Real Velona

I recently began a course with the AICD, to formalise my experience as a director, and in the first module on Corporate Governance I was struck by the complex and often nuanced nature of transparency and disclosure within organisations. One of the most intriguing aspects of this topic is the delicate balance between openness and sensitivity, particularly when it comes to documenting and disclosing information from board meetings. On one hand, transparency is touted as a key component of good governance, accountability, and trust-building. The Australian Institute of Company Directors (AICD) and the Australian Securities and Investments Commission (ASIC) emphasise the importance of maintaining accurate and detailed records of board meetings, including minutes that capture key decisions, discussions, and actions.

However, this emphasis on transparency raises important questions about the level of detail that should be included in board meeting minutes. While detailed minutes can provide valuable context and insights for future boards, they can also create risks and drawbacks, particularly if they capture sensitive or confidential information. In some cases, excessive detail can even be used against the company in future litigation, highlighting the need for a balanced approach to transparency.

This is an area that has challenged me in my previous experience on boards and often put me at loggerheads with legal, as my principles, established throughout a long career using Agile Ways of Working is towards providing full transparency at all times.  It is quite an adjustment to consider where less transparency is in the best interests of the company.  

While studying the course, I have reflected on this and have realised that I didn’t appreciate the distinction between transparency and disclosure.

Transparency refers to the overall openness and clarity of an organisation’s practices, processes, and decision-making. It involves providing a clear understanding of how an organisation operates, makes decisions, and governs itself. 

Disclosure, on the other hand, refers to the specific act of revealing or sharing specific information, data, or details about an organisation’s practices, processes, or decision-making.

Such a simple perspective change has removed the cognitive dissonance I was experiencing around this topic, because I know realise that I line up very well to what is required for corporate governance. I have always been very pro transparency on policy, process, structure, approach, and always very conservative and careful with disclosure on sensitive information.

As this distinction became clearer to me, it also shed new light onto another a prickly concern that has often challenged my thinking over the years.  The issue of compensation and salary transparency. which is a topic that has been floating around in agile circles for over a decade now. 

Some leading agile companies have embraced radical transparency by making all employee salaries publicly available, while others are taking a more cautious approach, citing concerns about creating unnecessary tension or comparison among employees.

Buffer are often used as an example of radical transparency in action. The company makes all employee salaries publicly available, along with detailed explanations of its compensation structure and decision-making process. This approach has been praised for promoting fairness, equity, and trust among employees.

In the context of salary and compensation the distinction between transparency and disclosure is important.  While transparency might involve providing a clear explanation of an organisation’s compensation structure, disclosure would involve revealing specific salary details about individual employees.

My approach in my companies in the past is that it is much more important to be transparent around salary ranges, compensation structures, or performance-based incentives as well as how assessments are applied for set these.  This allows for each individual to apply a fairness test to how their compensation or incentive was set and measured. This approach can help to promote fairness and accountability while minimising potential drawbacks of fully disclosure on salaries. 

Ultimately, the key to navigating this paradox is to recognise that transparency and disclosure are not binary concepts, but rather exist on a spectrum. Organisations can choose to be transparent about certain aspects of their practices and processes to promote trust, accountability and fairness, while exercising discretion and sensitivity around more sensitive or confidential information.