Top 10 management models for your business #9: Balancing transparency, Piet Hein Coebergh and Edi Cohen (2009)

24 September 2014 by in 100+ Management Models, Business and finance

by Fons Trompenaars and Piet Hein Coebergh, co-authors of 100+ Management Models.

Model 97

Problem statement
What is the optimum level of transparency for an organization?

Transparency seems to be growing worldwide, yet people differ widely in their assessments of the value and impact of transparency. To explore the risks and benefits of transparency, consultant and former financial journalist Edi Cohen and lecturer and consultant Piet Hein Coebergh reviewed literature on transparency and interviewed 33 (Dutch) achievers in science, politics and business on when individuals or organizations should be transparent about who they are, what they want and what they do. Their research showed that decision makers vary greatly on the dilemma of when to be transparent. Optimists believe that the benefits of transparency outweigh the disadvantages; pessimists believe the opposite. Perceived benefits include increased access to valuable information and increased opportunities to raise one’s voice, leading to emancipation of deprived people. Perceived risks include increased juridification (as people tend to regulate more when they know more) and decreased privacy.

How to use the model
With the help of history professor James Kennedy, Coebergh and Cohen constructed a concave function that reflects how different levels of transparency are experienced. When there is little transparency in a given environment, people find it difficult to trust each other and hesitate to behave flexibly. When people open up and behave more transparently, mutual trust is raised and behaviour becomes more flexible. Conversely, redundant transparency results in people feeling over-monitored, making them feel mistrusted. Juridification – the burden of rules that govern a group – typically measures redundancy of transparency. The reconciliation of the dilemma between emancipation and juridification is governed by the individual and collective morality, taste, ethics and intelligence of stakeholders, as some people deal well with tough information, while others don’t.

The model helps to identify the risks and benefits of transparency for individuals or organizations. This aids in assessing to what extent transparency should be more or less pursued in a given context.

The pros and cons of transparency are increasingly being researched. For global societies, Kirstin Lord found that ‘the information revolution may not lead to security, democracy or peace’ (2007). For publicly listed corporations, Coebergh (2011) found that transparency (in corporate strategy) significantly contributes to corporate reputation and to liquidity of stock. In a historical essay, Manfred Schneider (2013) also shows that the human urge for transparency is constantly growing, leading to societal control increasingly replacing societal trust.

Coebergh, P.H., Cohen. E. (2009) Grenzen aan transparantie, Amsterdam, Business Contact.
Coebergh, P.H. (2011) ‘Voluntary Disclosure of Corporate Strategy: Determinants and Outcomes – An Empirical Study into the Risks and Payoffs of Communicating Corporate Strategy’, available online at Social Science Research Network.
Lord, K.M. (2007) The Perils and Promise of Global Transparency: Why the Information
Revolution May Not Lead to Security, Democracy, or Peace, New York, State University of New York Press.

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