Why Transparency is Important and the Dangers of Excessive Transparency in the Workplace
In today’s day and age, transparency is critical, and COVID-19 has only reemphasized this point. The pandemic has disrupted nearly every aspect of normalcy we once knew (and should have cherished) and has brought about widespread feelings of unease regarding the uncertain future. Now more than ever, people are looking to their employers for answers about job security, information on COVID-19 protocol, and reports on the company’s well-being.
According to a survey administered by O.C. Tanner, companies with increased transparency during the pandemic have seen an 85% increase in employee engagement and a 72% increase in employee satisfaction. In contrast, when employees have felt company transparency has decreased, there has been a 25% decline in employee engagement and an 87% greater likelihood of employees leaving the organization. Those numbers paint a pretty clear picture—either companies start being candid with their employees or suffer the dire consequences.
Transparency in the workplace is open, two-way communication between management and employees. Recognizing that transparency is imperative is one thing but implementing it is quite another. Luckily, we have compiled the benefits of transparency, ideas on building a more transparent organization, and the dangers of excessive transparency and how to avoid them, so you can get to work on improving your organization.
Benefits of Transparency
The benefits of transparency in business are numerous, but we’ve sorted through many and selected a few that are too important to overlook.
Gallup describes employee engagement as “…those who are involved in, enthusiastic about and committed to their work and workplace.” When employees are more engaged, companies experience higher productivity, so it is no surprise then that fostering engagement is at the top of many business leaders’ priorities. And how do you increase engagement? You guessed it—being transparent with employees. According to a Harvard Business Review study, 70% of respondents said that senior leadership continually communicating the company’s strategy and individuals having a clear understanding of how their job contributes to it are critical factors to increasing employee engagement.
Regularly communicating company goals to the staff helps employees feel like an essential factor in creating success for the organization and helps align their personal goals with that of the company. As a result, employees are more motivated at their jobs because they can see how their work impacts the business.
Hiring is no easy task—it requires sifting through hundreds of resumes, performing countless interviews, and ultimately making the ever-difficult decision of which candidate to choose. After all that work, the last thing any manager wants is to bring on a new hire only to realize they aren’t a good fit at the company. Thankfully, transparency during recruitment can reduce the risk of a mis-hire. During interviews with potential job candidates, honesty about salary, job expectations, culture, daily responsibilities, and management style ensures that companies find someone who is qualified for the job and a cultural fit. Conversely, when an organization openly shares essential details about their inner-workings, it helps candidates identify whether they would be a good fit for the job. This self-selection by applicants reduces the time wasted for both parties and speeds up the hiring process.
Improved Bottom Line
Transparency in business not only applies to internal employees and leadership but also to consumers. With countless products, services, and experiences available, consumers have the liberty of being picky when it comes to their purchases. As such, brand loyalty is more important than ever before. According to a study done by Label Insight, 94% of consumers are likely to be loyal to a company that offers transparency, and a 5% increase in customer retention increases profits by 25-95%. Put those two together, and you find that transparency leads to loyalty, which leads to a rise in a company’s bottom line. So, how can businesses create this coveted brand loyalty? Here are just a few ideas:
- Stay active in the community
- Respond promptly to customer concerns
- Admit when a mistake has been made and explain what the organization is doing to rectify the situation
- Inform consumers of changes that happen within the company
- Follow through on brand initiatives and commitments
- Provide easily accessed and detailed information on products
- Make reasonable claims about products
Building a Transparent Culture
Now that we’ve outlined the advantages of being transparent, you may be wondering how to put a plan in place to reap those benefits. Well, you’re in luck—keep reading.
Honestly really is the best policy when it comes to building a transparent workplace. Trust is vital, and the best way to gain employees’ trust is by being upfront with them about the good and, more importantly, the bad. When rumors start to spread through an organization, leadership should take the time to recognize and respond to them. As mistakes occur, management should candidly address the issue, apologize to those affected, and implement a plan to amend the situation. Being honest also includes providing employees with information that is pertinent to them. If revenue is down and the company will have to cut expenses, employees should be informed as soon as possible. Being open and truthful is not an easy task, but it is essential to create a transparent culture.
There is no improvement without feedback. Companies seeking to be more transparent should not shy away from criticism, whether good or bad. For employees, giving feedback is not always comfortable or even feasible. They may worry about ruining relationships or even putting their job at risk. As companies focus more on transparency, they should create ways to frequently and comfortably submit ideas for change, like through an anonymous forum. Even more important than allowing employees to give feedback is acting on those suggestions. If management chooses to ignore feedback, employees will begin to feel that their thoughts and voices go unheard.
Communication is king—it is the glue that holds a company together and the foundation of transparency. Communication within teams and close co-workers is usually constant and free-flowing in the workplace, but company-wide communication is less frequent and can result in information gaps. Ways to improve broader conversations across the organization are regular company updates, casual meetings with company executives, and online forums for people to pose questions. Communication is especially important right now when times are uncertain, and employees are searching for clarity on what their future might look like, both personally and professionally.
Dangers of Transparency
Transparency increases engagement among employees, ensures a more effective hiring process, and improves companies’ bottom line, but even so, there can be too much of a good thing. The mantra “everything in moderation” applies in full to transparency. As such, keep an eye out for these three dangerous consequences of being too transparent.
With increased transparency comes increased visibility. Employees may start to feel like they are under a spotlight and that everything they do is scrutinized. As a result, people will become overly cautious and hesitant to innovate for fear of messing up. In such environments, creativity is stifled, and progression comes to a halt because employees don’t have the privacy to brainstorm and develop ideas before they come to light. To combat this, management should communicate that learning is the goal—not creating the perfect idea every single time. Employees must feel confident that they won’t be punished for trying something new, even if it doesn’t succeed.
While being open, honest, and communicative is important to a transparent workplace, having too many people with too much information can hurt more than help. For one, people begin to weigh in on decisions without adequately understanding the circumstances or information. Consequently, management rejects those ideas, and the individual harbors negative feelings because of it. Additionally, widespread information sharing can cause organizational drag, as decision processes now involve too many people, which makes it impossible to get anywhere. To mitigate this issue, management must share relevant information to those who need it to succeed in their job. Marketing doesn’t need to sift through employment contracts, and engineering shouldn’t be drafting legal documents.
As a company starts to focus more and more on transparency, managers start to pay more attention to their team’s activities, ask for information on decision-making processes, and request frequent reports. When this shift occurs, there is a chance that efforts to create a more transparent environment come off as micromanagement and a lack of trust from leadership. Management can generate a positive sentiment around transparency by proactively discussing the reasons for the increased openness. Explaining the benefits of transparency will help avoid the feeling that transparency results from disapproval or distrust around the employees’ work.
To Sum it All Up
In recent years, transparency has arisen as an imperative aspect of company culture, and with a global pandemic on our hands, being open and honest has never been so important. There are three significant benefits to a transparent organization: increased employee engagement, better hiring efficiency, and higher profits. To take advantage of these benefits, management must be honest with their employees, invite feedback for improvement, and frequently communicate on a large scale. As with anything, there are dangers involved with transparency that leadership must be conscious of and work to prevent. But when management succeeds in creating a more transparent environment, they will be rewarded with a more productive, happier, and profitable organization.