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Business Transparency

Create an Open, Trusting Environment

Transparency in Business

 

1. Why Transparency Is Important in Business

2. Perceived Barriers to Transparency

3. How to Measure Business Transparency

4. Benefits of Business Transparency

5. Business Transparency Trends

6. How to Be More Transparent in Business 

 

Why Transparency Is Important in Business

According to a research report1 by Brad Rawlins, published in Public Relations Journal, transparency is an essential element for building trust. In business, transparency is demonstrated through a company culture that encourages the open sharing of information and accountability at all levels. Organizational transparency must be concretely backed by company policies and decisions rather than just being a vague, empty saying or catchphrase.

We all know why trust is paramount in our personal lives, but why do we need to create trust and openness in the workforce? In order to build a family culture and the kind of company people want to work for, managers and leaders must share information on the company’s direction, strategies, and financial outlook.

Creating an open business environment encourages employees to look out for the company’s best interests and to act in a way that engenders even more trust. The true objective of transparent business practices is to support the greater good of the business by improving manager/employee relations. This creates a culture of value where employees know what they are working for, feel valued, and are able to deliver results that support continual and sustainable company growth.

Perceived Barriers to Transparency

Sometimes a lack of transparency in the workplace comes from the fact that businesses simply keep doing things the way they have always done them, with no thought about the effectiveness of their workforce management strategies. In other instances, executives believe that opening up information for everyone to see would have a negative impact on the business.

Open-book management strategies are geared toward bringing transparency to business financials such as a company’s profits and losses. A main concern here is the fear that competitors could end up getting hold of key financial information. While it’s true that outsiders could theoretically obtain financial data from your employees, the reality is that this doesn’t happen, and even if it did, it wouldn’t make much of a difference. In open-book management, the financial information that is shared is simplified data that just doesn’t provide any competitive insights.

Another common concern is that giving employees financial information might lead to unintended internal consequences. These include having staff members find out how much revenue the company generates and consequently requesting a larger salary or finding out how little the company makes and jumping ship. However, in reality, with open-book management, employees feel more involved in driving the company’s success, while salary figures are never shared and privacy is protected.

In our years of experience with various industries, we’ve learned a couple things about human behavior when it comes to financial transparency in business. In the case of finding out a company isn’t as profitable as a person assumed, we’ve learned that people are willing to step up and fight to help their organization. In the case of employees finding out that the organization is generating more revenue than people expected, this provides an opportunity to point out the company-wide actions that led to that success and what individuals can to help the organization achieve even greater success. It also highlights career advancement paths, showing employees how their future career growth is in their hands.

How to Measure Business Transparency

Organizational transparency is an approach that tends to fluctuate, as certain business events and scenarios require a greater degree of discretion. As the amount of transparency changes, each individual’s perception of that transparency will change over time as well.

A great way to gauge company-wide perceptions about transparency is to conduct employee surveys. Through these surveys, trends can be analyzed and areas for improvement can be identified and addressed. This allows you to implement policy changes that move the company in the right direction.

The following are general areas to cover in employee surveys to measure transparency in the workplace.

  1. Secretive communication

  2. Participatory communication

  3. Accountable communication

  4. Substantial information disclosure

  5. Company integrity and goodwill

  6. Overall trust

  7. Overall transparency

Benefits of Business Transparency

At The Great Game of Business, our unique understanding of the importance of financial transparency in business was born of necessity. The concepts and implementation of financial literacy training and open-book management came from a need to better empower and engage employees at a struggling manufacturing plant in Springfield, Missouri, in 1983. The practices that were developed worked for that company and have since gone on to help hundreds of organizations in a wide range of industries.

Below are the biggest advantages to financial transparency for business:
  1. Builds internal and external trust

  2. Creates a competitive edge in business

  3. Improves business success metrics

  4. Enhances an organization’s culture

  5. Increases employee engagement

  6. Improves employee performance

  7. Attracts better talent

  8. Increases clarity and accountability

  9. Fortifies brand perception

  10. Facilitates communication

  11. Leads to more informed decisions

  12. Breeds a more unified team

Business Transparency Trends

With today’s changing workforce demographics, creating a fun, cohesive work culture is becoming more important. Contemporary work practices encourage transparency, open communication, and collaboration instead of traditional top-down, “command and control” style. This doesn’t mean that no work gets done. In fact, it’s quite the opposite. When employees realize they are trusted by, and can trust, management, they are more likely to step up and perform their work in an engaged and thoughtful manner.

Organizations are learning what best motivates millennials in an effort to reduce turnover and retain good talent. Consequently, trust in the workplace is becoming more of a priority. An SHRM job satisfaction and engagement report indicated that the two most important factors in job satisfaction are respectful treatment of employees and trust between employees and management.

How to Be More Transparent in Business

How can a business create transparency? The number one way to be more transparent is to implement open-book management practices. The financial information provided in an open-book approach creates an ownership culture in which employees start to see the business in the same way owners and executives see it.

This lifts the veil between upper management and the rest of the team, and allows for a more honest and collaborative relationship and improved communication. Along with open-book management, a financial literacy program must be developed so that employees have a foundation for understanding the information being shared. 

Those business leaders who are open to new ideas and like the idea of transparency can dive deeper into The Great Game of Business operating system and community to fully understand how The Game can transform an organization. Creating more transparency in management, communication, and operations produces a positive impact, but you may need assistance in making the transition. Feel free to reach out to our business coaches to form powerful partnerships on your journey toward trust and openness.

1) Rawlins, Brad. (2008). "Measuring the relationship between organizational transparency and employee trust." Public Relations Journal. 2. 

 

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