Radical transparency has drawn media attention in recent years, as more and more notable business leaders go public about making it part of their company cultures and processes. But what is it, exactly?

Radical transparency can be loosely defined as actions and approaches that radically increase the openness of organizational processes and data. This practice is intended to create an environment where people feel psychologically safe to communicate with one another directly.

It may not be something every organization will want to embrace. However, keeping all information on executive lockdown can result in an unproductive – and potentially stifling – environment for your business.

Why consider going transparent?

Trust, loyalty and commitment provide a solid foundation for any organization. With transparency, you stand to gain ground in each of those cornerstone elements, but it’s up to leadership to set the tone.

When business leaders can share what prompted decisions to be made, what the consequences will be, and who will be impacted by those consequences, it gives employees the confidence to keep moving forward and embrace change.

For example, say your management team decides to hire new staff or cross-train current staff. Sharing all information that impacts the internal team cuts down on the amount of questions, fears and potential fallout that might take place if the reasons for the decision are not communicated in a transparent manner.

Announcing any major changes without transparency – not offering up the reasoning behind the decisions – may have a negative effect on morale. Your employees might think management has a lack of awareness of their workload and workflow or, worse yet, is oblivious to the time and effort required to do their jobs.

Rolling out staff changes without transparency may also cause anxiety that could lead employees to question their current roles or develop doubts about staying with your company long-term.

What hotel stays can teach us about radical transparency

Checking into a hotel room is always an exercise in trust. Many major hotel chains use radical transparency about their brand promise to win customer loyalty.

When you stay in a hotel – whether it’s a budget chain or a luxury high-rise – the more you know about how it’s run, how the rooms are maintained, the quality of the linens, etc., the more comfortable you are sleeping there.

And when you sleep comfortably, with no unexpected incidents, you’re very likely to become a loyal customer and even recommend that hotel to your friends and colleagues.

That’s why, when you walk into your hotel room, you see an itemized checklist that defines the hotel’s standards and practices for housekeeping and maintenance. You’ll also usually find a list that specifies which refreshments are complimentary and how to request more pillows, towels and little shampoos.

These printed explanations set your mind at ease. They assure you your room will be the way you want it and tell you who to call if it’s not. Those in-room assurances tell you what to expect, and you’re able to validate it on the spot.

That’s how radical transparency builds trust.

When does transparency become TMI?

One CEO made headlines a few years ago for stating that his company made everyone’s salary public knowledge, explaining his belief that what people earn shouldn’t be a secret.

Since then, company-wide sharing of salary information has become a much-talked-about aspect of radical transparency. It may be a nice idea in principle, but it has the potential to open your organization up to a great deal of scrutiny and legal hot water.

Suddenly making all salaries public could be a recipe for disaster, or at least a whole lot of feather ruffling. You could face discrimination complaints and lawsuits, or experience a wave of resignations that might cause certain departments – or your entire company – to grind to a halt.

Invoking radical transparency on pay is generally not a good idea. But if you want to make salaries transparent, it’s best to do a comparative analysis or audit of every person’s salary (with respect to their job requirements and rank within the company) before making them public information.

This can help you ensure salaries are on par with employees’ experience and abilities.

Where should you draw the line?

Radical transparency isn’t limited to salaries and employee data or metrics. It also extends to things like organizational processes, where every employee has the same input and opportunity to shape company protocol as the C-suite. It’s about leveling the playing field.

But when does it go too far? Where should businesses draw the line? And what if radical transparency puts your company in a position of violating customer or employee trust?

Radical transparency isn’t a one-size-fits-all approach, and it may not be right for every business.

Sharing too much information could be detrimental to your company. Whatever you do, be careful not to leave your company overexposed.

You don’t want to share information that could be used to harm your organization or your employees. Troubling stats, such as error rates or client attrition, could have a negative impact on your business, especially if leaders aren’t transparent about how these issues are being addressed and improved.

Beware that, if sensitive information gets into the wrong hands, it can have devastating consequences for a specific team, project or the whole company.

It’s essential that company leadership verify the validity of any data the company bases its work on. The same goes for data that’s shared with teams, with customers, or in marketing or advertising.

Before making the decision to go transparent, it’s important to understand the compliance challenges of your industry and be aware of the legal ramifications if slip-ups occur.

Start from the top and stay consistent

No matter the industry, implementing radical transparency must start from the top. If your business is a mom-and-pop company, then transparency has to start with the owners. With bigger organizations, it might start with the board of directors and cascade down through the leadership team and employees.

Take a hard look at your leadership team. Do all members of your team possess these key traits?

  • Honest
  • Great communicator
  • Consistent
  • Open to feedback
  • Mature
  • Fair
  • Approachable
  • Accessible
  • Dependable

Smart ways to apply radical transparency

1. Increasing headcount

In many companies, a business case must be submitted to justify hiring additional employees. Traditionally, managers might determine that on their own. With full transparency, a manager can survey the whole team to get their input for defining the new position.

Team members may offer up valuable feedback that would determine the types of skills and qualities to look for in new hires. Plus, this allows the manager to get buy-in from the team on the necessity of additional employees, and dispel any anxiety regarding each team member’s role.

So, they’re not left wondering things such as, “Will this new person be hired to replace me?”

This enables the manager to do a more thoughtful and thorough development of the job role to better boost synergy and productivity, which should strengthen the business case submitted to management. This process can also help with writing a more accurate job description.

In cases where the new position is a supervisory role, transparency allows current employees to step up and apply via an internal job posting, which can prevent animosity that could hamper morale or spur productive team members to leave.

2. Benchmarking

For years, hospitals have used data tracked from performance metrics to establish standards of excellence in health care. Benchmarking can be used for measuring and comparing a hospital’s progress over time and how it stacks up with other hospitals.

Data tracked through benchmarking might include hospital-acquired infection rates, patient wait times, re-admission rates, and so on.

Hospitals can opt-in to share data – confidentially – with a data repository. After obtaining and reviewing this type of comparative analysis, hospitals can promote their high-performance areas and share low-performance areas internally as targets for process improvement or increased training.

And benchmarking extends well beyond the health care industry.

From education to all types of project management, benchmarking can provide a report card that highlights strong points that might be worth revealing for your PR bragging rights and marketing efforts. Benchmarking can also pinpoint what needs improving.

3. Sales tracking

A recent shift in sales motivation strategies has shown how a transparent approach can have positive results. When organizations share sales goals and progress figures with salespeople, it can promote team pride and increase competition, while motivating individuals to contribute to team goals.

When your top management shares their vision and action plan with your sales team, and then gives regular updates on their progress, your sales force gets a chance to buy into that vision. And when your team is invested in where you want your business to go, the possibilities are endless.

Have your sales managers set targets for specific sales outreach activities, pipeline volumes and revenue levels, and then track each person’s progress so they can see where they stack up compared to the rest of the team.

Celebrate successes as a team – after all, who doesn’t appreciate some recognition? But you should also take time to learn from losses on occasion, so team members can share what works and what’s holding them back.

Ready to see if radical transparency could benefit your company?

If you’re seriously considering adopting radical transparency, it’s important to understand all the layers of your business. It’s also critical you understand your company culture and the attitudes (and personalities) of the people you’ve hired.

Keep in mind, the idea behind radical transparency is to make people feel safe – employees, customers, board members, investors, etc. Consider how it can help your business grow and improve first, and then define what you want to be transparent about.

Use your company data to dissect what you can do better, such as employee engagement, expense management or client retention. And if you choose to implement radical transparency, be sure it’s rolled out over time.

Results worth pursuing

We’re all living and working in an information-seeking world. Employees, customers and the public at large seek to shore up their decision-making with information. Done right, radical transparency has the potential to grow your business, boost your community and brand awareness, and increase employee engagement.

For more insight on being the best leader you can be for your company, download our free e-magazine: The Insperity guide to leadership and management.

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