I work with organizations in both the for-profit and non-profit sector, i.e., hospitals, Universities and churches. During one of those engagements I was struck by the organizational hierarchy’s desire to keep some challenges hidden while they tried to figure it out by themselves.
Now, in some instances this can be appropriate, so that chaos and panic does not become the order of the day. However, in this context, it would have been better to involve others in the conversation in order to devise a solution to move the organization forward. As a leader, when you operate a business, the ability to leverage business transparency for the organization’s benefit can lead to intangible rewards or unsettling perceptions about trustworthiness.
What is business transparency and why is it so important? Business transparency is simply defined as clear, unhindered honesty in the way a company does business. However, it is more than just that. It includes the full, accurate, and timely disclosure of information. Not only is there an ethical value to transparency, but there is also a practical value. Stakeholders in a business want to know as much information as possible about the operations of the firm.
The Power of Assurance
Transparency translates into assurance. As information is disclosed, questions are answered and uncertainty dissipates. Company-wide transparency has been shown to reduce employee attrition and boost morale. If we dig even deeper, financial transparency is important to investors in your organization because it points to the immediate health of the company and quality financial reports allow for effective analysis. These financial reports should be designed to reveal rather than hide data. Investors will have confidence and feel better about the risks of providing their resources.
The Benefits of Transparency
There are two immediate benefits of business transparency that I want to point out. In a for-profit context, the market gives a higher value to companies that are upfront with investors and analysts which immediately impacts the organizations bottom line. From a personnel perspective, management transparency is one of the top factors when determining employee happiness. For example, clearly communicating team changes in a timely manner will keep employees confident in the organization’s leadership. They will feel secure in their jobs, and in their specific role and contributions. Management transparency is one of the top factors when determining employee happiness. Click To Tweet
Vision and Transparency
It is also important that the vision and values of the organization are clearly communicated to employees. This helps provide a clear picture of where the company is headed. At the end of the day, when leaders demonstrate transparency by valuing and advocating transparency, the organization will naturally develop a culture of honesty, collaboration and strong leadership. Employees who trust their management tend to work harder for them, which helps everyone to grow while making it less likely for employees to leave.
Point of Clarity Quote:
Truth never damages a cause that is just.”
― Mahatma Gandhi