I really like the gist of what you are saying. It is very important to be transparent. However, I would like to add few observations.

In tough times people like to thing that someone is in control. We like the idea of a leader who has a plan. Knowing someone is in control means I can sleep a little better to night and I can concentrate on my job tomorrow.

Never lie – but it is important to project confidence and control. Some people are better at this than others. Therefore, management must spend sometime coaching those who are not or have them defer.

Just because you are not confident in the plan does not mean it will not work. It is almost impossible to separate you take on a plan of action and the plan itself. However, it is VERY important that you do. If management has decided on a course of action that you would have passed on… then you still need to toe the line. Not doing so could mean failure. Distension among the ranks, will spell the end to and loss of the war. (Make no mistake corporate survival is a war)

This is related to the above point, but it deserves mentioning directly. Everyone sees a wreck differently. Three people will see the exact same wreck three different ways. When communicating, we must be careful to state the facts as they are (knowing you will communicate 60% of it wrong).

All this is to say – be honest, be transparent, but doing so should be a planned orchestrated effort that reinforces confidence and focuses on the team’s goals.

Stop; spend some time on the communications plan. Take a moment to remember what you say is as important as what you don’t and how you say it.

Project leaders walk into a close door meeting, walk out looking glum, tell project members everything is okay. Of course, project members know better.

Well, they might know less, but that doesn’t stop them from making interpretations and inventing stories. Usually much worse than what reality is.

It may be my shortsightedness, because I’ve asked absolutely anything else and gotten input. There are a couple of situations in the past in which the EVP of HR heavily influenced the CEO and management team in the direction of transparency. But it’s rare in most organizations for the senior HR person to have that kind of power. Thankfully, there are a few HR senior execs that weigh in with power.

You may know that the best studies and resources (including Harvard Business Review article or two) recommend transparency in difficult situations.

Truer words were never spoken. What a lot of leaders don’t understand — but should — is that if you don’t tell the troops what is going on, they’ll make it up. I always tell them to measure their communications success by the level of rumor buzz in the organization. You would think they would pay attention since time spent fueling the rumor mill just drags down the bottom line.