relentless exposure, public access to information, exposes by media have led to increased accountability and transparency. Consider some of the 10 commitments that the US Catholic bishops made:

· To reach out to clergy sex-abuse survivors and their families, helping them find healing and care.

· To publicise information about how people can make accusations of sexual abuse by bishops.

· To include lay people in investigating misconduct by bishops.

· To put the needs of the people making accusations of abuse above institutional concerns, including cooperation with lay experts and civil authorities.

In Catholic context terms, this is revolutionary — a far cry from the ‘duck and deny’ approach the Church was used to earlier. This came through simply because of the ‘sunshine is the best disinfectant’ approach forced on them, through information being exposed and disseminated. More needs to be done, but progress has been made.

In our leadership journeys we will be asked this question: “Should we tell?” The real leader will know the answer to that question has to be “Yes”.