Building trust—with customers, with employees, or with the public—is a primary concern for every small business owner. Fostering an environment of open communication not only builds trust and improves company culture among team members; business transparency also contributes to business success and customer loyalty, ultimately benefiting your bottom line.
Here we take a deeper look at how everything from company performance and decision making to employee engagement and workplace culture are impacted by business transparency. We’ll explore just what it means to be a transparent company, some of the challenges that come with open communication, and many of the internal and external benefits that transparent companies see each day.
What does transparency in business mean?
Put simply, business transparency is the practice of honest, open, and direct communication with all of your audiences. This means that sharing information (as much as is practicable) is central to your company values, and it means it applies to everyone from stakeholders and investors to your team members, contractors, and contributors.
Honesty and directness also mean that when a mistake is made or a problem needs to be fixed, transparent businesses don’t sweep it under the rug. Instead, being upfront about the issue, communicating your plan for fixing or remedying it, and following through with updates as the process moves along are all beneficial.
Small business owners and startup founders who have embraced business transparency report that it has been fundamental to improving employee morale and the day-to-day work environment, as well as improved customer relations and retention.[1]
Why does business transparency matter for small businesses?
In short, business transparency matters the most for small businesses and startups for a number of reasons. First, when you are just starting out or have a small customer base, every single customer is critical to your continued success. And customers are more savvy and selective than ever when choosing where to spend their dollars. So if your company appears to be hiding things or lacks transparency, consumers will very quickly take their business elsewhere.[2]
The growth of social media has also allowed customers to get a better sense of an organization or brand and use that to decide if they feel like doing business with that company. The connectedness that social media creates also opens companies up for more scrutiny. And that can be fine as long as your audience feels you are coming from a place of honesty and openness. But from data breaches to product recalls to social media missteps, it also means that people will immediately notice if you’re being evasive or deceptive in your communication.[3]
These are just the potential external impacts of a lack of transparency in business, and there are a whole host of internal issues that may result as well. A transparent company should also be a transparent workplace, ensuring that employees know what is happening, why it is happening, and how it will impact them and customers.[4]
Workplace transparency about everything from company goals to the decision-making process offers both immediate and long-term benefits for employee retention, employee satisfaction, teamwork, and buy-in.
Benefits of transparency in business
A transparent business offers major benefits for your company, and a transparent workplace offers a number of benefits to your employees as well. The list of possible benefits from business transparency is long, but some of the most important and impactful are listed here.
- Improved job satisfaction: Employee performance, advocacy for the organization, and engagement are all increased or improved when people feel that their company is being open and honest.
- Better applicants and hires: When people who value transparency can see that your company is practicing it every day, they are likely to be interested in working with and for you. Thus, your applicant pool is improved and people who share your company values will pursue opportunities to work with you.
- Improved public image: Current customers, prospective customers, and the general public are all connected these days, and they are watching what businesses are doing. They want to do business with companies they can trust, and transparency is the key to building, fostering, and maintaining that trust.
- Brand equity: Your reputation is difficult to build and easy to destroy. But a culture of honesty and transparency, and company values that reinforce that transparency, will let people know what your brand stands for and how trustworthy your company is.
- Exemplary leadership: Setting a standard of transparency offers you or your executive leaders a model for how to make decisions that impact the company. This means that a culture of integrity and honesty makes it easier for people to lead and succeed at every level of your organization.
Challenges of transparency in business
No business practice is devoid of challenges, and creating a culture of transparency in your business comes with some concerns that you should be aware of.
- Nothing happens overnight: Moving toward a more transparent and open organization will take time. Simply updating your company values on the “About Us” page isn’t enough; it’s a culture shift that you should plan for and work toward continually.
- Don’t give away the store: There are areas where business transparency isn’t or shouldn’t be employed, such as trade secrets, confidential information, and so on. Don’t mistake transparency for simply giving everything away.
- Misuse of information: Your transparent communication initiatives may be launched with the best of intentions, but there is always the chance that your message could be misunderstood, misused, or distorted. Take extra care in your communications to ensure clarity while doing your best to prevent these issues.
Examples of transparency in business
From the one-on-one level to full-blown PR campaigns, there are dozens of ways that you can implement more transparency in your small business. Below are just a few great examples of ways that transparency can become a way of life for you and your organization.
- Regular, substantive meetings: Get your employees and team members together regularly, but not just for the sake of having a meeting. Instead, be sure to be candid in those meetings with your updates. Offer them the same information you currently have, solicit feedback or thoughts, and promise further updates as you gain new information.
- Answer questions when you can, and admit when you can’t: Whether in an all-hands setting or in one-on-one interactions, give as complete an answer as you can to employees’ questions. And when you don’t know, don’t be afraid to admit it. Then make a commitment to following up when you do know more.
- Show people what you do: From “day in the life” content to organic footage of your production process, showing is worth much more than telling. If current or prospective customers can see what you do and how you do it, they will inherently have more trust in you and your business.
- Where the buck stops: Whether internally with teams or externally with job applicants and the public, sharing information about salaries is a powerful demonstration of transparency. It can also help with level-setting internally, helping eliminate pay gaps and discrepancies and define bonus structures.
Tips for being transparent with employees and customers
Practicing business transparency with both your employees and your customers may sometimes require different approaches, but there are a few standard practices that can be helpful in both instances.
First, offer a way for both audiences to provide their feedback. Whether your employees have a concern about a current initiative, or your customers want to share how they feel about your product or service, encouraging honest feedback and providing a space for it is remarkably beneficial.
Second, say what you mean and mean what you say. Instead of avoiding a topic or using empty phrases and jargon, communicate in a direct and honest way.[5] And not just for the tough topics or problem areas. Get right to the point whether the news is good or bad, and you’ll notice that people have more respect and fewer questions for your company.
Finally, share your goals. Whether large or small, let people know what you are hoping to accomplish, how close you are to it, and what you are planning to do to help your business and your team get there. This applies to your direct reports too; let them know what you are hoping for and how they fit into the picture of accomplishing it.
Mistakes to avoid when it comes to business transparency
Like a lot of things in life, too much transparency can also be a bad thing. And there is such a thing as being “too transparent.”
For example, while we shared salary transparency above as a recommendation, publishing your entire company’s pay scale for the whole world to see is probably not the best practice. However, sharing that information internally and trusting your team with that information is a good practice.
Another possible mistake with business transparency is allowing it to make people (employees) uncomfortable. A culture of unrestrained transparency can make people uncomfortable or make them feel like they have to share and account for everything in their work. Establishing a clear line between beneficial and detrimental is key.
Transparency with your employees or with the public can also lead to backlash if it extends too far. Employees might feel that they are being monitored or that everything they do is being scrutinized in minute detail. Without context, the public may misinterpret the information you are sharing and spread that mistaken belief far and wide.
Finally, an excess of transparency in any business can lead people to hide things, distort information, and even withdraw—all of which is the exact opposite of your intentions in fostering a transparent company and workplace.
Strengthening business and relationships with transparency
Relationships are, as you know, at the heart of every business interaction. From sales to hiring to day-to-day duties, maintaining good relationships requires a foundation of honesty and trust. And transparency is the key to building that trust.
Whether you’re looking to bounce back from some bad press or you want to ensure that your team starts out strong, make transparency a fundamental building block of your values, beliefs, and business practices.
For expert assistance in establishing a culture of transparency for your customers and employees, connect with one of our top-rated HR providers in the UpCity network. No matter what industry you are in, there are dozens of local resources available to help you realize the benefits of increased transparency in your organization.
Sources
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- Transparency in Business: The Next Wave in Company Evolution, Slack
- 9 Out of 10 Consumers Will Stop Purchasing From Brands That Lack Transparency, ZDNet
- #BrandsGetReal: Social Media & the Evolution of Transparency, Sprout Social
- The Case For Transparency In The Workplace, And Its Impact On Organizational Performance, Forbes
- The Importance of Being a Transparent Leader—and How to Be One, United States Chamber of Commerce