While the trend might have been started with smaller startups, pardon the pun, larger companies are now realizing the benefits of transparency, as they continue to establish ethical ground rules and causes that their business models stand for. Let’s expand on the benefits of transparency in today’s world of business and how they can apply to your company’s business ethics.
Improves employee happiness
A recent survey conducted by TINYpulse, a company specialized in providing weekly employee engagement polls revealed that employees with a transparent mindset are more committed to their organization and, as a result, more productive. Discovering a surprisingly powerful connection between transparency and happiness, the survey ends in a conclusion that management transparency and interpersonal communication has a correlation coefficient of .937 with employee happiness. The best thing is that improving transparency costs next to nothing but requires continual dialogue between staff and management. Some companies are even successfully using transparency to attract and retain talent. This may even help you when you are managing employee benefits as you can ensure that they will improve the happiness of your employees.
Retains public trust
When applied in the workplace, transparency doesn’t only improve your employee motivation and happiness, but also your marketing efforts, website traffic, etc. When you’re transparent, it’s much easier to gain trust from your audience, which makes it easier for you to convert many of your visitors into shoppers. In May 2015, bakery-café chain Panera Bread vowed to stop using artificial ingredients by the end of 2016. In the end, they took an extra step and launched a transparent menu campaign that listed detailed ingredients, calories, and nutritional info for every product. For their head chef, it’s all about the choice that customers make between health and decadence.
Many businesses start their transparency journey by publishing some of their private information. This may include public revenue, hiring policies, and wages. There are also sites that automatically pull such data and post it in a user-friendly way. This way, your customers can tell exactly how you’re standing from a business point of view, as well as how much you’re earning vs. what you’re spending on.
Visibility on social media
In this day and age, most businesses have at least one social media account. The whopping 88 percent of companies use social media marketing to relate with their customers in a world that is active 24-7 and already publicly available to a wide base of consumers. On social media, information spreads like a bushfire, and the audience is always hungry for new developments.
Only one piece of misplaced or leaked information is enough to ruin a company’s reputation. In March 2017, McDonald’s Twitter followers were astonished by a surprising and derogatory tweet about President Trump. Although the tweet was quickly identified as a work of hackers, it showed how sensitive corporate social accounts can be. It’s in the best interest of every business to provide this information transparently and responsibly, and ultimately prevent an unintentional leak.
Study good case practices
In the past two years, more than a few companies attracted public attention with business ethics practices that contributed significantly to both employee engagement and customer trust. In an unprecedented approach to company transparency, social media company Buffer made all employee salaries public, proving they aren’t holding anything back. Transparency is essential for creating and nurturing trust with your customers because it erases any mistrust or uncertainty that may arise about the products or services. Another bright example that’s worth mentioning is Youi, an insurance company from Australia. From the very beginning, they’ve been transparent and straightforward with their customers about all insurance products and services their offer, most recently including the NSW Greenslip case. Once again, they’ve proven that when you’re open about your practices, you’re ready to acknowledge possible shortcomings of your business operations, which reassures the customers you have nothing to hide from them.
These two examples show that successful companies are beginning to understand that transparent business ethics raise their reputation among consumers and employees alike. In a direct showdown, a service provider that is ready to reveal information is more likely to be chosen over a competitor that keeps its customers in the dark.
Building a culture of transparency
Simply making some business information public isn’t enough to build a transparent culture.
You need a plan and tools that allow for transparent communications. You need to be open about the reasons behind the decisions that you and other company managers make. It’s your goal to make every employee understand why it’s important to share details about hiring, growth trends, finances, strategic directions, and tactical decisions.
As one of the backbones of transparency, you should always strive for honest feedback. Motivate openness and honesty in communication and send anonymous surveys that measure employees’ engagement, leadership, and alignment with the company’s mission.
Risks of being transparent
There are strong cases for risks on both sides of company transparency. While there are many stories of marriage of business success and transparency, there are a few dark stories of companies that failed to use transparency in the right way only to have it backfire.
In a Canadian engineering firm, the founder and CEO used to personally evaluate each employee’s contribution for the year and award each person a Christmas bonus at his own discretion. However, as the company grew, more transparent processes and practices were introduced and among others and a fair bonus system was created based on pre-established KPIs. The result was that employee’s perception of transparent bonuses was much worse than when they were determined by the judgement of the founding CEO.
It’s only too easy to make too much information public, which leads to an overflow of data, which in return makes it more difficult for the management to make decisions. Such an influx of overshared information can frighten team members, as now every mistake can be interpreted that someone is altering the numbers for purpose. This not only suppresses creativity but can also reduce performance as people might want to play it low key.
Although creating a culture of transparency takes time and effort, its payoffs are hard to ignore. Apart from improving relationships between highly-motivated employees, you’ll be able to build a great ethical foundation on which to develop your future projects and attract new talent. Since transparency works both ways, if you don’t have good news, be honest and explain your reasons. Both your employees and customers will appreciate your open approach.