Do you have a trust deficit? The case for radical transparency as a company value

June 07, 2021
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An AltoPartners Blog Post

The Covid-19 pandemic has been a moment of truth for corporate culture. Management consultancy company Bain says that many leaders began to interrogate whether their actions and choices during the pandemic reflected their company values. A key question came up: Is there a disconnect between what organisations say and what they do?

The connection (or gap) between what companies say and what they do is closely aligned with the degree to which the company is transparent. Transparency means a company is open and honest about its plans and operations, and its employees are also open and honest with one another and with customers. Then there’s radical transparency - the belief that all corporate entities should be honest, open, and straightforward and companies should also make employees feel welcome to share their thoughts and opinions.

Openness and honesty seem like a no-brainer. But companies may not actually view transparency as a value they can get behind.

In a July 2020 corporate value statements study conducted by MIT Sloan Management Review, only 13% of 562 large (mostly U.S.) companies, listed transparency among their official corporate values. (The value listed most was integrity, with civility coming in last). MIT Sloan then sifted through 1.4 million employee-written reviews on Glassdoor (a website where current and former employees anonymously review companies) to gauge the impact of Covid-19 on employee perceptions of corporate culture – and transparency came up as a big issue.

The study boiled the data down to 50 companies that experienced the biggest gain in their culture values score during the first six months of the pandemic, and found that “the top 50 companies excelled at transparent leadership, effective top team (senior leadership) communication, and clearly communicating strategy throughout the organization”.

The Org, a start-up that is building a database of organizational charts for leading companies, also looked at transparency during the pandemic. It conducted a study — with more than 1,000 respondents across all ages of working adults in the U.S. — to gauge businesses’ successes and shortcomings when it came to transparency. “Nearly half of respondents said that since the start of 2020, there has been no improvement in transparency at their place of work - despite a desperate need for this, to counteract the difficulties that come with remote work.”

So, who is transparent then?

The Org published a list of the world’s 100 most transparent companies at the end of 2020. The list was based on a list of factors: people, values, culture, processes, technologies, strategy and growth/funding numbers. GitLab, the world’s largest all-remote organization, came in at number one. Netflix, Airbnb and Fitbit are some of the more well-known names in the top 20. Its not just the new kids on the block either. By putting its supply chain in the public eye, Patagonia- the poster child for sustainability - allows customers to know exactly where their clothing is coming from. The company’s “Footprint Chronicles,” provide consumers with an almost-unprecedented window into their purchasing power, allowing everyone to make more eco-friendly decisions. Lower down on the list, IBM (69), T-Mobile (86), Airbus (87), Vodafone and the Coca-Cola Company (78), all received recognition for efforts to improve transparency levels on a range of issues, from information sharing to supply chain management, quality and accessibility of disclosures and the treatment of private data.

What does it mean to be transparent – and why do it?

From a company point of view, moving to a more transparent culture might be a little intimidating. But Front Page, the blog run by customer communication company Frontapp.com, says there are good reasons to foster transparency: an environment that fosters transparency is the single strongest predictor of employee happiness – even if it means being upfront and honest about challenges and mistakes. And being transparent might mean companies can broaden their hiring horizons: in The Org’s study, nearly 70% of respondents said they would take one job offer over another if the one company was more transparent.

Where to start?

  1. Ensure all employees know what the organisational chart looks like. Don’t keep responsibilities and job functions a secret. Accompany that organisational chart with a simple list of responsibilities so each employee can take ownership of a specific set of tasks.

  2. Share results. Don’t just share plans, let employees see what worked and what didn’t. Leaders who speak openly about the state of the company gain trust.

  3. Hire the right people. It seems obvious – but to maintain a transparent culture as your company grows, hire people who are excited about transparency.

  4. Establish open communication channels. Ensure that everyone in the company knows where to turn when they need information.

  5. Don’t assume that all employees know what they are working towards. If needs be, run a “refresher” onboarding session for all employees – does everyone know the company vision and what the leadership is working towards attaining? Is everyone aware of the strategic framework and how their job fits into the bigger picture?

Real-life examples of transparency (from Front Page):

  • Buffer published the salaries of everyone in the company, from the co-founder and CEO down to those in entry-level positions.

  • Stripe asks all employees to CC every email to various mailing list archives. These archives allow anyone in the company to access sent emails by topic.

  • Mailchimp publishes an annual Transparency Report to share the requests the company has received for user account information and how they determine what and when they will disclose.

  • Asana publishes detailed notes about what was discussed at their board and upper management meetings.