Ethical Dilemma: Transparency or Confidentiality?

Corporate scandals at Enron corp. , Tyco International Inc. and WorldCom Inc. demand for transparency in public reporting of financial data. It is highly desirable and lawfully required that each organization does diligent efforts to improve transparency in financial reporting as a means for the public to regain the confidence in the business community. It is believed that information sharing is a powerful positive action and an ethical duty of business. Transparency is desirable at all level of management in each functional area, not only in finance.

“When transparency becomes part of the corporate vision, it can produce long term benefits” (Hanser, 2003, p. 1). Though management is concerned that some attempts to pursue transparency are in fact attempts to cull sensitive information that, if released, could damage business. Transparency and Confidentiality must be balanced during communication. “Transparency means helping people to see into systems and understand why decisions are taken” (Osborne, 2004, p. 292). 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” (Lambert, 2003, p1). 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 favor of. However, in real life, it’s not that simple. Manager should know, there are limits to what you can disclose 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 an organization. The question is how one can decide what falls into this category? There is no doubt that transparency is good and needed. It is HOW and WHEN it is applied that makes the difference. The answer to it will depend upon contextual, situational, temporal and personal parameters.

The timing to disclose the information and knowledge of employees are factors that should dictate the process of information sharing. Whenever employee has smallest suspicion that management is sharing partial information, one becomes uncomfortable and starts losing trust in management. Definitely, everybody agrees that the lost of trust leads to chaos. At the same time, caution during confidential information sharing or not sharing should never restrict transparency. Sound strategic and tactical decision-making can help avoid chaos.

As an example, in case of employee termination, organization’s disciplinary procedures should be totally transparent to people but on other hand, it is not appropriate to be transparent about specifics of an individual’s situation. It should be confidential. “Transparency means openness, credibility, fairness, equal opportunity, keeping promises, enforcing agreements and delivering on commitments” (Brown, 2001). But it should be asked whether it is effective, what disadvantages it can bring, when and where it is justified and how it should be achieved.

References Brown, G. (2001, December 1). Is what you see really what you get? Business Today (Egypt), 1. Retrieved May 21, 2004, from the EBSCOhost database. Hanser, R. (2003, November). Transparency key to rebuilding trust, 21(43), 24-25. Retrieved May 20, 2004, from the EBSCOhost database. Lambert, J. (2003). Confidential Information. Retrieved May 21, 2004, from http://www. nipclaw. com/conf/basics. htm Osborne, D. (2004, January). Transparency and Accountability Reconsidered, 11(3), 292-300. Retrieved May 20, 2004, from the EBSCOhost database.