How to manage the need for fair, full disclosure

Knowing what you shouldn’t say is as important as what you do say

Today there’s an unprecedented demand and need for full and fair disclosure, aka transparency. Be it the media, investors, politicians, consumers or the government, everybody wants information to make informed decisions, which is generally a good thing.

Publicly held companies have been on notice since the Securities and Exchange Commission’s October 2000 mandate known as Regulation Fair Disclosure that says companies have basically no choice but to comply with the law of the land prohibiting selective disclosure or giving anyone an unfair investment advantage. For nonpublicly owned companies and organizations, the need to provide full transparency is a bit murkier.

Unless a private company answers to no one, and has no customers, knowing when and how to communicate the good, bad or ugly is paramount not only to success but, in this age of social media and the internet, a prerequisite for survival.

A company that tries to put its head in the sand in the face of adversity is likely to find itself forever buried in the sand.  However — and this is a big however — providing too much information too early can be just as bad as remaining mute.

Using common sense still is the best guideline for determining when information must be disseminated outside of a tightknit, need-to-know inner circle. A good rule of thumb is if you believe a public statement is essential for those who need to know something to make an informed decision, then it’s simple: “Get the story out.” If it’s a matter that could jeopardize health and safety, then communication speed is paramount, even if the concern proves less significant than initially feared.

On the flip side, if providing information will only cause confusion and lead others down the wrong path, it is usually better to wait and either flush out the issues or remain silent because “disclosure” serves no purpose and, worse, may even do more harm than good.

As an example of the latter, a company thinks it’s on the path to developing a new technique that will make the business dramatically more efficient and effective, but will result in significant layoffs. If at this point, there is only a possibility that the technique will be become a reality, prematurely divulging this in a public statement may come back to bite the company. Employees will likely panic and customers will take it as a promise.

If further studies revel this mega innovation is a dud, the organization has done itself a great disservice. Once Pandora’s box is opened — even if the company says there will be no layoffs — workers will always be waiting for the next shoe to drop. Customers that were expecting a breakthrough will feel disappointed by what is now interpreted as a broken promise.

This reinforces what President Abraham Lincoln once said, “Better to remain silent and be thought a fool than to speak out and remove all doubt.” Common sense is still the first “gut check” to use when deciding to make or not make full disclosure. Many things are best left unsaid.

Michael Feuer co-founded OfficeMax and in 16-years, as CEO, grew the retailer to sales of $5 billion in 1,000 stores worldwide. Today, as founder/CEO of Max-Ventures, his firm invests in and consults for retail businesses.