10 Reasons Why Transparency Is Powerful for Your Employees

Corporate Team Working Together

Transparency goes a long way for not just your employees but your business as well. Being transparent with your employees is often underestimated, yet it can be a powerful tool for creating a productive and positive work environment.

Quick hit: In Slack’s Future of Work study, a relative classic from 2018, 87% of workers want their companies to be transparent. They surveyed 1,400 people.

Transparency starts by creating a sense of trust between management and direct reports, allowing them to better understand one another and work together more effectively. When employers communicate openly and honestly with their employees, it can improve morale, enhance loyalty, and increase productivity. (Read: You make more money!)

Being transparent with your employees demonstrates respect and encourages collaboration, ultimately resulting in a healthier work atmosphere and a stronger business model.

Embracing transparency can have a powerful impact on your business’ success. We’ll show you why and how this happens.

Improved Employee Engagement

One of the key benefits of being transparent with your employees includes improved employee engagement. When employees don’t know or understand company policies, goals, and plans, they tend to disengage from their work and the company as a whole.

A survey conducted by Paychex in 2020 stated more than 83% of employees surveyed said they were satisfied with their jobs when their employer was transparent versus just a 57% satisfaction rating when their employer wasn’t transparent. Similarly, three-fourths of employees at transparent companies said they would stay with their current jobs versus just 45% of people at non-transparent companies.

A Gallup poll of 67,000 people in 2022 found that only 32 percent of workers are engaged with their work, down 4% from 2020.

It pays to be engaged, and transparency is a huge factor in employee engagement.

Transparency helps employees to feel more invested in the company's success and enables them to contribute in a meaningful way. By providing open and honest communication about the company's objectives, employees feel that the company values their input they have a stake in the company's future.

Furthermore, when employees are aware of the challenges and opportunities facing the company, they are better able to identify areas for improvement and propose solutions. In fact, we often turn our challenges into games. We call these MiniGames, and they're a great way to increase employee engagement.

The idea is to pursue an opportunity or correct a weakness within the company, make it fun and engaging, show people how they can help build success, and reward employees with a prize if they meet the goal.

Playing MiniGames can increase the level of engagement in an organization, leading to greater innovation and creativity, which can help drive the company forward.

Of course, the workforce changed when COVID happened. With quiet quitting and remote work, keeping employees engaged has become increasingly difficult. CEOs will have to be mindful of how they're integrating their remote workforce into their culture to ensure high levels of engagement. Employee engagement will continue to be a crucial element in retaining top talent.

Increased Trust and Respect

Transparency helps to build trust between employers and employees, which is essential for a positive work environment. When employees feel that they can trust their employer to be truthful and forthcoming, they are more likely to be motivated to work towards the company's goals and contribute to its success.

Trust builds the foundation of any relationship, personal and professional. When employees trust their employer, they feel more secure and confident, leading to better job satisfaction and improved overall performance.

Trust works both ways in companies to achieve a common goal. Sports metaphor time. NFL coaches trust the players on their teams to come through when they put together a game plan. It’s the coach's job to give players the tools they need to succeed. Meanwhile, the players need to practice their craft regularly to excel. But coaches don’t succeed by keeping the playbook from their players. Every team member gets to see, study, and memorize the playbook to know what to expect and what’s expected of them on every play.

Coaches trust players to execute the play based on their roles. Players trust coaches to come up with the right play calls to win the game.

This same thing happens at the workplace.

Being transparent with your employees means sharing vital information, such as the company's financial performance, future goals, and business plans. By sharing this information, employees can understand the company's overall direction and feel like they are part of the decision-making process. This level of transparency fosters a sense of openness and honesty between the employer and the employees.

Just like football, the trust works both ways. The company trusts the workers, and the employees rely on their employer to take care of them and treat them properly.

Additionally, transparency can also help prevent rumors or speculation among employees. Without transparency, employees may create their own narratives or assumptions about what’s happening within the company. This habit can lead to distrust, low morale, and a lack of motivation. Transparency has the opposite effect.

Another benefit of increased trust and respect is that it can lead to more employee loyalty. When employees trust you as an employer and feel respected, they are more likely to stay with your company for the long term. This tendency can reduce turnover, saving your company money and time in recruiting and training new employees.

Moreover, when employees trust their employer, they are more likely to speak up and offer feedback. You’ll see a more productive work environment where employees feel comfortable sharing their ideas and opinions. When employees feel valued and respected, they are more likely to contribute their best work, leading to improved performance and productivity.

Need another reason to know why trust is so vital? Your bottom line is at stake. A 2022 study from Deloitte stated the following:

Workers who trust their employer are 79% more motivated to work (and less likely to leave).
A trusting workforce achieves two times better customer satisfaction.
Customers who trust a brand are 88% more likely to buy again.
Building customer trust, which comes from customer satisfaction, affects partners and improves market capitalization up to four times.

Trusted companies outperform their peers by up to 400%.

Trust comes from internal and external sources. But it starts with the inside first. And that trust leaks onto customers and clients.

Read how Total Solutions Group’s pre-tax profits rose a whopping 75% from one year to the next after implementing a new company culture and rebooting their employee engagement.

Greater Collaboration and Teamwork

Another significant benefit of transparency in the workplace comes from enhanced collaboration and teamwork. When employees understand the bigger picture, they work more collaboratively with their colleagues. You will start to notice increased productivity because teams are more efficient at completing tasks.

Cliques can form without collaboration, leading to a siloed work environment. We see this happen a lot with large companies that have multiple departments where communication between teams can get convoluted. Open communication, however, encourages departments to work towards a common goal and feel more connected. Think about employees who work remotely or from home. Open communication is vital to their success!

Consider your last company-wide project or initiative. When employees understood the objective, goals, and expected outcomes of the project, they provided more insightful feedback and suggestions. Communication about a project creates a culture of collaboration where all team members feel heard, valued, and supported. The resulting project or initiative is typically more successful because the team members have a better understanding of their roles, their colleagues' responsibilities, and the project's overall purpose.

Improved Performance and Productivity

Have you noticed the positive impact transparency can have on employee performance and productivity? When employees feel that they are trusted and respected and have a clear understanding of their role within the company, they are more likely to be motivated and engaged in their work.

Engaged employees tend to be more focused, efficient, and productive. They are also more likely to go above and beyond what is expected, taking ownership of their tasks and striving for excellence. You’ll experience significant improvement in overall company performance and increased profitability.

Transparent communication can also reduce the time and energy spent on conflict resolution. Employees who understand their expectations and goals are less likely to be frustrated or confused and more likely to work together effectively. Additionally, transparency in performance feedback can help employees evaluatetheir strengths and weaknesses, enabling them to make improvements and grow in their roles.

Enhanced Company Culture and Values

Creating a strong company culture leads to the success of any business, and being transparent with your employees is a crucial component of this. By being open and honest about your company's goals, values, financials, and decision-making processes, you can help to build a culture of trust and collaboration.

Superior Restoration rebooted its company culture to empower its employees with greater autonomy. The team retained the best employees with their new culture, and those who didn’t fit in left the business. Overall, the company has benefited significantly from its revamp and way of working collaboratively.

Connectivity with a company's values and mission has become a significant sticking point for many younger workers. Boston Consulting Group’s landmark leadership survey states that the top four things workers want most from their leaders come from the emotional heart of leadership (emotional intelligence), citing recognition, coaching and development, empathetic listening, and care as part of what it calls “generative leadership” for a company value.

Transparency also falls into the EQ category because it takes a risk for company leaders to show transparency to employees.

A sense of connection to the company’s larger picture can help to increase employee motivation and job satisfaction, leading to a more positive workplace culture overall by reinforcing your organization's values. By openly communicating how how your business operates and makes decisions, you show your employees that you are committed to honesty and integrity.

This commitment to transparency can also extend to areas such as employee compensation and benefits. Being open and upfront about your company's pay structure and benefits package can help to create a more equitable workplace where employees feel valued and appreciated for their contributions.

Increased Innovation, Creativity, and Empowerment

As a business owner, you must foster an environment that promotes innovation and creativity. You want your employees to feel empowered to think outside the box and develop new ideas to help your business grow and succeed. Transparency plays a critical role in fostering innovation and creativity in your workplace.

Transparency allows you to give teammates the information they need to make informed decisions. They can see the big picture and understand the goals and objectives of the company. This transparency can inspire your employees to think of new and innovative ways to achieve those goals, whether automating mundane tasks or thinking at a higher level to achieve goals through measured steps and individual tasks.

Transparency also allows employees to share their ideas and perspectives freely. When employees feel like their voices are heard, they are more likely to develop new and innovative ideas, as they believe their input is valued and that they have a stake in the company's success.

Innovative ideas can come from anywhere within the company. You may find that employees in departments you never considered are developing new ideas that can positively impact your business.

Transparency can also foster collaboration, which can lead to increased innovation. When employees work together, they can bounce ideas off one another and come up with something new and innovative that they might not have been able to create independently.

Improved Communication and Feedback

Effective communication is critical in any organization. Employees are more likely to contribute to the overall success of your company when they feel valued and respected rather than judged or rejected when leaders acknowledge their voices are heard. Transparency from leadership fosters these open channels of communication.

Open dialogue between management and employees about goals and day-to-day operations can help identify potential innovations as well as address problems before they escalate. This attribute is particularly important in a fast-paced business environment where quick action and effective communication are critical.

Reduced Workplace Stress and Conflicts

Without transparency, employees may become suspicious of the motives behind certain decisions or actions, leading to misunderstandings, gossip, and conflicts. This tension creates a work environment that undermines productivity and damages colleague relationships. Conversely, transparent communication fosters a sense of openness and honesty that encourages employees to trust one another, communicate effectively, and work collaboratively towards shared goals.

A study in early 2022 from MIT Sloan states a toxic workplace culture drives 10 times as many resignations compared to compensation. Don’t be one of those companies!

Transparency also helps employees to manage their workload and expectations better. When they have a clear understanding of the company's objectives, priorities, and challenges, they can align their work accordingly, making better decisions and using their time and resources more efficiently. This clarity reduces stress and anxiety and enables employees to focus on their work, increasing productivity and higher quality work output.

Stress and anxiety on the job can quickly lead to burnout. A groundbreaking survey from 2015 by Deloitte noted that a whopping 77 percent of the 1,000 workers surveyed said they experienced burnout at their current job.

Another way that transparency can reduce workplace stress is by giving employees a sense of control over their work environment. By providing clear and open channels of communication, employees can voice their concerns, ask for help, and contribute ideas that can help improve their work environment.

Improved Retention and Attraction of Top Talent

This is a big one. We see this concern a lot from the business owners we help.

Few things are more important than attracting and retaining top talent, especially in a tight labor market and fears circulating that AI will take someone’s job. The employees who make up your team are the backbone of your company (your single-greatest expense is labor), and they significantly impact your ability to achieve your goals and objectives.

Here are just a few of the ways that being transparent can help you retain and attract top talent.

1. Transparency helps to build trust and respect.

When you are transparent with your employees, you show them that you trust them enough to share information that might otherwise be kept under wraps. You’ll help build a sense of trust and respect between you and your employees, which is essential for creating a positive workplace culture. A positive culture is a big deal for getting new talent on board when all other things are equal in the job market.

2. It creates a sense of ownership.

Employees want to feel like they matter and want to be a part of the decision-making process. They’ll feel invested in the success of your company. This sense of ownership can be a powerful motivator that keeps your best employees engaged and committed to your company.

3. It promotes loyalty.

When your employees feel like they are part of a team working toward a common goal, they are more likely to be loyal to your company. This sense of loyalty can help you retain top talent for the long term, even when other companies may be trying to lure them away.

Cue the football metaphor. Touchdown! Game over!

Enhanced Reputation and Public Image

Being transparent with your employees is not just good for internal reasons. It also positively impacts your company's reputation and public image. In today's digital age, where social media and online review platforms have immense power to influence consumer behavior, businesses need to focus on building a trustworthy and credible brand image.

Have you read your company’s Glassdoor ratings? What do people say?

While it may not be all glowing, even responding to negative Glassdoor reviews can impact whether or not someone feels positive about your company.

By openly sharing information about your company's policies, values, and practices with your employees, you create a sense of authenticity and honesty that resonates with customers. Employees are more likely to speak positively about their workplace to their networks and even online.

Transparency also flows to your clients or customers. They will trust you more for your authenticity and honesty.

Customers can see that your company is willing to be upfront and honest about products, services, and operations. It sends a message to customers that you’re confident in your offerings and have nothing to hide.

Additionally, being transparent with your employees can lead to better decision-making that aligns with your company's values. Customers often take note of companies that prioritize ethics and social responsibility, and such initiatives can lead to positive media coverage and brand image.

On the other hand, a lack of transparency can harm your reputation, leading to mistrust and suspicion from customers and stakeholders. Even if you don’t have a whistleblower at your company, local media outlets aren’t afraid to go after “on your side” stories about unethical companies if there is enough information to warrant a report.

And don’t forget about social media. You wouldn’t want to become a (negative) TikTok trend.