4 Ways Transparency Separates Companies That Thrive From the Ones Lucky to Survive
Join Entrepreneur's The Goal Standard Challenge and make 2017 yours. Learn more »
The word “transparency” has been thrown around so carelessly that it’s become a flavor-of-the-month corporate buzzword. But this reputation is neither fair nor justified. Building transparency into your company culture is one of the best things you can do for your business.
Transparent organizations are 50 percent more likely to report lower turnover rates than their industry average. When employees understand how they and their colleagues are benchmarked, and how their work impacts the success of the organization, they’re much more motivated and committed to the company mission.
Moreover, companies that admit to their mistakes and maintain an open dialogue with consumers enjoy higher customer loyalty. And of course, transparency is highly attractive to investors, which is critical for startups that hope to go public or get acquired.
But what does it mean to build transparency into your company culture, and how do you find the right balance? Here are four lessons I’ve learned about transparency as the CEO and founder of glispa.
1. The line between transparency and TMI.
Why has transparency become so attractive for businesses? It’s partly about the fact that human beings value transparency in our interpersonal relationships, but the push for greater transparency is also driven by our shifting cultural norms. Whether we’re active on social media or do most of our shopping online, many of us have willingly surrendered a certain level of privacy.
To many people, transparency means vulnerability, and vulnerability can be terrifying, so it’s critical to draw the line between transparency and TMI. Revealing everything, all the time, could come back to haunt you. But practicing transparency can make you stronger as a person, as a team, and as a company.
We use every opportunity to keep the team informed about the company's strategic direction, without disclosing the details of specific deals. Using the OKR (Objectives and Key Results) goal-setting system, along with related KPIs (Key Performance Indicators), enables us to share quarterly revenue goals without compromising details on costs. Every employee can view the status of running campaigns to better understand and serve our clients.
Remember, there’s huge a difference between protecting privileged information and keeping employees, customers, clients or investors in the dark. The former is a way to protect your company, while the latter is problematic and leads to an environment of suspicion and mistrust.
2. The secret to success? Don’t keep secrets.
One of our team members described her former employer’s frustrating tendency to remain tight-lipped. "At my last company, the executive team held things so close it was like 'Fight Club,'" she said, "We didn’t know where we were going. Now it’s clear how much that hindered our ability to be successful." If the first rule of your company is to not talk about your company, you’ll suffer from a lack of clear communication both internally and externally.
It’s disorienting and demoralizing to work for a company with a culture of secrecy. People become disengaged, lose track of the firm's strategy and rack up billions of dollars in lost productivity. And yet there are still are businesses -- from young startups to Fortune 500 companies -- that are reluctant to share even the smallest shred of information. If your employees don't know where the firm is going, how are they supposed to help you get there?
From day one, I wanted all glispa team members to be fully informed about revenue, profitability and strategy. This allows them to make better decisions, which has two significant effects -- it improves the business and makes it possible for each team member to be stronger individual contributors.
Every employee is able to see the goals of their colleagues across all departments, giving them an overview of everyone's responsibilities and the goals. We use Weekdone to ensure that all employees are aware of both our company and personal OKRs, including my own.
3. Transparency is critical for relationships.
When recruiting for a very senior role, we spend a lot of time discussing what's wrong with glispa, as well as what’s right. We lay everything on the table, and expect the same level of honesty from prospective employees. We want them to divulge their achievements, their limitations and areas where they want to grow. Once everything is out in the open and we determine that we have a mutual fit, we can hire with confidence.
Transparency shouldn’t be limited to those inside the company. Being open and honest with potential partners seems like common sense, but some firms are still hesitant to do it.
Collaborating with a company that’s opaque is incredibly difficult. We’ve worked hard to tear down those barriers, and we’re willing to disclose information up front. That’s critical for a business built on partnerships between multiple stakeholders.
Our partners are always aware of what we can and cannot offer. It doesn’t help anyone to build a partnership while concealing important details. Just as we expect to know the direction a partner wants to take going forward, we endeavor to be open and honest about our expectations as well.
4. Turning employees into entrepreneurs.
When you're part of a growing company with a transparent culture, you’re exposed to more opportunities. You’re free to learn about all aspects of the business, from sales and cash flow to accounting. I had a similar experience before starting glispa, which inspired me to build a company that was open and honest from day one.
That strategy of encouraging employees to branch out and learn about every aspect of the company has had a measurably positive impact on our company culture. It even inspired a handful of glispa team members to start their own businesses -- and I’m extremely proud of them. At the same time, it provides an opportunity for current and future employees to learn new skills and gain more experience.
Our goal was to build an open and transparent organization from the very beginning. Free, unrestricted access to knowledge and information helped our enterprise grow into a thriving company, where our employees know they’re respected and our clients feel secure in our partnerships.