Harry Nelson

Transparency: How do we rebuild trust?

I was reflecting the last few days on transparency or, more specifically, the lack thereof in our political leaders, including:

-leaders refusing to make traditional financial disclosures;

-unfolding investigations where information dribbles out contradicting previous accounts; and

-major legislation worked out in backrooms outside public view.

These are not new problems.  The example of non-transparency on healthcare legislation repeated itself from ObamaCare to TrumpCare.  Both parties elected secrecy.  It’s a striking contrast between all of the political “hidden-ness” and non-transparency, and the alluring “draining the swamp” promise on the campaign trail.  Draining the “swamp” of Washington, D.C. strikes a resonant chord across political lines because there is way too much business in our political system that is conducted outside public view.  This, in turn, leads to distrust, decisions that ignore democratic process, and compromises that sacrifice our collective interest for the interests of a narrow group.  Instead of taking care of the public interest, over and over again, we see regulatory decisions and laws that advance the interests of the politically powerful.

Unfortunately, it looks like “drain the swamp” was a nice rhetorical flourish that was devoid of meaningful content. It makes sense to think that a wealthy, independent political maverick might be able to make a dent on the issue.  Maybe it was never intended to be more than a good line for speeches.  Or maybe we need someone who knows how government works from the inside to actually do something about it.  I suspect that as we’re going to be hearing from plenty of future outsider politicians (Iger, Schultz, The Rock, among others) promising that they will really do the work of draining the swamp.

Instead of figuring who, if anyone, is really committed and capable of doing so, I would propose transparency as a first, more modest first goal. Let the sunshine in and let’s see how decisions are being made.  Who’s meeting with whom?  Which direction are political contributions and other goodies flowing?  It’s only when we actually know what’s going on behind the scenes that we can weigh in, hold people accountable, and insist on integrity.  Keeping the blinds drawn and letting government work in secret is a recipe for corrupt decision-making that subverts the public interest.  On the other hand, transparency improves the odds that all interests are fairly considered.

Ever since I took a political theory class freshman year of college at the University of Michigan with Professor Alfred Meyer, I’ve been taken with  an idea from John Rawls’ Theory of Justice — the idea that, to arrive at a just rule when the interest of different people are in conflict, we need to make the decision behind a “veil of ignorance.” In a nutshell, Rawls argues that a just rule is one designed by attempting to look down “from the balcony” on a hypothetical social situation and not knowing which position we may ultimately occupy. Our best hope of achieving a just system of taxation, for example, will be one where we set the rules with blinders on as to how rich or how poor we will be, and try to strike a balance that we can live with no matter where we end up. It’s a more socially complex version of a principle that kids know well:  if we’re going to split the candy bar in half, one person makes the break, and the other person chooses which piece.  In our house, this comes up regularly when I play Sony PlayStation 4 sports games with my kids: one person picks the matchup; the other person picks which team to play.  Without transparency, the odds of balancing competing interests fairly go way down.  We end up with rules that privilege people with money and access or big corporate interests over those of people without.  It’s easy to implement these safeguards on fairness when the stakes are low, but much harder when the consequences are more serious than the small piece of the candy bar or having the weaker team.

In my own businesses, I’ve learned the value of transparency and the costs of not being transparent. It is much easier to keep information tight to the vest and make decisions with fewer people involved. It’s particularly tempting if, like me, you are a person who struggles with wanting to please everyone and be liked.  The temptation not to deliver hard news  has some appeal, rather than holding people accountable. It is easier to make decisions privately, and avoid the difficult moments of explaining what you’re doing and why.

But there are huge costs. People lose trust. They don’t take you seriously.  People on the outside don’t feel like they have a voice. And while you still get things done, one of the things you can’t possibility get is real buy-in from the people who were left in the dark. Since I know that avoiding difficult conversations is tempting, I have learned to do my best to bend over backwards to lay out what we are doing and why we are doing it, even when it’s uncomfortable. Often, my discomfort in sharing certain information with the people who work with me can be a sign of just how important the information is.

The best personal example  of transparency I can give is our law firm finances.  We’re a privately held company, so we have no obligation to disclose publicly how much we are doing. As in any business, if management is transparent with financial information — how much revenue is coming in and how much is going out in operating expenses (overhead and salary — then the employees can figure out how much the owners are taking out and what the profit margin is. In a professional services like a law firm, it allows everyone to calculate profits per partner and see how much money is being made from the work being done.

As a business owner, this makes me nervous, first, because it could cause people to second guess how much the partners are profiting from the work being done. Second, talking about how much money the organizatoin is making opens people up to wondering if they are being treated fairly, whether they should accept the status quo or push for more for themselves. Other lawyers have looked at me like we’re crazy for inviting people in, because it’s distracts people and invites conflicting views. We pressed ahead because we believed that this was part and parcel of living our values when it came to transparency. For the past several years, we’ve gotten over this anxiety and shared all of the details with our team, in brief at our monthly “all hands” meeting towards the end of the year and in detail at our attorney retreat each spring. Each time we do this exercise, I feel the same anxiety. And each time, people receive the information with respect and appreciation. The end result builds the level of trust. People know that we don’t need to share all of this information, and that we’re making ourselves vulnerable by trusting them with sensitive information. I can’t think of a better way to convey that we mean what we say.  It enable them to participate in conversations about what we prioritize and where we invest resources from an informed position. And it shows people we care not just about extracting as much value as we possibly can from their efforts, but about building something together for our collective benefit for the long-term.

As a result of transparency, we see greater buy-in and trust on the way we’re operating. We’re not perfect, but we’re open and honest. People feel safe asking questions. Personally, I believe that being transparent forces us to think long and hard about how we would want to be treated behind the veil of ignorance: if we were associates or staff in the company, rather than the owners. I think it leads to fostering a sense of esprit de corps and think about how we can take care of each other.

It made it particularly sweet to find out that our team voted us one of the 100 best places to work in Los Angeles in 2017, even in the midst of a year that has been trying as we have strained to keep up with growth. I am so grateful for this confirmation that the people working with us believe in what we are doing. And it makes me and committed to redoubling our efforts to be a great — and more transparent — place to work. Here’s to hoping our country can find the same path.

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