Honest organizations are more successful.

At least that’s the conclusion reached by Halley Bock, CEO and President of Fierce, Inc. In a recent article, she cites a 2010 Corporate Executive study that found companies encouraging honest feedback among their staff delivered 270 percent more on 10-year total shareholder returns than other companies.

An astonishing difference, but why would honest companies be more profitable?

job_interviewFierce conducted its own investigation into the issue, and uncovered some interesting findings. After surveying more than 1,400 executives and employees, Fierce found that an overwhelming 99 percent of professionals preferred a workplace where employees were able to discuss issues truthfully.

What was even more surprising was that the survey found that 70 percent of the respondents believed a lack of honesty negatively impacted their company’s ability to perform, supporting the Corporate Executive Board’s findings.

So how can companies become more truthful? Surely, all leaders want their staff to feel as if they can tell the truth, but open and honest workplaces don’t happen organically.

Keep a Running Dialogue

One way to encourage honesty, Bock says, is through social networks. While most organizations try to be transparent, they often get caught in the trap of “terminal niceness,” or attempting to be politically correct at all times so as not to offend employees. While this is a well-intentioned approach toward maintaining a civil work environment, it is actually counterproductive. Bock argues that employees desire communication that more closely resembles social networking. What employees want, it seems, is a candid, running dialogue between managers, employees and coworkers.

Don’t Sugarcoat Issues

Another method Bock suggests to increase openness in the workplace is direct communication. In other words, don’t sugarcoat the issue. Some employers may think that cushioning a difficult conversation with compliments or small talk will alleviate tension, when in fact, it can complicate a delicate situation.

For instance, rather than telling an employee “We’re concerned about your attendance rate. Please try to see what you can do to remedy it,” Bock recommends being more direct, saying something like, “Our records show that you’ve been absent five times in the last two months. This exceeds the allotted three personal days we allow our employees, and any additional days you take off will be docked from your salary. If you are absent in excess of eight days, we’ll have to let you go. Please inform us if there is a personal or medical issue and we can try to determine the best way to address the situation.”

In the first instance, the employee is left without a clear idea of what steps he or she needs to take to ensure that another “difficult” conversation does not take place. In the second instance, there is a clearly defined route for the employee to follow, and although it might not seem as “nice,” the directness of the communication will alleviate any stress on the employee or supervisor caused by unclear expectations.

If organizations want to avoid the communication stalemate that often results from politically correct communications, they should develop mechanisms to support clear communication with employees.

Set aside a time once a month where staff can discuss their questions and concerns with supervisors. Encourage open communication. Accept even negative commentary as a way to improve your organization. After all, no organization ever improved without some constructive criticism and an open mind.

This guest post was contributed by Erin Osterhaus, a Managing Editor at Software Advice, a company serving as an online resource for HR professionals seeking to buy software. Erin writes for The New Talent Times, a Software Advice blog offering tips on talent management and leadership skills to those in the HR space. To read Halley Bock’s original article, click here.