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5 Illuminating Lessons on Transparency

Inc. Magazine recently shared an article about salary transparency in light of the recent firing of New York Times executive editor, Jill Abramson, who was seemingly let go shortly after she made an inquiry about her compensation. In the article, writer Ilan Mochari details some common challenges faced when implementing open-book as well as some tips for those who want to make salaries more transparent at their workplace. While the tips are practical, we loved this article because there are some illuminating lessons that can be learned from the examples in the story.

We've pulled our favorite excerpts from the article and shared some lessons that can be learned from it.

"Here's the problem: In everyone's race to venerate transparency, it's easy to forget that actually implementing an open-book system is difficult."

Lesson #1: Open-book ain't easy. Okay, so there's no hidden message here, but it's a good message nonetheless. The overall concept of being transparent seems to be a no-brainier; especially as the need for transparency in every facet of life increases with the access to information and evolving technology. But actually doing it; sharing financial and operational business information with your employees…that takes planning, commitment and consistency.

(In explaining problems faced by, Adjacency, a San Francisco-based company after they started discussing financials weekly with their 25 employees)

“Employees got frightened. They didn't like hearing about Adjacency's close calls with missing payroll. Sather admitted that the reports sometimes "scared" the employees.”

Lesson #2: Humility is necessary. Being transparent in business requires you to share the good and the bad with employees. This type of openness requires a certain level of humility; it’s tough to tell your employees that a mistake was made or that the company is experiencing a problem. Our hat’s off to the leaders at Adjacency for having the courage to be honest about the company's "close calls." Sharing the negative news is a difficult and humbling experience, but it's a necessary component of earning the trust of employees.

and

Lesson #3: Fight fear with education. It can be debated that fear and anxiety are created by not knowing or fully understanding a situation, concept, etc.. The main way we combat this when preparing companies to open their books is with education. An understanding of basic business literacy (becoming familiar with the financial statements and the drivers for various numbers) is the best method for removing fear. Once people understand concepts, it’s easier for them to process what you are sharing. Furthermore, educated employees become empowered employees. Instead of focusing on the fear of missing a paycheck, employees are likely to offer solutions to avoid the problem in the future.

In offering tips for making salaries transparent:

…research suggests that you don't have to reveal all of the numbers. Instead, you can provide ranges or medians. Employees above the median will be pleased. Employees below it will seek explanations. That's when you, as a leader, need to step up.”

Lesson #4: Transparency isn’t “one size fits all.” What you share and how you share it is different for every company, your practices should be adapted to best meet the needs of your unique culture. Sharing salary ranges or medians is a great middle-of-the-road approach. Here at SRC, we choose to aggregate financial line items. Using this method, salaries and benefits are reported as a single number. This is our preferred method because it is less overwhelming as a whole when our associates get together in their weekly Huddles to report the numbers; breaking out every single revenue, cost and expense would be a very time consuming (and mind boggling) process.

and

Lesson #5: Go beyond simple explanations. Encourage and expect employees to seek explanations and ask questions. Responding to questions is not only a way to earn trust, but also a method for educating employees. For example, if an employee inquired about the median salary range, you have an opportunity to teach them about the marketplace and other factors that go into setting compensation levels. There is always a "story behind the numbers;" in order to make any number relevant, you have to provide an explanation.

"In other words, the work of being transparent (about salaries or anything else) doesn't stop when you open the books. That's where the heavy lifting--the communicating, the explaining, the managing of feelings, the recruiting and retaining--begins."

Bonus Lesson #6: Open-book ain't easy. Didn’t we already say that? Mochari wraps back around to this point in the closing of the article, so we thought we’d do the same. Sharing is an ongoing process; opening the books is just the beginning. The benefits of transparency far outweigh the challenges; if you open your books with a strong process in place, you are likely to experience Rapid Financial Results and Lasting Cultural Change™. Companies who play The Game most commonly find their employees...

  • feel more secure because there is consistent communication about the business and business decisions
  • make intelligent decisions during day-to-day tasks
  • are more involved and committed to the company and its success
  • are motivated and empowered to positively impact the business

If you'd like to see more examples of results experienced by successful open-book companies, take a look at our Case Studies.

Have you learned any lessons while building trust with transparency at your company?

Topics: Transparency

The Great Game Team

About The Great Game of Business

Our approach to running a company was developed to help close one of the biggest gaps in business: the gap between managers and employees. We call our open-book approach The Great Game of Business. What lies at the heart of The Game is a very simple proposition: The best, most efficient, most profitable way to operate a business is to give everybody in the company a voice in saying how the company is run and a stake in the outcome. Let us teach you how to develop a culture of ownership, where employees think, act and feel like owners.