How to Instill More Transparency in Your Business

What is transparency in business?

Transparency in business is sharing information about your business results, strategic direction, operations and compensation with others outside your executive team and ownership. This includes various stakeholders, primarily employees and customers. 

Different transparency levels exist, and sharing everything isn’t a good idea. For example, trade secrets should be accessible only to a select few (and protected by nondisclosure agreements). Similarly, sensitive information like business bank account balances and customer payment data should be access-restricted and protected. However, there are several areas where sharing information with stakeholders is appropriate and beneficial.

How to implement transparency in your business

Businesses can introduce various transparency types: 

• Salary transparency
• Task transparency
• Financial transparency
• Employee performance transparency
• Hiring transparency
• Transparency with customers

We’ll discuss implementing these transparency types in more detail.

Salary transparency 

Salary transparency has been a hot topic of debate. Companies like Buffer have made waves by making their salaries visible to all employees (and even the general public). People generally recognize that being open about salaries can significantly help end perceived and actual salary discrimination based on gender or race.

At the same time, even business leaders who don’t discriminate on salaries tend to fear internal repercussions. One of the main arguments against salary transparency is that employees paid less than their peers may not work as hard or will be unhappier at work. According to a Visier report, employees who discover new hires are being paid at a higher rate are more likely to resign. A ResumeBuilder study concurs, finding that 1 in 20 employees will quit if they discover their co-workers earn more.  

The accessible salary matrix

You may be able to mitigate the negative impact of pay discrepancies if you can justify the differences in pay. An accessible salary matrix is one way to justify pay differences. Within the matrix, each department’s roles are listed vertically by seniority (think entry-level marketer up to head of marketing). Then, each individual role has an assigned salary and projected salary increases. 

These numbers are set using the following system:

• Salaries can be determined based on research into averages for equivalent roles in the area where your business is based.
• During the hiring process, people can try to negotiate their seniority level but can’t negotiate salaries within a particular role’s level. When the matrix is fixed, all employees receive equal pay at the same level.
• Outside of promotions, everyone at the company receives a raise when the company achieves a predetermined collective goal.
• All of this information is available to everyone internally.

An accessible salary matrix involves a great deal of upfront effort. You must put in the work to build a solid compensation system because you’ll be held to it. But isn’t that what you should be doing in the first place? Cutting corners on compensation will always bite you in the end. 

Task transparency

The silo is one of the most-used metaphors in business. We hear so much about breaking down silos because, unfortunately, it’s an almost universal issue. Business silos create bottlenecks, and information gets stuck at the individual, team and organizational levels (as well as inside software). The following occurs:

• People keep information that could benefit colleagues in their brains or inboxes.
• Teams don’t share achievements or insights that could help other teams.
• Over time, organizations develop cultures of intentionally or accidentally hiding information from employees, partners or clients.

These bad habits grow with the company, becoming more significant issues as you scale. For this reason, it pays to make task transparency part of the culture early. Here’s what you can do:

• Hold weekly meetings. One way to break down silos and improve internal communication is to have an all-hands company meeting during which team leaders share wins and failures from the previous week and check in on team goals. This is a standard way to provide visibility across teams and create a culture of openness regarding achievements and areas that need improvement.
• Post information for all to see. Companywide meetings might be difficult to scale as you grow. (Does your office even have a space that could fit 50 or 100 employees?) An alternative is to ask everyone to post information in a public Slack channel for the entire company to see or use another internal communication app to share information. 

Task transparency can help your company do the following: 

• Discover new opportunities. Teams can easily find new opportunities in the work of other teams or colleagues they may not have otherwise encountered. For example, someone on the data team might see a marketing initiative they feel deserves more testing. Your customer service team might have a call with a client who could make a good beta tester for a new product.
• Improve accountability. Sharing your tasks with the team is also a way to improve accountability. Even if nobody else reads your daily update, the short amount of time you spend thinking about the previous day and planning the next one has enormous value. It keeps the team on task, and the fact that anyone can scrutinize these lists anytime provides healthy pressure to follow through on your planned work.

Financial transparency

Did your company achieve its quarterly goals? How close is it to achieving its financial, sales and other targets for the year?

You may also decide to provide strategic and financial transparency during your weekly meetings or less frequently. Sharing how the business is performing and whether you’re hitting your targets can empower every individual to make better, faster decisions. It can help your team prioritize – without involving senior leadership.

Being close to achieving company goals can empower and encourage your staff to put in a little more effort to reach the finish line. If not, the team can brainstorm to find out where the problem is and how to fix it.

Employee performance transparency

Openly sharing individual employees’ progress on their goals is a controversial topic. On the plus side, visibility into goals – and progress on those goals – may help employees prioritize and empathize. For example, if you see that a colleague has achieved only 10 percent of a complex key result with two weeks left in the quarter, you may not bother that employee with small passion projects. Or, if you’ve made solid progress on your own goals, you may even offer to help. 

On the other hand, knowing that a colleague is not performing as expected can lead to conflict, pressure and shaming from peers. 

One way to get around this problem is to periodically solicit anonymous informal feedback about every employee, including management and the executive team. Managers can review each employee’s feedback and combine it with that person’s employee data and performance results. 

With the understanding that no one is perfect, managers can communicate this information to the employee one-on-one; team members can use the feedback to improve their performance in areas where they’re falling short of expectations.

Hiring transparency 

“Hiring” and “transparency” are rarely heard in the same sentence. When you find a candidate you want to hire, you don’t want to share anything that might push them away from the job. If you’re unsure whether they’re the right fit, you don’t want to give them too much access. You also don’t want the power dynamic to shift in their favor, especially in salary negotiations. 

However, being upfront with new hires sets the tone for a positive work environment. New hires understand that no company is entirely free of challenges and problems, and being prepared for them reduces stress and builds their trust in management.

One way to increase transparency in your hiring process is by bringing candidates into your work environment for a pilot project. Bringing a potential new hire in on a contingent basis allows them to experience what a workday looks like and lets the company test that candidate’s skills during the hiring process. 

They’ll have lunch with the team, interact with employees, ask questions and get a true sense of what it’s like to work with you. This will give you (and the potential employee) a good idea of whether the new hire fits the company culture.

Transparency with customers

While it’s beneficial to have all employees in your company on the same page, it’s equally important to be transparent with your customers. Hiding information from customers is viewed as shady and can backfire, wiping out any advantage you may have had. 

According to an often-cited study on transparency from Label Insight, 94 percent of shoppers prefer brands that are completely honest and transparent, and 70 percent actively seek insights into a company before purchasing. Corporate executives surveyed by Deloitte agree, citing these top reasons consumers lose trust in a consumer product company:

• Brands not being open and transparent (90 percent)
• Brands not meeting consumer environmental, social and governance expectations (84 percent) 
• Brands engaging in greenwashing (82 percent)

To earn customer trust, be transparent with customers about your pricing, product ingredients, labor and sustainability practices, as well as how you use customer data. If you make a mistake, own up to it, and let customers know how you plan to fix it and prevent similar mistakes in the future.

Why is transparency important in business? 

We’ve already mentioned some potential outcomes of increased transparency, including higher employee morale and retention. Here are a few benefits you can add to that list:

• A larger pool of job candidates
• Greater internal workplace collaboration
• Quicker project turnarounds

Transparency is critical for the following reasons: 

• Transparency levels the playing field. The primary reason transparency is so essential in business is that it levels the playing field through information accessibility. It’s a powerful sign of trust when all employees have the same access to information, regardless of role or seniority. You’re showing the team that you trust them with the information and have nothing to hide, increasing their trust in you. For this reason, transparency has a massive impact on retention and team morale.
• Transparency encourages decisiveness. By providing an even playing field, you’re empowering your team members to make more educated decisions independently. They no longer have to pry information from those in the know to move projects forward. This decisiveness leads to more accurate deliverables and quicker turnarounds.
• Transparency boosts efficiency. Additionally, since people are more informed when entering conversations, transparency reduces work duplication and increases the efficiency of your internal communications. 

Downsides of business transparency

Being transparent with your employees may also present some challenges, including the following: 

• Transparency can lead to distorted information. One potential problem is that the information you share with employees could be distorted, misunderstood or misrepresented. If you have unhappy or alienated employees, they may use the information you’ve shared to attack the company, internally or with competitors.
• Transparency can foster blame assignment. Complete transparency can also set up a situation where poor performers are blamed rather than helped to improve.
• Transparency takes time and effort. In addition, communicating all the information needed for transparency will take some time and effort, especially at first. 

Take these steps to counter these issues: 

• Provide context. If you’ve made a decision, it isn’t enough to inform your employees. Explain why you made this decision, how it conforms to your company’s values, and how it benefits the company and its employees, customers or other stakeholders.
• Touch base. After divulging certain information, you may want to talk to individual employees to ensure they clearly understand it and to gauge their feelings about it. This can prevent problems before they start.
• Communicate your expectations. If information is sensitive, tell employees that it is not to be shared outside the company and how doing so could negatively impact the company and its employees. If your employees have signed an NDA, this would be the time to remind them.

Transparency in forward-thinking businesses

Is greater transparency in business such a radical idea? Consider the following straightforward ways to implement transparency:

• Be open about salaries, and use research, not negotiations, to set them.
• Be open about work because it creates accountability and opportunities for collaboration.
• Be open about performance because it creates a culture of empathy, drive and pride in your work.
• Be open about hiring because it attracts candidates and allows both parties to see if they’re a good fit before they go all in.

These seem like logical and forward-thinking steps, not radical changes. While transparency in business may not be the norm, when has sticking to the norms ever spawned exceptional companies?