“A lack of transparency results in distrust and a deep sense of insecurity.”
“Own it.” There’s a reason this notion has become ubiquitous. In a world of immediate communications and instant Google searches, the consequences of perceived dishonesty or questionable corporate conduct can be swift and potentially devastating. People are simply engaged with brands and businesses on a more personal level and are more aware of how ethical business practices are. There is really no place to hide in the internet age, so attempting to cover up, obfuscate, or distance yourself from trouble is usually pointless — or much worse.
There’s far more value in owning up to mistakes.
As they say, bad news travels fast. This is perhaps more true in the era of social marketing than it has ever been before. The good news is that good news seems to travel even faster today. That’s one huge point in favour of business transparency, but it is far from the only benefit, meaning transparency should ideally be a conscious choice made at all times across your organization — instead of just when caught red-handed.
Honesty really is the best policy
So what does transparency actually mean in the business context?
Basically, it is being honest, accurate and forthcoming in all of your interactions both internally and with suppliers, stakeholders, clients or customers. A useful business dictionary definition is the “lack of hidden agendas or conditions, accompanied by the availability of full information required for collaboration, cooperation, and collective decision making.”
It can mean putting clear and complete nutritional information on packaging, investing in educating customer service reps, sharing some of your manufacturing or outsourcing practices, responding quickly and openly when a product recall happens, communicating company values or vision with employees, or giving full disclosure to stockholders. None of this is difficult on its own, but it does require commitment and communication on the part of leadership to implement consistently organization-wide.
5 key benefits of transparency
- Overcome negative perceptions.
This is the classic use-case for transparency after-the-fact. When executed in a timely fashion, it can go a long way towards rebuilding trust with customers as part of a win-back strategy.
Volkswagen, for example, had considerable work to do after the emissions scandal broke in 2015. The German car company launched print ads apologizing for breaking the most important part of the car, a driver’s trust. The ads recognized that “actions speak louder than words” and vowed to win back consumers’ trust.
McDonald’s Canada also had some success with its “Our Food. Your Questions.” digital platform. They answered some pretty tough questions about their food and processes posed by the Canadian public. It was also an opportunity to uniquely position the company by offering some behind the scenes glimpses to their customers
- Build authenticity into your brand.
Why not build trust from the get-go? An up-front policy of transparency can add honesty and integrity to your business — you can even make it part of your Unique Selling Proposition. It demonstrates that you have nothing to hide, and shows respect for both employees and customers. It can also help a business mitigate against any future incidents that might otherwise trigger a credibility crisis.
When the not-for-profit ethical consumer magazine Fashion Revolution published the transparency index to showcase businesses that are forthcoming about their supply chain practices, Levi Strauss placed first. Levi’s commitment to transparency and openness has continued since the transparency index placement, and in 2016 they public disclosed their Water<Less technology in order to help prevent water waste throughout the industry.
- Improve customer satisfaction and loyalty.
With so much choice, customers demand more from the businesses they support. Open, honest practices can help you stand out, sway customers, and build brand loyalty. One study suggests that almost 19 of 20 consumers are “likely to be loyal to a brand that offers complete transparency”, and that 3 of 4 would even pay more for their products.
This may be what high-end outerwear brand Patagonia was trying to tap into when they asked people not to buy their jacket. This risky campaign asked audiences to think twice about whether or not they truly needed a new jacket, disclosing that each jacket produces two thirds of its own weight in waste. Far from a one-off, Patagonia demonstrates continued dedication to sustainability and net-positive corporate citizenship, even teaching people how to repair their own clothes. You can feel good about owning their jacket, provided you actually need one.
- Engage your team.
People like to know where they stand and what they are working toward — after all, much of your life is spent at work. If you have a history of open and honest communication, good people will want to work with you and for you. Team members feel more invested and involved if they know the direction and values of the company.
One article cites a 2013 survey in which 70% of employees claimed to be most engaged “when senior leadership continually updates and communicates company strategy”. Another article claims top-down transparency is the #1 factor in determining employee happiness. No wonder more companies are using it as a recruitment tool.
- Drive higher performance.
The same open communication that engages employees also helps ensure alignment of goals across the organization. This can lead to higher performance and better solutions. With organizational transparency, when challenges arise, your team is more motivated to step up and help you overcome them — and solutions are more aligned with company culture, objectives and values.
The bottom line is that transparency can generate a great deal of value for incredibly low cost. All it takes is clear focus, commitment, and communication.