Transparency in business: why it pays to tell it like it is
We take a look at what transparency in business means and how you can achieve it.
In all relationships, trust is the key to success. The workplace is no different. Building trust is the single most effective way to establish valuable and lasting relationships between you and your employees, boosting motivation and creating a positive and proactive work environment geared for success. But how do you create this culture of trust?
It all starts with transparency. It’s a foundation that helps employees feel like an integral and valued part of the workforce. Without transparency, you can’t fully engage your employees or connect them with your business and its values. Let’s look at what we mean by transparency in business and how to achieve it.
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What is transparency in business?
Business transparency means establishing an honest path of communication between you and your employees. A transparent company is open to sharing information about performance, strategy and internal processes – including any shortfalls – while welcoming feedback from employees at all levels. This two-way conversation helps create a workplace culture of openness and honesty, where individual employees feel part of a broader team that values and respects them.
There are different levels of transparency when it comes to business-investor, business-customer and employer-employee relationships. Let’s take a look in more detail:
For employees, transparency is about open and honest communication. Employees are most engaged and motivated when they feel a level of trust from their employer. Indeed, a 2019 survey by Peldon Rose1 revealed 80% of employees feel being appreciated is crucial to their happiness in the workplace.
This can be achieved through regular updates about company strategy and direction, establishing clear values, encouraging feedback and communicating truthfully about the company’s financial situation.
Transparency has a significant impact on customer loyalty, particularly in terms of company values. A recent Zeno study of 75+ brands2 found that over 94% of global consumers are more likely to engage with companies with a clearly defined purpose or set of values.
It suggested that these companies have four times more purchasing power, are 4.5 times more likely to be recommended by customers, and are 4.1 times more likely to be considered trustworthy.
Investors and shareholders
Transparency for investors is about having easy access to financial information, including price structures and third-party audited finance reports. Making this information readily available gives potential funders the confidence they can trust your organization to provide accurate and up-to-date records and make the due diligence process run more smoothly.
Why does transparency in the workplace matter?
To many businesses, the idea of transparency can seem daunting. Some employers may even worry that transparency will make them appear less authoritative or decisive. But this isn’t true. Employees want to feel connected and trusted within the workforce. They want to be a part of an environment that is open and values their input.
Transparency and trust are particularly important for remote and hybrid workers, who are likely to spend most of their working hours completely disconnected from any physical work environment. In the wake of the pandemic, this makes transparency a vital tool in establishing and retaining a company culture that keeps your employees active and engaged.
Here are some of the ways transparency, or lack of it, could affect your business:
Research by Deloitte shows that Millennials and Gen Zs trust companies far less than previous generations. Company reputation among both these groups is important because of its impact on the perception of products and services and on your ability to recruit new talent.
And that’s a big problem. A company culture of trust and transparency is becoming more of a prerequisite for job-seeking candidates. In particular, Millennial and Gen Z groups consider company values, employee satisfaction ratings, and the ability to attract and retain staff as important factors when applying for roles.
A recent survey by EY, placed openness and communication in the top five priorities for job seekers, with 59% of respondents citing transparency as very important in a potential employer.3
According to Salesforce, employees who feel their voice is heard are 4.6 times more likely to feel empowered to perform at their best.4 Finding ways to maintain productivity has been particularly important through lockdown, with companies having to trust their employees to work at full capacity even outside the workplace.
As we move into a world where flexible and hybrid working is increasingly common, innovative companies will learn to use transparency to empower people wherever they work.
It’s all about trust. Transparent companies build stronger bonds of trust with their employees that encourage higher levels of commitment and more employee engagement. According to EY, those with a low level of trust in their company said this would be the major influence behind them looking for another job (42%), working only the minimum number of hours (30%), and being less engaged and productive (28%).
LinkedIn data suggests that employees have ten times more social connections collectively than a company alone.5 This means that when employees share positive words on social media about your company, it has a far wider reach and a far greater chance of creating a positive, lasting impact than self-promotion through company channels.
The Peldon Rose study says that the happiest workers are most likely to connect tose positive feelings to a good company culture. The problem is that only 22% of workers say their company actually has a good culture. Companies can do a lot more to help establish positive work environments, including encouraging friendships through social and team-building activities and promoting wellness with ongoing health and well-being initiatives.
How can a business leader create an environment of transparency?
So, what can business leaders do to help build a culture of transparency into their workplace? Here are five ways to get started:
Employees should feel comfortable approaching any level of management at any time. Making yourself available during certain hours assures employees that you’re on hand to help if an issue should arise.
While engaging in regular team meetings is important, managers should also have 1:1 check-ins with team members, giving them the space to ask questions or raise concerns they don’t feel comfortable sharing in a group.
Share and explain decisions
Sharing information, both good and bad, will help promote a culture of trust. It’s always best that your teams find out about business decisions from you and not the rumor mill.
Don’t try to hide the truth in complicated reports and business jargon. Your employees will have a lot more respect for you if you say it like it is, and will be more likely to repay you with valuable feedback to help the business thrive.
Act on feedback to build trust
Embracing transparency requires follow-through, listening carefully and acting on feedback received by employees. Leaders must exhibit behavior they want their teams to imitate, addressing areas of change in a timely and constructive way to build lasting trust.
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