22 June 2014


'The Transparency Paradox: A Role for Privacy in Organizational Learning and Operational Control' by Ethan S. Bernstein in (2012) 57(2) Administrative Science Quarterly 181-216 offers another perspective on the 'wearables' findings noted in the preceding post.

Bernstein states [PDF] that
Using data from embedded participant-observers and a field experiment at the second largest mobile phone factory in the world, located in China, I theorize and test the implications of transparent organizational design on workers’ productivity and organizational performance. Drawing from theory and research on learning and control, I introduce the notion of a transparency paradox, whereby maintaining observability of workers may counterintuitively reduce their performance by inducing those being observed to conceal their activities through codes and other costly means; conversely, creating zones of privacy may, under certain conditions, increase performance. Empirical evidence from the field shows that even a modest increase in group-level privacy sustainably and significantly improves line performance, while qualitative evidence suggests that privacy is important in supporting productive deviance, localized experimentation, distraction avoidance, and continuous improvement. I discuss implications of these results for theory on learning and control and suggest directions for future research.
Bernstein comments
Organizations’ quest for worker productivity and continuous improvement is fueling a gospel of transparency in the management of organizations (e.g., Hood and Heald, 2006; Bennis, Goleman, and O’Toole, 2008). Transparency, or accurate observability, of an organization’s low-level activities, routines, behaviors, output, and performance provides the foundation for both organizational learning and operational control, two key components of productivity that Deming (1986) identified. As an antecedent to enhanced organizational learning, transparency may improve some of the processes that scholars have shown to be important. For example, it may improve one unit’s access to the expertise, experience, and stored knowledge of another (Hansen, 1999), thereby creating the potential to increase the quantity and quality of knowledge transfer (Argote et al., 2000) and shared understanding (Bechky, 2003), accelerate organizational learning curves (Adler and Clark, 1991), or increase network ties for the exchange of knowledge related to learning before doing (Pisano, 1994). Similarly, it could neutralize the skewing effects of impression management (Rosenfeld, Giacalone, and Riordan, 1995), facades of conformity (Hewlin, 2003), or organizational silence (Morrison and Milliken, 2000) on meaningful information flows up the organization, as well as reduce the risk that localized problem solving will fail to contribute to organization-wide learning (Tucker, Edmondson, and Spear, 2002). Transparency concurrently may enable operational control by ensuring access to richer, more extensive, more accurate, more disaggregated, and more real-time data by managers and employees, thus improving both hierarchical control (Taylor, 1911; Adler and Borys, 1996; Sewell, 1998) and peer control (Barker, 1993). Senior leaders are therefore redesigning their organizations to make more work more visible more of the time, embracing innovations such as advancements in surveillance and knowledge search technologies (Sewell, 1998; Levinson, 2009), open workspace design (Zalesny and Farace, 1987), and “naked” communication of real-time data via advanced information technology tools (Tapscott and Ticoll, 2003).
This trend toward transparency has been particularly evident in the design of the world’s factories, where visual factory implementations have been “spreading . . . like a trail of gunpowder” (Greif, 1991: 1). Most modern-day facilities are designed to provide near-perfect observability of the actions and performance of every employee, line, and function. This observability serves as an important foundation for all aspects of the Toyota Production System DNA (Spear and Bowen, 1999) and is a necessary antecedent behind the seventh principle of the Toyota Way: “use visual control so no problems are hidden” (Liker, 2004: 149–158). Factory managers and employees need to see activity in order to improve it. Accurate observability also provides the basis for many of the widely accepted practices in total quality management (TQM) implementations (Hackman and Wageman, 1995), which target simultaneous improvements in both learning and control (Sitkin, Sutcliffe, and Schroeder, 1994). An emergent logic about the relationship between observability and performance has thus become dominant in theory and practice: organizations “that are open perform better” (Tapscott and Ticoll, 2003: xii).
Nonetheless, the implications for organizational performance of increased transparency remain surprisingly unstudied, both in factories and more broadly. Without sufficient empirical, field-based evidence of a causal relationship between observability and performance, uncritical assumptions about that relationship have germinated (Hood and Heald, 2006). Rarely does one hear about any negative effects of transparency or problems stemming from too much transparency. There are, however, reasons to be skeptical that transparency is such a panacea: detailed field work from the long tradition of factory floor research in management science has documented instances in which observability has encouraged hiding behavior among organization members (Roy, 1952; Dalton, 1959; Burawoy, 1979; Hamper, 1986), producing only the appearance of enhanced learning and control without real benefits to organizational productivity, continuous improvement, and performance.
Dalton (1959: 47) described how managers, mandated by their superiors to conduct “surprise inspections,” instead chose to “telephone various heads before a given inspection telling them the starting point, time, and route that would be followed” so that each inspection would simply “appear to catch the chiefs off-guard.” Roy (1952) and Burawoy (1979), in reconfirming the “restriction of output” observations in the Bank Wiring Observation Room at the Hawthorne Works (Mayo, 1933; Roethlisberger and Dickson, 1939), provided substantial detail on the “quota restriction” and “goldbricking” activities in the Greer machine shop (Roy, 1952), which only became worse when managers were in sight (Roy, 1952; Burawoy, 1979). Subsequent insider tales from one of General Motors’ largest and most open plants portrayed management’s stance on various workarounds like “doubling up” as “a simple matter of see no evil, hear no evil,” leaving workers with the challenge of hiding their self-defined “scams” within the context of an observable factory floor—the more observable the factory floor, the more effort “wasted” on hiding them (Hamper, 1986: xix, 35). Each of those facilities was designed to be extremely transparent, yet those organization designs with high observability resulted not in accurate observability but, rather, only in an “illusion of transparency” (Gilovich, Savitsky, and Medvec, 1998)—a myth of control and learning—maintained through careful group-level behavioral responses by those being observed. Although observability was achieved through the removal of physical barriers like walls, accurate observability (transparency) was not. Goffman (1959) originally suggested that increasing the size and salience of an “audience” has the tendency to reduce sincerity, and to increase acting, in any “performance.” Analogously, increasing observability in a factory may in fact reduce transparency, which is displaced by illusory transparency and a myth of learning and control, by triggering increasingly hard-to-detect hiding behavior—a result I term the “transparency paradox.”
To untangle the transparency paradox, this paper presents a behavioral model of observability in organizational design, based on both qualitative and experimental field data, in an empirical setting that uniquely allowed me to investigate transparency within the locus of organizational experience and performance. I studied workers at the mobile phone factory of “Precision” (a pseudonym) in Southern China, which was the second largest mobile phone factory in the world at the time. Over the past century, factory studies have been central to building the foundations of organizational theory (e.g., Taylor, 1911; Roethlisberger and Dickson, 1939; Roy, 1952, 1960); however, I chose these workers not because of the type of work they did or because they worked in the epicenter of Chinese outsourced manufacturing but, rather, because organizational life for them was extremely transparent, in both actions and performance. In accordance with best practices for visual factory design (Greif, 1991) and TQM (Hackman and Wageman, 1995), visibility was everywhere. There was a clear line of sight across factory floors, each football fields long, such that learning could be quickly captured, distributed, and replicated by managers. Hat color signaled organizational role, function, and rank, such that expertise could be visibly sought when needed. Both output and quality were constantly monitored via very visible end-of-line whiteboards, factory floor computer terminals, and real-time reports to management and customers worldwide. If ever there were an organizational context in which existing practice demanded transparency, this factory in Southern China was the epitome, and management had implemented the best existing transparency tools with great diligence and success. I, in contrast, inductively explored the workers’ behavioral responses, at both the individual and group level, to such stark transparency, while simultaneously controlling for any Hawthorne effects—circumstances in which subjects improve the aspect of their behavior being experimentally measured simply in response to the fact that they are being studied, not in response to any experimental manipulation (Mayo, 1933; Roethlisberger and Dickson, 1939). I use the resulting qualitative participant-observer field data in Study 1, and the empirical field experiment it informed in Study 2, to challenge some of the current, blanket assumptions about the value of transparency for productivity and organizational learning and construct a contingent, behavioral model of the relationship between organizational transparency and learning, control, and performance.
He concludes
We typically assume that the more we can see, the more we can understand about an organization. This research suggests a counteracting force: the more that can be seen, the more individuals may respond strategically with hiding behavior and encryption to nullify the understanding of that which is seen. When boundaries to visibility fall, invisible boundaries to accurate understanding may replace them at a significant cost. In this research, that cost was a 10–15 percent detriment to performance.
Hence the transparency paradox: broad visibility, intended to increase transparency, can breed hiding behavior and myths of learning and control, thereby reducing transparency. Conversely, I have observed that transparency can actually increase within the boundaries of organizational modules, or what the operators called zones of privacy, when the visible component of transparency is decreased or limited between them.
This paper does not challenge the value of transparency. Instead, it challenges what, and how much, individual observers should see in order to achieve it. Because the mere presence of a manager, in line of sight of an employee, may affect employee performance in negative ways, management by walking around may sometimes be inferior to management by standing still. In this study, creating zones of privacy around line workers’ activities did not result in slacking off or cutting corners. Instead, the zones of privacy improved transparency within the line and, with it, improved productive deviance, experimentation, and focus on productive work. While hourly defect-free production results remained transparent to all via the IT system, line activities remained visible only to those who were best suited to innovate: the line operators. The establishment of a zone of privacy around the line allowed improvement rights to be owned by those on the inside, encouraged more transparency within the visibility boundaries, and ultimately enabled an increase in organizational performance. Visual privacy is an important performance lever but remains generally unrecognized and underutilized. Paradoxically, an organization that fails to design effective zones of privacy may inadvertently undermine its capacity for transparency.