You cannot open a newspaper these days without hearing calls for ‘greater transparency’. Whether about executive pay, MP’s expenses and taxes, the BP oil disaster and petrol prices…or even Saturday night TV scheduling!
And as the world becomes an even better connected place - with the internet and a 24-hour culture of information sharing - there really is no hiding or keeping secrets. For businesses, whether they like it or not transparency is here to stay. Organisations that fail to embrace it, may often find themselves in greater trouble.
Why is it important?
Your transparency as an organisation can play an important role in the type of reputation you develop amongst your customers, investors, stakeholders, employees and peers. It's so important, because transparency is a key component in developing trust. If you're open with me, if you share things with me, and seemingly have nothing to hide, you will build greater trust with me. If I trust you, I will believe in you. If I believe in you, I'll buy your products, work for your company, and buy your stock. And all this is vital for your bottom line and your results.
Research by the Corporate Executive Board (CEB) has revealed corporate culture to be directly related to financial performance, with companies with more open and transparent cultures proven to be more successful, more adaptive, and to have systems that are self-correcting.
Through their research ‘Why Integrity Pays’ they have found companies who spend time and effort on building a high-integrity corporate culture achieve:
16% higher 10-year shareholder returns
12% higher rate of employee discretionary effort
67% decrease in the most significant forms of business misconduct
But what does the concept of transparency really mean for businesses? And how can a leader effectively breed such a culture within their own organisation?
What is transparency in business?
At its simplest level, transparency within an organisation is about being open, open about your business practices, your products and services, your finances, about anything... even your mistakes. It does not mean you have to air your dirty laundry in public, or share inappropriate information, but to err on the side of openness with your people is now an advantage.
Developing trust through transparency as a leader
So what do leaders need to do to be more transparent internally? We suggest the following:
Be open and honest. Be straight talking
Be transparent with your motives. Never have a hidden agenda
Never lie, never twist the truth
Make sure that your employees know where your company is going and why
Provide people regular updates on the company and performance. If in doubt, over-communicate
Encourage questions and challenge. Be open to others' views
Admit your own mistakes. Never punish other people's mistakes, always focus on learning from them.
Developing trust through transparency as an organisation
For your organisation as a whole, you also need to develop trust through your transparency. Here's what we invite you to do as an organisation:
Proactively develop a culture of transparency. Maximise trust in your culture. Minimise fear. Fear is the enemy of openness & transparency.
Share information with your employees about most aspects of the business. It matters to them and will get them more engaged. If in doubt, share it out. Make sure you have regular forums and multiple methods for sharing.
Develop all of your managers to be great people managers. Your managers (including your top leaders) need a transparent managerial style themselves. They also play a critical role in encouraging all employees to be open and transparent.
Have clear and simple pay structures and organisational levels. A lack of transparency around title and money has a disproportionately negative affect.
Encourage people to speak up and say what’s on their mind or what’s troubling them. When people feel they can be open about anything, you'll minimise the organisation’s underground dynamics and ‘coffee machine gossip’. And you'll find out about important issues that are affecting morale or company performance.
No-one said it would happen overnight!
It is important to recognise that developing transparency requires commitment over the long-term, and that you develop it (or undermine it) one step and one action at a time. The good news is that if you embrace it, you may soon find it has become one of your greatest assets and a key contributor to a healthy bottom line.