Get All Access for $5/mo

Can Radical Transparency Work for Your Business? Five tips for a company culture where everyone knows everything.

By Nadia Goodman

Opinions expressed by Entrepreneur contributors are their own.

When a startup is just getting off the ground, there are only a few employees, and they know everything about the business. They have to. As the company grows, that dynamic tends to shift until only those at the top are fully informed.

Recently, more leaders are resisting that shift. They're adopting policies of radical transparency, meaning that typically private information -- such as salaries, email content, or performance metrics -- is available to everyone at the company.

Transparency may be especially helpful in today's uncertain environment. We experience uncertainty as a threat, which inhibits perception, cognition, creativity, and collaboration -- all the skills we need to do our jobs well. Working at a transparent office creates a sense of certainty, allowing employees to flourish.

"When everything is transparent, a new hire can look around, see who is successful, and mirror themselves to that individual," says Ryan Smith, CEO of Qualtrics, a Provo, Utah-based cloud survey business that makes individual performance metrics, goals, and tasks visible to everyone, as well as all meeting notes and paid time off. "They execute at a higher level."

Related: 3 Ways to Think Outside the Box

SumAll, a New York City-based data analytics company, takes transparency even further. Salary information, performance reviews, and stock shares are visible to everyone at the company. "It's a giant living experiment," says CEO Dane Atkinson.

The primary benefit, according to both CEOs, is that employees stop focusing on internal politics and spend their energy making the company better. "Transparency has created a much more collaborative environment," Atkinson says. "Internal competition is pretty much eliminated."

As you think about whether a radically transparent model would work for your business, consider these tips.

1. Start when you're small. While your company is still small and dynamic, that's the time to make it radically transparent. "Having this conversation with the CEO of Amex would get pretty difficult," Smith says. "It's like trying to turn a cruise ship." By starting early, you weave that culture into your company's DNA and attract only employees who are motivated by full accountability.

2. Take issues one at a time. When creating a radically transparent business, Smith recommends incremental exposure. "Thinking about it all as a whole is very difficult and very daunting," he says. Instead, each time you would typically hide information, ask yourself, "Why can't I share this with everyone?" Unless someone comes up with a strong argument against it, always opt for openness.

3. Make time to explain your logic. As a radically transparent leader, you must be honest and fair. Employees need to understand how you came to your decisions and why. "You do need to spend a huge amount of time with your team explaining everything," Atkinson says. The extra time will pay off--ultimately, your effort will inspire trust and loyalty.

4. Clearly outline the steps for advancement. Transparent companies need clear measures for bonuses and promotions. You might set specific performance goals or create a rubric that combines skills and outcomes. An objective approach reinforces fairness and prevents you from promoting anyone beyond his abilities. Smith sums it up, saying, "We're interested in the competent being promoted, rather than the confident."

5. Question your own discomfort. Making traditionally private information available naturally stirs up discomfort. "A lot of times it's uncomfortable because it's never been done before," Smith says. Whenever Smith hesitates, he asks himself if sharing that information would help or empower his employees. If it would, he does it. Once it's out in the open, discomfort quickly fades.

Related: 4 Ways to Build a Culture of Innovation at Your Startup

Nadia Goodman is a freelance writer in Brooklyn, NY. She is a former editor at YouBeauty.com, where she wrote about the psychology of health and beauty. She earned a B.A. in English from Northwestern University and an M.A. in Clinical Psychology from Columbia University. Visit her website, nadiagoodman.com.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Science & Technology

5 Automation Strategies Every Small Business Should Follow

It's time we make IT automation work for us: streamline processes, boost efficiency and drive growth with the right tools and strategy.

Business News

Former Steve Jobs Intern Says This Is How He Would Have Approached AI

The former intern is now the CEO of AI and data company DataStax.

Business Process

How CEOs Can Take Control of Their Emails and Achieve Inbox Zero

Although there are many methodologies that leaders can use to manage their emails effectively, a consistent and thought-through process is the most effective way to systemize and respond to emails and is a step of stewardship for the effective leader.

Side Hustle

'Hustling Every Day': These Friends Started a Side Hustle With $2,500 Each — It 'Snowballed' to Over $500,000 and Became a Multimillion-Dollar Brand

Paris Emily Nicholson and Saskia Teje Jenkins had a 2020 brainstorm session that led to a lucrative business.

Marketing

5 Critical Mistakes to Avoid When Giving a Presentation

Are you tired of enduring dull presentations? Over the years, I have compiled a list of common presentation mistakes and how to avoid them. Here are my top five tips.

Leadership

Visionaries or Vague Promises? Why Companies Fail Without Leaders Who See Beyond the Bottom Line

Visionary leaders turn bold ideas into lasting impact by building resilience, clarity and future-ready teams.