You can be on Entrepreneur’s cover!

Let's Be Real: Why Transparency in Business Should Be the Norm It's clear there's a real need for businesses to be open -- with both consumers and employees.

By Robert Craven

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

The concept of "need to know" has undergone a significant shift in recent years. With the entire universe of information only a click away and social media platforms keeping everyone constantly connected, individuals increasingly feel they need to know -- and share -- everything.

Whether it's product reviews, political opinions, innermost thoughts or even a photo of today's lunch, people are living their lives completely out in the open, laying bare all manner of minutiae online.

This expectation for transparency has extended beyond personal interactions and is now a reality in business. Across all industries, transparency has never been more important to a successful business model. Withholding or cleverly reshaping information is no longer a viable option for this new era of consumers who are savvier than any generation before them and for whom skepticism seems to be a default setting. In order to build brand loyalty, companies need to first build trust.

There's a common misconception out there about transparency. Far too often, companies see it only as a tool to be used when owning up to a mistake or righting a wrong. This approach is shortsighted and isn't an effective way to build trust. Customers will be far more forgiving of mistakes if a company has a history of being forthright with all interactions -- not just the negative ones.

Related: Fakepreneurs, a Modern Epidemic

Instead of being scared by transparency, businesses should embrace it as way to improve service and increase customer loyalty. A recent study from Harvard Business School took a look at the concept of transparency in a restaurant setting where the cooks and customers could literally see each other during the food prep and dining experience.

The results showed a striking improvement of 17 percent in customer satisfaction and 13 percent faster service when customers and cooks can see each other. This is a fascinating look at the power of transparency, and it indicates that customers are happier when they feel they've been made part of the process. Plus, I have a feeling that if we all knew our customers were able to see our every move, we'd be more thoughtful and precise in the decisions we make.

And it's not just consumers. Employees put a high premium on transparency in their interactions with different levels of management, going as far as naming it the top factor in determining their happiness and satisfaction in the workplace. No one wants to work for a company if they don't know what it stands for and what its long-term plans are. This is just further indication of people's growing need to know about every aspect that affects their lives.

I believe that more companies will see success if they begin to view their customers as essentially an extension of their internal operations teams. The actions of a single morally corrupt company have the power to paint an entire industry in a bad light. But when you practice transparency, you don't need to worry about being tainted by association when a company in your industry does something that lacks integrity.

There are many examples of how companies are embracing transparency in their daily operations. Social media company Buffer got a lot of attention last year when it announced it had made all employee salaries public information. Nordic bank Nordtec recently released a series of online anti-marketing ads aimed at demonstrating exactly how transparent they are in a humorous way.

In my own company, we started something called the Transparency Project, an online web series that provides a behind-the-scenes soup-to-nuts look at how MegaFood operates. Nothing is off limits, and our goal is to engage and inform anyone who's interested in seeing what goes into making our supplements. It was an experiment for us, and it seems to have paid off.

Regardless of the industry, there are a few simple steps every company can take to become more transparent.

Related: What to Do When Employees Wonder Where All the New Funding Will Go

1. Be personally transparent

Pick a medium or two (LinkedIn if your customers tend to be other businesses; Twitter or Facebook if consumers) and share your personal thoughts, ideas, likes, dislikes -- the concept of transparency must start at the top. And don't farm out your social media either -- do it yourself!

2. Be internally transparent

Transparency starts from within. If not everyone in your company believes the company -- or CEO -- is transparent, then they'll have a hard time portraying transparency to the marketplace. Be an open book company, and do things like hold town halls to update the entire staff on progress, risks and opportunities.

3. Be transparent with your corporate objective and then give updates

For example, let people know that you're trying to find a new supplier in order to take your quality to another level, and ask for their help. Be careful not to make promises though, and share all sides of any argument.

4. Be bold

If people come to trust you and your company through transparency, they'll be far more forgiving when you explain why something didn't work or when you make a mistake. Don't be afraid to experiment with transparency and look for innovative ways to develop a deeper, trust-building dialogue with your customers.

It's clear that whether it's in dealings with consumers or internal practices with employees, there's a need for businesses to meet the expectation of transparency in a real way -- and not just as an afterthought or as a marketing tactic.

Related: Embrace True Transparency, and You'll Experience More Success

Robert Craven

CEO of MegaFood

RObert Craven is the CEO of vitamin supplement maker MegaFood

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

Editor's Pick

Side Hustle

He Took His Side Hustle Full-Time After Being Laid Off From Meta in 2023 — Now He Earns About $200,000 a Year: 'Sweet, Sweet Irony'

When Scott Goodfriend moved from Los Angeles to New York City, he became "obsessed" with the city's culinary offerings — and saw a business opportunity.

Personal Finance

How to Get a Lifetime of Investing Experience in Only One Year

Plus, how day traders can learn a lesson from pilots.

Branding

94% of Customers Say a Bad Review Made Them Avoid Buying From a Brand. Try These 4 Techniques to Protect Your Brand Reputation.

Maintaining a good reputation is key for any business today. With so many people's lives and shopping happening online, what is said about a company on the internet can greatly influence its success.

Travel

Save on Business Travel with Matt's Flight's Premium, Only $80 for Life

This premium plan features customized flight deal alerts and one-on-one planning with Matt himself.

Science & Technology

Here's One Reason Urban Transportation Won't Look the Same in a Decade

Micro-EVs may very well be the future of city driving. Here's why, and how investors can get ahead of it.

Marketing

I Got Over 225,000 Views in Just 3 Months With Short-Form Video — Here's Why It's the New Era of Marketing

Thanks to our new short-form video content strategy, we've amassed over 225,000 video views in just three months. Learn how to increase brand awareness through short-form video content.