The super-stealth school of management huddles behind closed doors, whispering "information is power." They've got a firm grip. Meanwhile, Profit Magazine lists "keeping staff in the loop" as the best way to improve efficiency. So, who's right?

Years ago, John Case published Open-book Management. Some concepts worked wonderfully in a tiny company I ran back then. Others proved disastrous, with incredible fall-out. Since that brush with terror, I've learned that openness usually promotes success. The key is to be open judiciously.

Openness with employees

Don't speak to employees about challenges with other employees. Personnel matters are more delicate than high-speed circuitry, and more volatile than company finances. Handled poorly, employee relations can demolish a company. At social functions or in the boardroom, keep HR issues confidential. If your family members are privy to HR concerns, make sure they understand this principle.

By sharing information about company performance, though, you'll empower and motivate employees. Even in private companies — especially in private companies—trust engenders trust. Informed employees gain a sense of ownership. They become interested in helping business succeed.

Yes, an indiscreet employee can cause trouble. A few may even turn into competitors. But most appreciate your trust. Your confidence in staff will fuel energetic performance at work. Six steps promote a healthy, transparent management style:

1. Hire great people, with whom you enjoy working

2. Update your staff regularly on the health of the business. During strong quarters, use good-news-briefs to generate energy and boost morale. During weak quarters, use frank-news-briefs to enlist people's cooperation

3. Encourage staff to contribute ideas for strengthening the company

4. Cultivate a receptive attitude, where first-rate ideas take root

5. Arrange social events that promote a sense of belonging: invite employees to dinner at your home, encourage recreational sports, hold all-staff functions

6. Whenever an employee leaves, try to part on good terms. Former employees can make exceptional allies, and may unearth business opportunities down the road.

Openness with the press

Private companies often miss the boat here. Unlike public companies, we have no obligation to tell the world how we're doing. But by releasing quarterly briefs to the media, we paint a business picture for potential employees, customers and partners. We may even coax competitors to do the same – and learn a bit more about their business. As well, the practice of issuing quarterly statements helps us cultivate management disciplines like those in a public company.

Again, use discretion and good sense. Before you decide what to publish, ask three questions:

1. How might this story help our business?

2. How might this story hurt us?

3. What aspect will appeal most to the media?

Consider chatting with business reporters to learn what kinds of stories interest their readers.

Openness with customers

Unexpected openness can disarm even sceptical clients. Many customers think they've heard almost everything. But openness is rare and engaging. It takes you out of "sales mode" and lets a real conversation begin.

Occasionally, we've trusted larger clients with a detailed financial picture of our business: when times were good, and not-so-good. In every case, their level of trust has risen in our professionalism and reliability. When you're frank about risks as well as rewards, you'll encourage customers to be more open with you.

Then there's the prickly question of how to handle a project heading south. Some people go quiet about problems. Others deny them flat-out and pin the blame on someone else. You know the adage, "Admit nothing; deny everything; make counter-accusations." Such tactics turn customers into former customers in a heartbeat.

Clients often remember more about the way you handle problems, than they do about outright successes. In my experience, clients appreciate an honest assessment of problems, along with a realistic strategy for solving them.

Openness with customers bears other fruit too. A customer who trusts you becomes an ally, and refers you to others.

Openness with suppliers

Yes, they're trying to sell you stuff, but most are normal, reasonable people. When companies treat their suppliers poorly, those suppliers lose interest in the long-term success of their client. But when you share strategic information with trusted suppliers, it's amazing the lengths they'll go to help.

Loyal suppliers make great allies. They'll get you better prices in the long-run. They'll protect your material supplies during a shortage. And they'll steer you to new business opportunities.

Openness with your board

Unlike public companies, private businesses aren't required to have an independent board of directors. Some owners prefer it that way: "keeping things in the family," to minimize risks of conflicting visions at the top. By including outside members on your board, however, you can significantly strengthen your company.

Choose your directors carefully. Enlist people who share your values and your vision, but who have complementary areas of expertise. You'll benefit from great business insights and creative thinking. Your networks of potential customers, employees and suppliers will widen exponentially. Plus, the discipline of accountability will streamline your business and keep you grounded.

Openness always involves risk. But openness also fosters trust. And trust makes for good business.

Michael Wakim is president of Fidus Systems Inc., an electronic design services firm based in Ottawa and Toronto. The company designs electronic products for a range of industries. Fidus has designed and consulted on more than 480 projects for 120 customers across North America and Europe. (Fidus is Latin for "trustworthy".)