The best thing you can do to encourage honesty in your group is to be honest yourself. This doesn't mean spilling your guts about your darkest secrets. It means asking for prayer in an area of your life where you're genuinely struggling; it means letting go of the myth that the leader needs to appear perfect; it means being genuine in your responses to the questions.
One way to develop group honesty is to have each member share four people, circumstances, events, or places that have left lasting impressions on them and made them the people they are today. Because some people have trouble talking about themselves so openly, you can use "hands" as a visual aid (click here for a printable set of hands). If you'd rather, trace your own hands and make copies of those.
Group members can write or draw thoughts, words, or pictures on the four hands and explain their drawings to the group.
If you have group members who think the drawing part is too cute, that's okay. Different temperaments like different things. The point is to share key influences from their lives, with or without a drawing.
Ideally, give people ten minutes to figure out what they want to talk about and do the drawing, and then five minutes apiece to share with the group.
If you have eight people in your group, that adds up to fifty minutes. Maybe you want to ask people to share just one person or event that has left a lasting impression on their lives. The goal is to develop honesty in your group and to help people open up about themselves.
If crunched by time, another option is to have people share their lasting impressions and pray together in smaller circles of three or four people.
Sub-grouping multiplies the amount of airtime each person gets. You don't have to worry so much about people who dominate and people who are shy. When you ask someone in each subgroup to facilitate the discussion, you are giving those people a chance to experiment with leadership in a safe way.
When people share personal things, the group's response is crucial. People need to sense that it's safe to tell the truth about themselves. Emphasize that anything shared in the group stays in the group.
Pay attention as people share, and when they're done, genuinely thank them. Acknowledge when someone says something that moves you. And even if someone shares something that seems bland, let them know you appreciate their story just as much as someone else's.
Finally, be sure that whatever you share about yourself comes from the heart and gives the group a real glimpse of who you are deep down.