The Dark Side of Workplace Secrecy: Who Really Benefits?
In today’s corporate cultures, workplace secrecy has become an increasingly contentious issue. While some organisations justify it under the guise of protecting proprietary information, research suggests that a culture of secrecy often serves to protect power structures rather than business interests?—?and comes at a significant cost to employee wellbeing, performance, shareholder value or reputation.
Understanding Workplace Secrecy
For those that employ it, a culture of secrecy goes beyond normal business confidentiality. It manifests itself in practices like discouraging salary discussions, hidden decision-making processes and lack of transparency around promotions and opportunities. According to a study by Harvard Business School, 42% of employees report experiencing a lack of transparency from their leadership, with devastating effects on trust and engagement.
Indeed, a 2022 study in the Journal of Business Ethics found that organisations with high levels of secrecy had 27% lower employee satisfaction scores and 34% higher turnover rates compared to transparent organisations.
This is something I witnessed myself as a senior director in government. Under pressure to hit financial targets, the executive team wished to create a ‘secret project’ (which even had a codename e.g. Project Orion) to evaluate where costs could be cut and jobs lost.
When I challenged the approach and suggested that we should remove the veil of secrecy, and engage employees in the challenge, it was dismissed as being ‘too transparent’. Of course, employees found out anyway and the culture verged on toxic for many months until the targets were met.
Matt McInnes wrote about the culture of secrecy at Apple in 2017. In the Vox article he talked about the negative impact that it had on employees on a daily basis, saying: “The environment of secrecy produces an unwritten hierarchy of ‘haves” and “have-nots’ within the company. For the ‘haves’ the hierarchy of disclosure is a way to exert influence and demonstrate power beyond one’s role or title. For ‘have-nots’ it’s a subtle but constant reminder of your rank.”
The Real Beneficiaries
Research by organisational psychologist Amy Edmondson reveals that workplace secrecy primarily benefits those in positions of power by:
These are evidenced in recent high profile examples of corporate secrecy such as Uber (2014–2017), Fox News (2016), Nike (2018), Wells Fargo (2016), Activision Blizzard (2021) and Volkswagen (2009–2015). They can also be seen in the current allegations surrounding Harrods.
In each of these examples, the subjects of the allegations were spared reputational and financial damage in the short-term.
However, as researcher T.O. Beidelman discussed, secrecy is a paradox: “…for a secret to be realised, someone must not only conceal something but someone else must know or suspect this concealment. Consequently, while the import of a secret may remain hidden, the act of concealment must be revealed if the secret is to have an audience and hence a social existence.”
Therefore, it is only a matter of time before the secret becomes public knowledge and the damage caused by protecting the secrets is plain for all to see.
The Impact
The Wells Fargo scandal alone saw a US$3bn settlement, CEO resignation, loss of customers and ongoing regulatory scrutiny. Coming clean earlier about the toxic sales culture which forced employees to open fraudulent accounts would have lessened the impact on its reputation; although obviously not as much as not engaging in the practice in the first place.
But the impact of secretive cultures extends far beyond reputational damage, financial challenges, legal ramifications, or employee dissatisfaction. Research from the University of California Berkeley identified several organisational culture costs too. Namely:
Which also contributes to:
It can also kill the confidence of employees and generate ill-feeling that creates the conditions for toxic culture.
McInnes said of his time at Apple: “I had often felt a nagging sense that something was broken about my own behaviour. At times, I had felt like a black sheep attempting to play the political game, guard information and obey the silos. Other employees seemed naturally adept at playing things to their advantage.”
Breaking the?Cycle
Forward-thinking organisations are recognising that transparency leads to better outcomes.
Creating a culture of openness requires:
Organisations must also recognise that while some information legitimately requires confidentiality (like client data, intellectual property, pricing or proprietary technology), using secrecy as a management tool ultimately undermines organisational health and only benefits those who stand to lose the most.
The only people who benefit from secrecy are those with something to hide. In today’s interconnected world, organisations that choose transparency are increasingly seeing better business outcomes, higher employee engagement and stronger competitive positions in their markets.
Put simply, workplace secrecy protects the powerful at the expense of organisational culture and employee health. The question isn’t whether to embrace transparency, but how quickly organisations can adapt to meet the demands of a workforce that increasingly expects and requires it.