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Transparency in Business: 4 Reasons You Can’t Afford to Ignore It

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The word ‘transparency’ almost seems like a kind of magical pixie dust that can make everything better just by merely saying it. Transparent offer. Transparent pricing. Transparent culture. It’s easy to rattle off, but what does it actually mean? An even better question, does it matter? Why is ‘being transparent’ such a big deal in business?

First, let’s start with a simple definition.

What is transparency?

Transparency is the condition of being easy to perceive or detect.

Two quick observations:

  1. Transparency is a condition. It’s not an end in itself. Rather, it’s a way of doing things — a process, if you will.
  2. Transparency is a condition of being. It’s applied to someone or something — what is seen is the object of the transparency.

Why transparency?

Now that we have a fundamental understanding of transparency, let’s answer the other questions centered around ‘Why?’ Here are four reasons you should care about transparency - as an individual and as a company.

1. Transparency reveals.

Transparency reveals what is true, what is real. Sometimes this is ugly, as evidenced by the Ashley Madison hack, but other times it’s heroic, as illustrated by Mark Zuckerberg’s open letter to his newborn daughter. Remember, what is seen is the object of the transparency.

It makes sense then that at the heart of transparency is vulnerability - showing up and being seen. And that’s scary since it opens the door for others to criticize our weaknesses and failures. But alongside this risk, far greater rewards are exposed. “Vulnerability is the birthplace of innovation, creativity and change,” explains Brene Brown, researcher and professor.

Even though it might be difficult at first, transparency exposes (or makes it ‘easy to detect’) areas of improvement and sparks ingenuity.

A significant aspect of fostering a transparent culture is owning our mistakes. Contrary to what we might feel, acknowledging our shortcomings displays leadership and strength. Research shows that 90% of team members across the business would rather hear bad news than no news. Incidentally, this kind of vulnerable transparency creates connection (something we’ll discuss more under reason three).

2. Transparency amplifies.

If a CEO puts key company metrics on a TV dashboard in the office where everyone can see them, obviously more people will be informed than if he keeps the reports in a password protected folder. Transparency is about getting the right information to the right people at the right time.

“Companies can’t innovate, respond to changing stakeholder needs, or function efficiently unless people have access to relevant, timely, and valid information.” - James O’Toole and Warren Bennis, Harvard Business Review

Being open and honest about our mission, our target metrics, or our current revenue helps not only educate, but also align our team. Obviously, amplifying a clear message doesn’t automatically mean everyone agrees or supports it. However, being transparent does bring conflicts and opposing ideas to the light where they can be intentionally and objectively discussed. Transparency encourages open conversations.

3. Transparency connects.

Closely related to open conversations is connection - something that we all crave as humans. Researcher and professor Brene Brown defines connection as “the energy that exists between people when they feel seen, heard, and valued; when they can give and receive without judgment; and when they derive sustenance and strength from the relationship.”

Connection happens when we’re transparent. And good things happen when employees connect and collaborate across departments - so much so that some companies engineer their office layout to encourage more serendipitous connections.

But being connected isn’t just about all the feels, it helps us do our best work. Transparency makes it easier to get back up when we fail. It creates a safe environment for radical candor, a powerful tool coined by Kim Scott. Radical candor is guidance that directly challenges the receiver (i.e. it’s actionable) and is given from someone who cares personally.

“It sounds so simple to say that bosses need to tell employees when they’re screwing up. But it very rarely happens.” - Kim Scott

Transparency fosters a connection between employees that brings out the best in them and pushes them to become even better. Over 50% of employees say that more company info and data being shared had a significant positive impact on their productivity and performance, according to a recent study on Mushroom Management.

4. Transparency empowers.

Openly sharing data, knowledge, and even radical candor empowers employees to take action. Employees who know and understand their company’s target metrics are able to generate better ideas, test possible solutions, and actively solve issues together.

“Today, power is gained by sharing knowledge, not by hoarding it.” - Dharmesh Shah, Co-founder and CTO of Hubspot

In both North America and Western Europe, a recent study by INSEAD found that empowering employees was the number one trait millennials wanted in a manager. Another study found that one in four employees have, or know someone who has, left a business due to a lack of transparency on business direction and performance.

Being genuinely transparent is one of the most powerful competitive advantages a company has in hiring and retaining the best talent.

“Transparency done right will help you recruit top talent, retain exceptional employees, and foster innovation throughout your company, and every organization can benefit from that,” explains Katie Burke, VP of Culture and Experience at Hubspot.

What next?

If we’re serious about growing our organizations and effecting change, transparency is essential.

The first step towards a transparent culture is recognizing and acknowledging that you’re not as transparent as you should be. Authentic, ongoing transparency doesn’t happen overnight. Changing the culture is hard and takes a committed effort, but it’s not impossible.

It starts with you showing up and being seen. The cartoonist and co-founder of gapingvoid.com, Hugh Macleod shares this on changing corporate culture - “That is where the real change happens: in our hearts, not in the PowerPoint deck.” Exactly.

hugh-macleod-gapingvoid-art

The question now is how transparent is your business? Are you a Mushroom Manager, keeping your employees in the dark so you can maintain the illusion of power? Don’t worry, there’s hope!

Discover the three signs of Mushroom Management and learn how to stop.

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