Confidentiality and Transparency in an Organization

Confidentiality and Transparency in an Organization

It is necessary that management of an organization must conduct itself to be effective so as to meet the expectations of operational transparency as well as to maintain confidentiality of information in order to foster a culture for good decision making. Management sometimes conflates and confuses confidentiality and transparency as two important, but seemingly opposite values. Organizations are expected to function in a transparent manner, but conducting business requires maintaining confidential information for legal and effectiveness reasons. Confidentiality needs to be balanced against the principle of transparency. All the organizations have to draw a line between transparency and confidentiality.

It is important to understand the difference between the two terms and how they relate to each other. Transparency is the disclosure of information to the employees, public and other stakeholders for operational reasons as well as to indicate that the organization is managed well, functions in an ethical manner and handles its finances with efficiency and responsibility. It is part of a duty of obedience for the management. Transparency engenders goodwill amongst the stakeholders such as customers, suppliers, the directors, government, the service sector and employees. Transparency is also the mark of a well managed and mature organization committed to adopting and maintaining best practices.

Confidentiality is the obligation and right not to disclose information to unauthorized individuals, entities, or processes if it would harm the organization, its business relationships, or an individual. It’s part of a duty of loyalty for the management.

Transparency means ‘helping people to see into systems and understand why decisions are taken’. In other words, transparency refers to a quality of openness and candor. The confidentiality is defined as ‘an action in equity to restrain a person who has received valuable or sensitive information in confidence from disclosing or making use of that information’. It means that manager must be asked to treat the information as confidential or it must be obvious that information is given in confidence. Transparency is one of those concepts that everyone should be in favour of. However, in real life, it’s not that simple. Manager should know, there are limits to what can be disclosed to the team. Total openness can lead to total chaos. This is the major dilemma for manager whether to be transparent or maintain confidentiality. It is agreeable that there are some situations that should not be immediately disclosed to others. The question is how one can decide what falls into this category?

A strict adherence to transparency and disclosure ensures that the management is firmly grounded in compliance with the law, while a culture of confidentiality ensures that management has the freedom to tackle the tough issues so it can rise to new heights. There are circumstances that require transparency and others that require confidentiality and each organization must make the right choice at the right time.

Organization accumulates confidential and proprietary information over time both about its own services, products and functions, and about its customers and others with whom it deals with. The internal confidential information and processed knowledge includes planning and other future oriented resources as well as information of immediate, current utility and concern. And these types of information are dispersed throughout the organization, and generally on a need to know basis of some sort.

At the same time organization holds large amounts of information, knowledge and perspective that should be openly visible and available to all – and if not to the entire world, at least internally within and across the entire organization. Strategic goals and priorities cannot work if the people who would have to achieve them do not clearly know what they are. For this type of information and insight, transparency makes the business function and barriers to them simply create avoidable disconnects, frustrations and problems. For this, opacity and barriers to knowledge sharing in the name of confidentiality can only reduce the organization’s capacity to compete and its overall effectiveness.

The rise of social media in these days and the demise of traditional organizational structure have created challenges in balancing transparency and confidentiality for the management of an organization.

The increased use of social media has created a world where even the personal information is shared and people have an insight into businesses and the lives of people they may never have had access to, previously. Workplaces are evolving with new generation, in particular, value transparency from management. Social media has contributed to the demise of the traditional culture of a workplace of ‘closed doors’ and a ‘need to know basis’ which breeds low employee engagement. Employees now expect to know about the organization working and be included in decision-making processes. Greater levels of transparency from management result in greater buy in from employees and lead to improved performance.

However top management, as holder of sensitive information, need to tread carefully. Management has access to a range of information available with it. While transparency has many benefits, it is a fine line between what management can share and what needs to remain confidential for business and legal reasons. Further just like with all other communication, if the organization is using social media to promote the business and build relationships with customers, then the communication is to be genuine and credible. Customers can tell if the information is not genuine, and then the reaction can be immediate and damaging to the organization.

It is highly desirable that organizations carry out diligent efforts to improve transparency not only in their financial reporting but also in every area of their operations as a means for stake holders to have the confidence in them. It is believed that information sharing is a powerful positive action and an ethical duty of any organization. Transparency is desirable at all level of management and in each functional area. When transparency becomes part of the corporate vision, it can produce long term benefits. Management is concerned that some attempts to pursue transparency are in fact attempts to cull sensitive information that, if released, could damage the organization reputation. Communication is the key factor between transparency and confidentiality. Transparency and Confidentiality must be balanced during communication. Various options for this are shown in Fig 1.

Transparency Vs. Confidentiality

Fig 1 Options for Transparency Vs. Confidentiality

Transparency and Business Intelligence

Business Intelligence (BI) transforms data into information that can be used to monitor the performance of an organization and the smaller departments within. There is a balance needed in the amount of transparency offered, versus the privacy and confidentiality of information.

Sharing the information between departments triggers a sharing of knowledge between the departments. This means that individual departments can improve and the organization as a whole can have a better result.

When looking at transparency with this in mind, it sounds logical to have as much transparency as possible. However, for privacy reasons, it is necessary to have some restrictions on the data as well.
Also along the lines of information areas it is common to have restrictions. This is mainly for operational BI, where the information is supporting the role of the user in the organization. For management reporting though it makes sense to share information over the information areas in order to look at the information from all available angles.

A good approach for transparency and confidentiality in a BI environment for management reporting is as given below:

  • Transparency – All users get access to general, reliable and insightful information. General means for all the available information areas, to the level of a certain organizational department.
  • Confidential – Detail and transactional data only for users with the corresponding jurisdiction (according to organization mandate and function relevancy) .

A prerequisite for this approach is that it must be possible to map the hierarchy that relates to organization for the relevant information areas.