Research: Transparency Builds Stakeholder Trust
Transparency is a leadership habit that builds stakeholder trust—balanced clarity, context and two‑way communication align stakeholders and reduce uncertainty.
Transparency means open, timely, and clear communication about decisions, processes, risks, and uncertainties. It builds trust by reducing confusion, showing integrity, and encouraging engagement. Research shows organisations that explain decisions and share relevant details - like financial data, performance outcomes, or study results - are seen as more reliable. However, poor handling of transparency, such as selective disclosure or overwhelming detail, can backfire. Leaders should balance clarity with context, tailoring their approach to stakeholder needs. Effective communication, regular updates, and honest dialogue are key to maintaining trust, especially during change.
Key Takeaways:
- Transparency strengthens trust by reducing uncertainty and showing accountability.
- Sharing decision-making processes and risks openly fosters credibility.
- Overloading stakeholders with too much information can harm trust.
- Regular updates and two-way communication ensure alignment and confidence.
For leaders, transparency isn't just a compliance task - it's a daily practice that requires clear communication, listening, and follow-through.
How Transparency Builds Stakeholder Trust: Key Statistics Across Sectors
Research Evidence: How Transparency Builds Trust Across Sectors
Corporate Governance and Multi-Stakeholder Trust
When corporate boards go beyond standard financial reporting, they foster greater trust among stakeholders. Research highlighted in PwC's analysis of multi-stakeholder governance reveals that organisations perceived as more accountable and trustworthy are those that use tools like proxy statements and corporate websites to outline decision-making processes, ESG oversight, and how stakeholder feedback shapes strategy. Trust is particularly strengthened when boards explain how they balance competing interests and incorporate trust metrics into executive evaluations.
However, challenges remain. A survey by PwC found that 57% of executives feel their boards lack a full understanding of non-shareholder stakeholders' concerns. This disconnect emphasises the importance of transparency, not just in decision-making but also in the mechanisms for gathering input - such as surveys, engagement sessions, and feedback loops. These practices bridge the gap between organisations and their stakeholders, setting a benchmark for transparency in other sectors.
Transparency in Not-for-Profit Organisations and Public Institutions
The benefits of transparency are equally evident in not-for-profit and public institutions. A 2025 survey involving 400 respondents demonstrated a clear link between financial transparency, donor trust, and perceptions of organisational performance. When organisations openly share audited financial statements, funding sources, and spending breakdowns, donors report greater trust. This type of reporting enhances legitimacy and boosts confidence in the organisation's effectiveness.
In public institutions, the connection between transparency and trust is also well-documented. Research on macroeconomic stability shows that governments that share detailed budget data, performance indicators, and the reasoning behind policy decisions are seen as more trustworthy and legitimate by citizens. This effect is amplified when information is presented in accessible formats, such as plain-language summaries or visual dashboards. Pairing financial data with performance outcomes helps people understand both how funds are allocated and what they achieve.
Higher Education and Public Sector Communication
Higher education institutions also benefit from transparency. Clearly explaining decision-making processes, publishing resource allocation criteria, and reporting on progress against strategic goals all contribute to perceptions of openness and trustworthiness. Studies show that transparent communication about governance and financial performance correlates with stronger stakeholder trust, improved reputation, and better access to external funding. However, researchers have noted a discrepancy: internal stakeholders often receive more detailed information than external audiences, which can undermine trust.
In the wider public sector, publishing performance data, explaining trade-offs, and providing mechanisms for citizen feedback help align organisational actions with stakeholder expectations. This alignment fosters stronger trust and accountability.
Healthcare and Service Organisations
In the UK, 65% of respondents reported greater confidence in research when studies were publicly registered and results were promptly shared. Transparent policies around data handling, consent, and participant rights - bolstered by tools like dynamic consent - help align organisational practices with participant expectations, boosting perceptions of fairness and trustworthiness.
These principles apply beyond clinical research. In healthcare and service organisations, practices such as advisory boards, co-leadership models with patient or community representatives, and open sharing of results demonstrate a commitment to equity and responsiveness. Such measures are linked to stronger trust and deeper community ties. For service organisations more broadly, clear communication about service standards, complaint processes, and performance metrics often leads to higher customer satisfaction, improved perceptions of quality, and greater employee engagement.
Digital Brands and Ethical Marketing
Transparency is equally critical for digital brands. Research shows that detailed disclosures about data collection, usage, and sharing - paired with visible privacy controls - enhance consumer trust and willingness to share data. Transparent consent frameworks, such as layered notices explaining why data is collected, how long it is stored, and how users can withdraw consent, reinforce trust by respecting user autonomy and ethical standards.
Involving users in shaping data policies and providing feedback channels further builds trust and loyalty. On the flip side, studies on data scandals reveal that opaque practices and misleading communications quickly erode trust, leading to disengagement and higher customer churn. Restoring trust requires not just technical fixes but also open and detailed explanations of the issues and the safeguards introduced to prevent recurrence. Across all sectors, clear and ethical communication about data use consistently strengthens stakeholder trust, highlighting the universal importance of transparency.
A Corporate Director's Guide: Using Transparency To Build Trust
How Transparency Builds Trust
Transparency plays a crucial role in building trust across various sectors. Let's explore the key ways it fosters confidence and strengthens relationships with stakeholders.
Reducing Uncertainty with Clear and Relevant Information
Providing clear and consistent information helps reduce uncertainty, giving stakeholders a sense of control and easing their concerns. Research from the UK Health Research Authority highlights this, showing that practices like registering study protocols publicly and promptly sharing results boost confidence, with 65% of people reporting greater trust when such measures are in place.
The real value lies in sharing decision-relevant information - details that explain both outcomes and the reasoning behind them. By clearly outlining decision-making processes, potential risks, and timelines, organisations can prevent unnecessary speculation and resistance. This clarity becomes particularly important during periods of organisational change, guiding stakeholders through transitions with greater ease.
Showing Integrity, Competence, and Empathy
Transparency reflects integrity when leaders openly discuss both achievements and challenges. For example, transparent policies on data usage, participant rights, and consent processes enhance perceptions of honesty and ethical behaviour.
Competence is demonstrated when leaders share evidence, metrics, and evaluation methods, showing they grasp the issues at hand and are actively monitoring progress. In the not-for-profit sector, a study involving 400 donors found that financial transparency positively influences both donor trust and perceptions of organisational performance.
Empathy, meanwhile, shines through when leaders acknowledge how decisions affect various groups, address concerns openly, and adjust plans based on valid feedback. This approach reassures stakeholders that their perspectives are valued and respected.
Promoting Engagement with Two-Way Communication
Transparency isn’t just about sharing information - it’s about fostering meaningful dialogue. For stakeholders to fully trust and support change, transparency must involve two-way communication. Examples include publishing draft proposals, hosting regular Q&A sessions, and establishing advisory groups. These methods actively involve stakeholders in the process, reinforcing trust.
In clinical research, clear communication about study goals, risks, and governance enhances participants' sense of fairness, which in turn supports recruitment, retention, and data quality. Crucially, leaders need to close the feedback loop by explaining when and why certain suggestions can’t be implemented. Even when disagreements arise, this transparency maintains mutual respect.
Tools like the Leadership Story Bank can assist leaders in crafting honest, coherent narratives that connect data with values and purpose. By improving their ability to communicate transparently, leaders can strengthen stakeholder trust, especially during times of transformation.
Challenges and Risks of Transparency
While transparency offers many advantages, it also comes with challenges that, if poorly managed, can erode trust among stakeholders.
When Transparency Backfires
Transparency, when mishandled, can do more harm than good. For example, when leaders acknowledge problems but fail to act visibly and meaningfully, stakeholders often perceive this as hypocrisy. A case in point is the UK’s clinical research sector, where past failures to publish unfavourable trial results led to a loss of public trust. This highlights how partial or selective transparency can sometimes deepen mistrust compared to clear and consistent disclosure backed by accountability measures.
Selective disclosure - where organisations highlight positives but omit negatives - can also undermine credibility unless it’s accompanied by tangible corrective actions. Stakeholders expect transparency to lead to real change, such as adjustments to executive objectives, strengthened risk management, or updated policies. Without these follow-ups, disclosures about sensitive issues like financial strain or workplace culture can give the impression that leaders lack both competence and sincerity.
Beyond the risks of selective or incomplete transparency, the sheer volume and framing of information require careful handling.
Managing Information Overload
Transparency can overwhelm stakeholders if not thoughtfully managed. Bombarding audiences with excessive detail, technical jargon, or ambiguous updates can lead to confusion, anxiety, and disengagement. For example, in high-risk industries like nuclear energy or healthcare, sharing large amounts of unstructured data about potential hazards - without clear explanations of mitigations - can heighten fear, spread misinformation, and amplify resistance to projects or changes.
To avoid this, leaders should focus on presenting a concise and relevant set of key indicators in straightforward language, while offering more in-depth information for those who want it. Tailoring communication to the audience is essential: deliver consistent core facts but adjust the level of detail to suit different groups. Pairing difficult disclosures with clear explanations, independent evidence, and a credible plan with milestones can help maintain trust, even when discussing uncertainties or setbacks.
Cultural and Contextual Considerations
Expectations around transparency vary significantly across cultures and industries. In individualistic, low power-distance cultures, stakeholders often expect direct and detailed disclosure. In contrast, collectivist or high power-distance cultures may place greater emphasis on maintaining harmony, respecting authority, and using relational cues. For UK organisations with global operations, overly blunt transparency might unsettle audiences in regions where deference to authority is more valued.
Industry norms also play a critical role. In regulated, high-stakes sectors like healthcare or clinical research, structured transparency aligned with recognised standards is often seen as essential. A lack of disclosure in these areas may signal potential safety or ethical concerns. Meanwhile, in the not-for-profit sector, financial transparency can bolster donor trust and improve perceptions of performance - but only if the information is clear, meaningful, and linked to outcomes, rather than appearing as mere compliance.
To navigate these complexities, organisations must balance consistent, fact-based transparency with an adaptive approach. This means tailoring the style, focus, and communication channels to align with the expectations and needs of local stakeholders, while inviting input on what information they value most. Ultimately, transparency is not just about openness - it’s about ensuring that openness resonates effectively across different contexts.
What This Means for Leadership Communication
The message is straightforward: trust thrives on transparency, but it’s up to leaders to turn research into everyday communication habits. This means going beyond occasional announcements and embedding openness into your leadership style, decision-making, and reporting - especially during challenging times.
Transparent Narratives During Periods of Change
When navigating change, leaders need to create clear and honest narratives that connect with stakeholders. Whether it’s restructuring, financial pressures, or a shift in strategy, vague reassurances won’t cut it. Stakeholders want to know what’s happening, why it’s happening, and how it will affect them. Research suggests that transparent communication should begin with a clear purpose statement that ties the change to organisational values and long-term goals. For instance, instead of saying, "We’re restructuring to improve efficiency", you could say, "We’re restructuring to secure financial sustainability over the next decade, ensuring consistent quality in service delivery."
After setting the purpose, it’s important to outline the options and compromises involved. Briefly explain the alternatives considered, why some were ruled out, and the trade-offs being made - such as balancing short-term savings with job security or maintaining service quality. Use realistic timelines (e.g., "Phase one will conclude by 31 March 2026") and commit to providing regular updates tied to these milestones. Be upfront about uncertainties rather than making promises you may not keep; studies show that acknowledging limitations builds trust more effectively than overly optimistic claims that later fall through.
Equally important is creating opportunities for feedback. Clearly explain how people can ask questions, share concerns, or contribute ideas - whether through Q&A sessions, staff meetings, consultations, or online platforms - and let them know when they’ll receive responses. A PwC survey highlighted that 57% of executives believe their boards fail to grasp the concerns of key stakeholders, underlining the importance of structured listening mechanisms for transparent leadership.
Making Transparency a Core Part of Governance and Reporting
Transparency shouldn’t stop at communication - it needs to be woven into the fabric of governance. Leaders should prioritise trust and openness as measurable goals within their organisations, with clear metrics and disclosures to track progress. Consider adding indicators like trust survey scores, transparency ratings, and engagement levels to board and executive scorecards.
Financial and impact reports should also include explanatory narratives. Provide context around figures by clarifying assumptions, constraints, and uncertainties. For example, in UK clinical research, 65% of people report greater confidence when studies are publicly registered before they begin, and results are shared promptly. This principle applies across industries. Use tools such as annual reports, ESG statements, or charity updates to show how stakeholder input has influenced decisions - whether through advisory panels, staff groups, or community forums. Start with UK governance standards, but aim to go further by offering meaningful, detailed disclosures.
Building Communication Skills for Transparent Leadership
At the heart of these structural changes lies a critical ingredient: strong leadership communication skills. Transparent governance relies on leaders who can communicate clearly and authentically, even under pressure. This means developing abilities in storytelling, understanding different perspectives, and delivering tough messages. Leaders need to structure their messages with context, conflict, choices, and outcomes, ensuring their decisions are both memorable and credible. They must also consider how various groups - such as frontline staff, local communities, or regulators - will interpret their words and adjust their approach accordingly. When delivering difficult news, such as budget cuts or delays, honesty, respect, and clarity are essential, as is explaining the constraints and support options available.
Platforms like Leadership Story Bank can help leaders refine these skills. By offering tools to craft compelling stories and enhance self-awareness, it equips leaders to communicate with clarity and confidence. Whether you’re guiding a team, managing stakeholder expectations, or addressing uncertainty, mastering storytelling can help you communicate openly without causing confusion or alarm.
Conclusion
The message is clear: transparency fosters trust, and trust is the foundation for aligning and engaging stakeholders during periods of change. Research consistently shows that organisations across various sectors that communicate openly about their decisions, trade-offs, and uncertainties tend to gain stronger confidence and support from employees, donors, citizens, and customers alike. Transparency acts as the bridge between open communication and how stakeholders perceive an organisation’s credibility and legitimacy, even when results are still unfolding.
That said, transparency isn’t automatic, nor is it without challenges. Leaders must carefully decide what to share, when to share it, and how much detail to provide. Striking the right balance is essential - too much information too quickly can overwhelm or lead to unnecessary speculation. When done well, transparency reduces uncertainty, highlights competence, and encourages genuine participation. But poorly managed transparency can backfire, causing confusion or anxiety, which is why strong communication skills and thoughtful planning are indispensable.
Regulatory demands for transparency are also increasing, from requirements for clinical trial registrations to disclosures in university governance. This shift makes openness not just a matter of compliance but a strategic advantage. At the same time, stakeholders now expect clear and trustworthy communication directly from senior leaders, rather than relying solely on institutional systems. Interestingly, while 47% of executives see trust as something that grows “bottom-up,” only 27% of customers and 35% of employees share this view. This gap highlights the importance of consistent and transparent engagement to build trust.
Ultimately, navigating the risks and rewards of transparency is a delicate but necessary task. The research and practical challenges underline the importance of embedding transparency into every layer of communication. Make it a regular practice: integrate it into governance, reporting, and daily interactions; explain changes with a clear purpose; acknowledge uncertainties; and invite feedback. By communicating openly, especially during uncertain times, you create the trust that keeps stakeholders aligned, engaged, and ready to move forward.
For more insights on transparent leadership, visit Leadership Story Bank.
FAQs
How can organisations ensure transparency without overwhelming stakeholders with too much information?
Striking the right balance between being open and avoiding overwhelming your audience with too much information is crucial for building trust and maintaining engagement. Organisations should aim to share clear, relevant, and timely information that speaks directly to their audience's needs.
To do this effectively, focus on the key points that matter most and steer clear of unnecessary details that could confuse or distract. Use straightforward, easy-to-understand language, and break down complex topics into smaller, more digestible parts. Providing regular updates and creating opportunities for stakeholders to ask questions can go a long way in strengthening trust while keeping communication streamlined and purposeful.
What are the potential risks of being selective in transparency efforts?
Transparency is a cornerstone of trust, but being selective about what you share can backfire. When stakeholders sense that information is being withheld or only half the story is being told, it can lead to suspicions of dishonesty or manipulation. Over time, this erodes trust and weakens relationships - especially during times of change, when trust is already on shaky ground.
To keep stakeholders onside, open and consistent communication is key. While there will always be sensitive details that must remain confidential, being clear about what you can and cannot disclose helps manage expectations and reinforces a sense of honesty and integrity.
How does transparency help build trust within the healthcare sector?
Transparency is key to building trust in the healthcare sector, as it ensures clear and honest communication among organisations, professionals, and stakeholders. When healthcare providers openly share information about decisions, challenges, or changes, it fosters a sense of inclusion and keeps stakeholders informed and engaged.
Take, for instance, times of change, like introducing new policies or procedures. Transparent communication during such periods can ease uncertainty and reinforce confidence in leadership. By being open and accountable, healthcare organisations strengthen their relationships with patients, employees, and external partners. This approach not only deepens trust but also encourages better collaboration across the board.