Balancing Transparency and Institutional Risk

In the midst of a crisis, how can organizational leaders weigh risk, and then do what they believe to be right for their institutions? It takes confidence, not hubris, not a sense of invincibility, but a belief in who your organization is and who you strive to be in order to communicate your truth to those impacted by the actions of your organization. My observation is that transparency rarely, if ever, loses, because transparency in communications reduces long-run institutional risk.

I am not sure how many of my attorney friends would agree, but the more I work alongside organizations to navigate complex situations, the more I believe that organizational leadership should work to be as transparent as possible in their communications when hard issues arise. This tug-of-war between legal preservation and transparent messaging sits at the heart of organizational leadership during times of crisis. Transparency is not merely a communications tactic, however, but rather a manifestation of organizational identity.

Legal counsel is trained to minimize liability, while leadership is tasked with maximizing trust. These two objectives may feel at odds with each other, but they need not be in conflict, and in fact, the best partnerships between organizational leadership and legal counsel are those who are willing to live in this seemingly uncomfortable tension. Your legal counsel serves as a critical risk advisor, and yet they are not the ultimate arbiter of values. When you, as a leader, are able to develop real trust with your legal counsel, you are able to have open conversations around risk management and transparency. You can ask each other: How much can we say about a complex situation? How great is the legal risk? How great is the reputational risk? How great is the risk of losing trust with your community? When you have this type of trusting partnership with your legal counsel, both you and your counsel understand they serve as a key advisor, but not the sole authority on your messaging.

Often, crisis situations place organizational leaders in a default position of fear based decision-making. There is an acute awareness of the consequences that will impact their organization. Weighing risk, however, is not a matter of avoiding consequences. It is about deciding which consequences the institution is comfortable living with at a given time. When unfortunate circumstances occur, damage will be done to an organization. The math of transparency asks leaders to weigh the short-term risk (often legal exposure or short-term reputational damage) with longer-term risk (losing your community’s trust and/or the trust of your employee-base, students, families, or customers). When organizations place more emphasis on managing short-term risks, their decisions can lead to long-term institutional decay. Of course sometimes leaders do not have a choice and have to make communications decisions that address immediate risks, but when weighing short-term and long-term risks, do not underestimate the impact a lack of transparency has on long-term trust in your organization.

Institutional confidence is rooted in a clear-eyed understanding of organizational mission, allowing leaders to speak their organization’s truth from a place of accountability rather than defensiveness. When an organization knows who it is and when it has fallen short of its mission, it is critical that it does not hide behind legalese or dance around its shortcomings. Sometimes mistakes happen out of the best of intentions, sometimes employees make poor decisions, and sometimes bad things simply happen without mal-intent. If an organization can use its messaging as a moral compass, it opens the door to leaders effectively using crisis as an opportunity to clarify and reaffirm institutional values, even when the crisis itself may appear to compromise those values.

Every leader will have their own risk tolerance spectrum, but it is important every leader understands that while every crisis will pass, the values communicated through and by the organizations response to that crisis will last.