5 practices to increase transparency in your business

by Christos Mitsis, on Dec 7, 2021

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Transparency has become a vital business trait for both employees and customers.

Businesses can no longer get away with covert cultures and covert practices. People don’t want to work for secretive companies and customers don’t buy from companies they don’t trust or share the same values.

So, leaders have to understand why transparency is important in business and how they can build a transparent company.

Here is a quick overview of our business transparency application suggestions:

  • Understand the role of communication in transparency
  • Speak with your decisions, not your words
  • Practice honesty and transparency
  • Start from the top and lead by example
  • Create transparency in business operations

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Understand the role of communication in transparency

Transparency is the product of honest and effective communication practices.

Taking down information barriers should be your priority if you want to create a transparent business environment.

Transparent companies establish communication channels that allow information to flow laterally and vertically. For example, marketing and sales communicate freely and managers don’t withhold crucial information from a misplaced sense of secrecy.

Challenge the traditional customs that divide companies internally and allow your people to get more involved with your company. People will amaze you with their willingness to step up and support the business.

Speak with your decisions, not your words

Every decision is a piece of communication.

No matter how simple or insignificant it looks. From hiring and promoting to parking spaces and break time, every decision is a powerful signal. More powerful than words.

In fact, your words have no impact when your decisions contradict them. For example, let’s say you preach to your teams that “progress” towards the goal matters most. However, at the end of the quarter, you end up promoting the team leader that hit their goal, not the team leader whose team members grew the most. 

The former has a team whose morale and performance was a roller-coaster. The latter, a team that has steady growth in performance and strong bonds between the members. So you communicate to your people that you care more about hitting the goals than displaying healthy progress.

Decisions speak louder than words.

Practice honesty and transparency

Honesty and transparency go hand to hand.

They are the two sides of the integrity coin. It’s impossible to build a transparent organization if your words don’t match your decisions.

First, encourage your people to hold you accountable. When people call out a decision that contradicts a previous statement, don’t punish them. Say “thank you.” When people acknowledge a change in how the team operates, don’t ignore it. Confirm the change. When people highlight a mistake, don’t try to hide it. Admit it and work to mitigate it.

Second, be candid about both victories and losses. Don’t exaggerate the effect and results of your wins. Doubling the numbers to make it look like an even bigger success makes your people doubt their performance and distrust other business numbers. Don’t hide under the rug the losses and failed attempts. Turn them into lessons and fuel people’s resolve with an experimentive mindset.

Reinforce the behavior you want to see from your people and be honest about the business results. People notice the inconsistencies.

Start from the top and lead by example

People emulate the behavior of their managers.

If the team leader isn’t being honest or transparent, then their team members won’t be honest or transparent no matter what the team leader says.

A transparent culture is built from the top-down, not by dictating it but enabling it. When people see their managers expose their mistakes and ask for honest feedback, they get the message that it’s OK to make mistakes and they’re open for feedback in return.

When leadership exposes the company’s strategy to its employees, it communicates that it trusts them. When leadership invites its employees to participate in developing the strategic plan, it communicates that it values its people’s opinions.

In return, employees will take responsibility for the plan and be transparent about their approach.

Leadership has to model the behavior it desires to see.

Create transparency in business operations

It’s the easiest to develop but should not be the first.

Sharing tactics and being fully transparent on how your business operates has beneficial effects internally and externally.

Internally, it’s clear who is responsible for every decision and action. People share information, feedback and proactively treat would-be problems. They quickly develop solutions and are not afraid to ask for help. Every decision is put into context and as a result, it’s rarely questioned.

However, demanding business transparency in the absence of a trusting environment has the reverse effect. People feel micromanaged and exposed. They feel that these transparent practices only serve as a means for management to “catch” them doing something wrong and use the information against them.

A culture full of trust and safety will only benefit from transparent operations.

Externally, the customers perceive the services or products delivered to them more valuable when they have an “insider's view”. When the customer can see the patisserie pouring the chocolate and baking the cake in real-time, they are more inclined to trust the business and thus buy its sweets. Various experiments showed that transparency in business operations benefits online services as well.

People are more inclined to trust a business that is transparent in its operations and thus become their customers.

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