The Impact of Organization Transparency - Literature review Example

Organizational Transparency of Affiliate CHAPTER 2 LITERATURE REVIEW Introduction Organizational culture and procedures are important in determining various aspects of employees that eventually affect their output, and the long term business position and relevancy of an organization. According to Burke & Cooper (2009), issues pertaining to transparency will greatly influence areas such as the “level of stress in the workplace, selection, recruitment and training” (p. 120). These areas are very important for continuity and ensure that there is harmony within the organization’s environment. Therefore, it is important that the management ensures that there exists a culture of utmost sincerity and honesty. The literature review will follow a systematic literature map on organizational transparency. Some of the issues that will be looked at in the literature review include: impact of transparency on effective communication, impact of transparency on performance, impact of transparency on whistleblowing, effect of transparency on trust and cohesiveness, impact of transparency on efficiency and productivity, corporate responsibility contrast of the private sector, corporate codes, and the disadvantages of organizational transparency. Impact of Organization Transparency Effective Communication Communication is an important aspect in an organization because it contributes towards the nurturing of organization culture and behavior. Griffin and Moorhead (2012), explains that “communication is the social process in which two parties exchange information and derive meaning” (p. 300). In the organization’s perspective the general realization is that the definition takes even a more complex approach due to the nature and degree of the interpersonal relationships. Communication is usually characterized by three very important aspects. These aspects are: delivering the message, the nature of the message and the perception of the recipient. However, Griffin and Moorhead (2012) outline that for every one of the aspects to be effective transparency should be a key consideration for both the source and the recipient of the message. A study documented by Institute of Public Relations (2010) verified that democracy cannot thrive in any institution when there is lack of information. In the public sector lack of transparency has been a key issue affecting performance and determining the public relations of a company. However, it is very difficult for an organization to promise or even claim transparency when there is lack of effective communication. Government sector institutions have realized that transparency does not only promote good public relations but improves the business success of an organization. Communication and transparency go hand in hand as emphasized by most publications on management (Myers, 2010). Indeed, transparency in communication requires that the information conveyed is transparent and that the recipient is also transparent and open in their perception. These attributes ensure that there is sincere exchange of information during communication. According to Hope (2011), when the employees are constantly exposed to an environment with little or lack of transparency, they will quickly lose confidence in the system and communication will be greatly affected. Hope provides an example of what happens in the American political arena. Americans usually lose their trust on their presidents after being lied to many times. The nurturing of trust and transparency is not an easy undertaking and most organizations face challenges (Bennis, 2009). For instance, transparency will sometimes require the revelation of confidential information that might be considered high risk by the organization. However, Hope (2011) outlines that such a risk worth taking because it encourages communication within the organization. Further, the employees will be willing to offer information to an organization where they are assured of transparency. The nature of communication in an organization influences the perception. For instance, Ingram (2009) gives an example of the recruitment process characterized by a two-way communication. He explains that a two-way communication gives the interviewee the perception that the process is fair. In essence, the interviewee is also allowed to independently comment on the interview process. Open communication is nurtured through trust and the assurance that information will be taken seriously. An organization should put into place structures and procedures that assure them that any information, concerns and complaints will be treated with utmost respect that transparent procedures will be followed. In a study conducted by Ingram (2009), there was the realization that transparency perception is built early in the relationship between the employee and the employer; as early as during the recruitment process. According to the study, 25% of the who felt that the process of hiring was unfair also felt that unfair procedures were used during promotion. In addition the study recognized that 28% of the employees felt that the hiring process was fair also felt that procedures used during promotion were fair. In essence, empliyees perceive transparency not subject to an individual or one department but as an organizational culture that is nurtured and promoted. For instance, when an individual complains about mistreatment from a senior manager it is important that the process of investigation is conducted in a free and fair way. Such an approach will ensure that workers will also have confidence on the final verdict. In fact, Bordia (2011) concurs that transparency creates the important information structures that encourage the human resource to communicate ideas hence promoting innovation.In essence, transparency promotes communication by assuring the human resource that information they give will be treated fairly and in an open way. Employees will be more willing to share information in an environment characterized by transparency rather than in an environment surrounded by secrecy. Effect on Employee Performance Performance has do with the way the employee understands what the organizations expects and how the organization operates. Most organizations overlook this important consideration or opt to keep information due to apparent security reasons. According to Hess (2011), most organizations hide information especially when they consider such information as high risk. However, that such an approach might have a negative impact on the performance because employees might fail to understand their contribution in the business success of the organization, or their role within the organization. Hess(2011), proposes that an organization should always be transparent on issues such as business success and achievements, challenges and future prospects to ensure that employees feel part and parcel of the organization. Consequently, the sense of belonging that is nurtured will improve the performance of the organization. Bennis (2008) outlines that not most organizations encourage the direct confrontation of top managerial with issues that require them to be transparent. However, Bennis outlines that in situations where such actions are encouraged the performance of both the top management and other employees improve significantly. The transparency within the structures of a system have the capacity to impact on performance either positively or negatively. Most employees look forward for promotions and are usually motivated to work harder because promotions come with additional incentives, better pay and a higher social status. A study conducted of the US Department of Defense (DoD) found that employees showed more confidence in the promotion decisions made, when such results including the candidate’s were published (Farrell, 2011). Employees within the US DoD had refused to accept the process by outlining that it was marred by irregularities. From the study there was the realization that more soldiers could accept the process if they were confident that it was free and fair. Rejection of such a process implies that employees will no longer be motivated to work harder. Instead, they will just concentrate on delivering without putting extra effort due to the knowledge that there will be no reward in terms pf promotion even if they work hard (Bennis, 2008). In a similar study documented by Shields (2011), there was the realization that the reward system of motivating employees worked better if they were assured that the process could be conducted freely. Conflicts and disputes in an organization are always inevitable and the way they are handled determines the stability and relevance of the organization. According to Bruijn (2007), employees are usually aware that problems within an organization are bound to rise but their fear is always with the way such problems are handled especially by the management. For instance, an employee might have an issue with a fellow employee maybe regarding workplace harassment. When the employee is assured that the issue will be handled in a transparent way, the performance of the employee will not be significantly affected even during investigations. However, when the employee is unsure of the transparency in the process the employee might become anxious and agitated and hence performance will be affected (Irlenbusch, 2005). In essence, transparency improves performance by ensuring that employees are confident that in instances when disputes arise they will always be handled in an open way regardless of the parties involved. Effect on Whistleblowing Despite the developments made in issues concerning corporate governance and the advocacy of accountability, most organizations are still reluctant to implement concrete and functional whistle blowing policies. Although substantial literature and studies advocate for whistleblowing and outline that it is a positive undertaking, most organizations are still afraid of the crises usually associated with whistleblowing. Gardner (2007), outlines that most people might have the good intentions of reporting a wrongdoing but very few are ready to consider the problems involved with the ensuing controversies. According to Brown (2008), most organizations concentrate on the short term implications of whistle blowing such as conflicts and negative impact on the whistleblower and forget the long term positive impacts such a move can be to the organization. For instance, most people still believe that whistleblowers eventually become outcasts in the society. A study in the Australian public sector documented by Barnett, Cochran & Taylor (1993) revealed that most civil servants who witness wrongdoing are often ready to offer the information. However, very little servants actually take the bold step of informing the relevant authorities of the wrongdoing. The general realization is that organizations do not have culture and behavior that encourage people to whistleblow when they witness wrongdoings in the work environments. In addition, employers usually find themselves in a tricky position because are required to protect the rights of the whistleblowers, and the people accused of misconduct by the whistleblower. Badarracco (1997), summarizes that the moral decision made by an individual is as a result of the values held by the community they hail from. A research conducted by Liyanarachchi (2008), established that effective whistleblowing can only be attained when there is a good environment and where company policies encourage and support whistleblowers. A culture of transparency in an organization might either encourage whistleblowing or discourage it. Most organizations nurture cultures that do not encourage whistleblowing. A study documented by Werhane (2004), explains that most employees still harbor a negative attitude towards whistleblowers. The study outlines that even in situations where other employees felt that a whistleblower did the right thing by reporting a wrongdoing, the other they might still victimize the whistleblower. The major reason for victimizing the whistleblower is that other employees might feel guilty for having seen the same wrongdoing but failing to report it. The scenario reflects upon an organization where there is no transparency and the work force will not be at ease in offering information. Whistleblower victimization is a very common occurrence in organizations that do not encourage whistleblowing. According to Alavudeen (2010), most countries have legislations that protect the rights of the whistleblower. In addition, most organizations also have policies that promise to protect the whistleblower. An organization might use psychological approaches to frustrate the whistleblower for instance discrimination or being sidelined on important issues (Tim, 1993). However, in organizations where transparency prevails employees usually have increased confidence in reporting a wrongdoing. Burke (2009) posists that, workers will be free to report a wrongdoing when they feel that the matter will be handled openly so that they do not appear to be having hidden motives. In essence, transparency in an organization creates a favorable environment for encouraging people to report wrongdoing and in dealing with wrongdoing. Effect on Trust and Cohesiveness According to Lencioni (2002), trust is key for any team to work together because it gives the team members confidence in the team. Lencioni outlines that trust is the aspect that motivates members to be open in a group and let loose of all their defenses because they are certain that the objectives of the other team members is noble. Tranparency does not only promote trust, but it is also promoted by trust. For instance, members will be more willing to offer information if there is trust and constant transparency of the team nurtures trust among the team members. Teamwork is a very essential ingredient in any organization because it plays an important role creating a good mood in an organization, encourages a sense of belonging and improves on the output of the employees. Gardner (2007) explains that “moral identity” encourages individuals not only to think of how certain actions will affect them, but also the effect of such actions on the community they operate. In essence, moral identity is also a key consideration in team work because it pushes individuals to take personal responsibilities like for instance being transparent. In every team there is always a leader that unifies the team. Bennis (2009) in explaining the three most important “ingredients” of leadership mentions integrity as one of the ingredients. Integrity usually calls for transparency because it deals with utmost honesty. In addition, teamwork thrives well where there is sincere and open communication. Expecting people to guess what their colleagues are thinking is a major drawback to effective teamwork (Wong, 2010). Wong further clarifies, individuals who display high degrees of transparency are usually easy to work with because they are not always afraid to display to the other team members their true intentions. The same observation applies to an organization. Managers are supposed to ensure that they not only emphasize on the importance of transparency by that they also practice transparency as individuals. When the managerial in an organization is transparent, employees will not only build trust and confidence on the managerial but will also be motivated to be transparent. Wong (2010) explains that transparency does not mean that one should explain every step they take, but it rather implies always being ready to account for any course of action taken when need be. In a situation where transparency does not exist communication is almost impossible and so is teamwork. There are always signs that in a company there is poor teamwork as a result of lack of transparency. When the team players are not willing to speak out their minds, when the team players are afraid to challenge each other even in a healthy and constructive way and when team members are constantly at conflict with each other. The general realization is that transparency promotes constructive teamwork. Transparency provides the employees with the opportunity to work together in harmony without suspicion or prejudice. Transparency also reduces the possibility of conflicts due to the increased understanding demonstrated by the team members. Effect on Efficiency and Productivity High efficiency and productivity of the human resources is the dream of every manager. Of all the approaches used to ensure improved efficiency and productivity in employees, transparency is rarely mentioned. Transparency in this case implies that the managerial is free to offer all the information regarding the production process to the employees as a way of ensuring that the processes flow smoothly. When the production process in an organization is laid out openly for the employees, there are higher chances that the process of production will be improved and so is the efficiency (Burke, 2009). Efficiency and productivity in this case is witnessed mostly in organizations where employees are engaged in the actual production of goods. Most organizations insist on training the employees to make sure that they understand the production process. Although some organizations take the training for granted, studies have indicated that when employees are informed of how the processes of production take place, they are bound to perform their duties with increased confidence hence increased efficiency and productivity. Corporate Responsibility Contrast to the Private Sector Owing to the legal and ethical implications associated with whistleblowing, Barnett, Cochran and Taylor (1993) explain that most organizations have opted to create guidelines for employees to report misconduct commonly known as Internal Disclosure Policies/Procedures (IDPP’s). Barnett et al. study reveals however that 95% of whistleblowers faced some form of challenge as a result of their disclosure of misconduct. The concept behind the advocacy of IDPP’s is that internal disclosures are easy to deal with as compared to external disclosures. Preventing employees from disclosing internally might lead to external disclosure that might be accompanied by legal probes and tarnishing of the company’s image. The study concluded that the IDPP’s encouraged employees to report misconduct because the employees were aware of the proper channels to follow. A case study by Frynas (2010) established that effective corporate social responsibility in the Oil and Gas sector is crucial to dealing with emerging issues of governance such as corruption. In essence, transparency in the private sector also impacts governance of nations through disclosure of revenues. Transparency can only be promoted when organizations adopt effective IDPP’s. Corporate Codes of Conduct All organizations at least have some form of corporate code of conduct that provides ethical and moral guidelines and prevents misconduct within the organization. According to Petrick (2009), the corporate code of conduct will usually reflect on the culture adopted by an organizations in terms of values and beliefs. Different organizations adopt different forms of corporate codes of conduct and in some instances the relevance and success of an organization might depend on the structure, content and implementation of corporate codes of conduct. A report by Transparency International revealed that the most non-transparent organization in the world is Russia Gazprom, a company that monopolizes the gas industry (Pravda, 2011). In comparison to one of the most transparent organization in the Gas and Oil industry Norway’s Statoil, there was the general realization that transparency was closely associated to governance issues. For example, the Russian government ranked Gazprom 154 out of the 178 most corrupt companies (Pravda, 2011). The general realization is that companies that are not transparent encourage negative governance such as corruption, cronysm and nepotism as compared to companies that are transparent. Transparent organizations give the public the opportunity to scrutinize and evaluate performance. Such corporate codes that encourage accountability by the organization not only prevent the occurrence of negative governance, but also ensure that negative governance is identified soon enough and relevant measures taken. However, companies that are not transparent create breeding places for vices such as corruption because these companies are not accountable to anyone and are therefore free to do as they like. In addition, non-transparent companies will not attract positive criticism because people are not even aware of their undertakings. In essence, transparency creates an environment that promotes good governance through accountability and by encouraging positive criticism. On the other hand lack of transparency encourages negative governance. Therefore, organizations should always nurture a culture that promotes transparency as a strategy to ensure good governance. Conclusion The paper has outlined the various advantages of transparency which include improved employee performance, improved communication in an organization, improved team work, encourages whistle blowing and improved efficiency and production. However, transparency is not without shortcomings most of which undermine the ability of organizations to become completely transparent in all their undertakings. A totally transparent organization cannot effectively attain competitive advantage against rivals because all the information concerning the tactics used by the organizations will be available. Competitors will therefore have a chance of replicating all the strategies that are implemented by the organization. Competition in the contemporary business world is so tight that organizations depend on surprise attacks to gain advantage. An organization will not be able to implement surprise attacks when all its dealings are publicly available to rivals (Kanda, 2011). Transparency also prevents top management from implementing some strategies due to fear of scrutiny and criticism during the earlier stages. Opening doors to scrutiny implies that in most instances issues must be debated upon and a consensus arrived at. Some issues however require quick decision making due to lack of enough time to engage in lengthy debates. These factors might affect innovation within the top management (Institute of Public Relations, 2010). CHAPTER 3 RESEARCH METHODOLOGY Introduction The research methodology will follow an empirical interpretivist approach where data will be gathered and the researcher will look at the trends that emerge and the concepts realized. The interpretivist approach will be beneficial in providing an analysis of the “meanings, values and beliefs” in situations where organizations have adopted a transparency policy (Markauskaite, 2011, p.169). When sufficient scholarship has been obtained in looking at situations where transparency takes place, comparisons can be made with regard to situations where there is lack of transparency policies. This long term research will follow an ethnographic approach where the researcher will observe what happens in an organizational situation. This researcher will attempt to establish what actually takes place in instances where transparency is present and when it is absent. The comparison of their views, values and beliefs will be a good source of data for analysis for the study. In essence, the ethnographic approach allows the researcher to view the important aspects of culture free from any bias that might be harbored by the researcher. This research methodology will take an approach based on social reality. Social reality is the determination of how the employees and the employers construct realities within their respective workplace, and how their constructs affect their perception towards transparency. In order for employees to understand the culture of an organization, it is imperative that they must act with regard to the realities they have constructed. The use of social reality will be important in establishing how the rules within an organization govern how both the employees and the employers approach transparency. The research will adopt primary data collection approaches and will make use of questionnaires. The questionnaires will be both open ended questionnaires. The open ended questionnaires will ensure that the participants give details of the responses they gave in thequestionnaires. In addition, they will assist the researcher in conducting an unbiased and objective analysis of the responses. Purpose of Study The research seeks to identify the various effects organizational transparency has on employees. These areas include employee performance, employee morale, teamwork, and efficiency and productivity of human resource in general. The purpose of this study will be to identify how lack of transparency impacts employee attitudes. Research Questions 1. What approaches are used by managers to nurture cultural transparency? 2. What are the effects of transparecy on employee trust? 3. What are the impcacts of transparency on performance? Data Collection Data will be conducted by using interviews and questionnaires and professional and personal networks. The purpose of using interviews a combination of questionnaires and interviews is to ensure that the bias realized in one of the methods can effectively be reconciled using the other method. In addition, not all employees can be available to have interviews and questionnaires will have the capacity to reach a large number of people within a short time. Questionnaires with follow the likert scale approach and will also include open-ended questions to bring out certain aspects that perhaps were not addressed in the likert scale. Three companies in different sectors will be chosen at random. After seeking approval from the companies, questionnaires will be distributed to the employees ensuring that all level including the managerial. Thirty employees will be chosen at random. Preferably the research will use interviews to collect data from the managerial. The study will seek to collect data from a minimum 90 recipients. The study will make use of secondary data collection approach of archival data. Several studies have explored on issues related to transparency including whistleblowing, ethical decision making and human resource management. Such studies will offer additional insight into the research topic by allowing the researcher to identify trends and particular areas of interest and discrepancies. In addition, some of the questions that can be answered by archival data include the history of transparency, previous methods used in data collection, the nature of data that was collected, and the identifiable areas of inconsistencies (Bernard, 2010). Data Analysis The data analysis will make use of statistical tools of data analysis including correlation statistics. The correlation statistics will seek to answer the question of whether there is a significant correlation between transparency and fear or trust in employees. A positive correlation will indicate a relationship while a negative correlation will indicate lack of a relationship. The study will perform regression analysis for predictive purposes. Data will be presented using the regression and correlation. Conclusion The research will adopt a descriptive interpretivist and social reality approach to realize the perception of employees towards transparency issues. The study will be long term, following an ethnogrpahic approach to allow the researcher to observe what actually happens in the organization. Primary data and secondary collection method will be used to gather data for analysis. Data analysis and presentation will make use of statistical tools of regression and correlation. References Alavudeen, A. (2010). Professional ethics and human values. Boston, MA: Laxmi Publications. Badarracco, J. L. (1997). Defining moments: When managers must choose between right and right. Boston, MA, MA: Harvard Business School Press. Barnett, T., Cochran, D.S. & Taylor, G.S. (1993). The internal disclosure policies of private sector employers: An initial look at their relationship to employee whistle blowing. Journal of Business Ethics, 12(2) 27-37. doi: 571808   Bennis, G. W. (2008). 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Managing employee performance and reward: Concepts, Practices, Strategies. New York, NY: Cambridge University Press. Tim, B. (1993). The internal disclosure policies of private sector employers: An initial look at their relationship to emloyee whistleblowing. Journal of Business Ethics , 27-37. Werhane, P. H. (2004). Employment and employee rights. Melbourne, Australia: Blackwell. Wong, Z. (2010). Human factors in project management: Concepts, tools, and techniques for inspiring teamwork and motivation. San Francisco, CA: Jossey-Bass. Read More