Strategies for Organizational Transparency
Transparency within your business has the potential to benefit every area of the organization. Financial transparency leads to high-quality financial statements that not only help you make business decisions, but also increase value and decrease risk for investors. Transparency in sales can boost revenue; in company values and processes, it can increase employee retention; in branding and marketing, it can improve customer loyalty. Here, we’ll discuss what organizational transparency looks like, and how you can implement strategies to improve your business.
What is Organizational Transparency?
Organizational transparency refers to being open and straightforward about operations, processes, and finances within a business. Transparent companies share information regarding revenue, internal processes, pricing, sourcing, and business values. When challenges arise, a transparent business avoids hiding the issue and rather chooses to face it openly and head-on.
Transparent businesses tend to do better in difficult economies—including the one we’re currently in. That’s because transparency helps employees stay connected to the values and mission of the organization in addition to increasing stability and efficient execution.
How to Boost Transparency
As you read through the suggestions below, keep in mind that there is such a thing as being too transparent. You can strive to be open within each department of your business without spilling your secrets for success to your competitors.
Define Your Business’ Core Values
When committing to transparency, you first have to be clear on what you want to convey to your employees, client base, and the market in general. Do your employees and executives see the external environment in a similar way? Do all parties involved understand organizational goals and plans? Does everyone agree on what success looks like? If not, it may be time to sit down and redefine.
Solidifying your business’s core values makes it easy for your employees to understand and follow them. If you want your business to be transparent, everyone in your company needs to be on board. Consider your business’ product and service offerings and how your core values can enhance those. Additionally, think about what values you would look for in a company before employing their services. For example, if you offer a B2B service, relevant core values to explore may be accountability, honesty, or reliability.
Keep Your Employees Up To Date
Another way your business can work towards increased transparency is to share information about your business—both the good and bad—with your employees.
The more upfront you are about your business with employees, the more their trust in you will increase. Consider adding a monthly newsletter, a weekly check-in meeting, or a quarterly state-of-the-business video where you can highlight the highs and lows of your business. Celebrate with your employees when things are good, and be honest about impending obstacles. When challenges arise, your employees will appreciate your candidness.
Focus on the Impact of Financial Decisions
In tangent with looping your employees in more often, begin to frame your business decisions in economic terms. If you’re planning on spending a significant amount of money on something—such as a new piece of equipment, employee wage increases or bonuses, or new hires—be prepared to explain your decision in financial terms. Focus on how the investment will pay off for the company. This will help your employees to understand the costs and payoffs of business decisions, as well as give them confidence in the direction the company is headed.
Quint Studer, author of Straight A Leadership: Alignment, Action, Accountability, notes that company leaders should teach all employees to think like a CFO. Training and encouraging your employees to think this way can be very powerful in creating more buy-in and trust.
Connect Employees to Financial Goals and Reviews
Employees are more likely to feel a greater sense of connection and willingness to work hard when they are bought into the results that the company produces. As such, find ways to highlight the employee’s contribution to the numbers they see and, as suggested in step two, show those numbers often. By demonstrating the connection each employee has to every dollar, they will be encouraged to take ownership. Highlighting how the employee fits into the big picture will create more purpose and drive. This isn’t possible without a base of transparency.
By sharing and remaining transparent with your company’s financial statements, employees can find increased value and connection to the company that they work hard for. Similarly, you as the business leader can reduce the fear that goes into sharing their finances with others. The goal is to help the employee, company, and its operating managers feel better prepared to use the company numbers to inform their work.
Commit to Accurate Accounting Practices
Some businesses utilize financial statements that are designed to hide rather than reveal information, breaking down trust among employees, clients, and investors. By committing to accurate accounting practices, your business can create financial reports that are easily understood, clear, and candid. Not only do upfront financials increase trust within your business, but can also better inform your decision making process.
Accounting standards relate back to the full picture of a company’s financial pictures, looking at liabilities, assets, revenue, and expenses. Accurate accounting practices, as dictated by GAAP, help you and everyone that interacts with your company to have a valid idea of the business’ financial position. If your current accounting team isn’t enough to maintain accurate, timely financials, consider seeking CFO advisory services to bring your department up to par. An outsourced accounting service has the ability to implement internal controls and GAAP practices to better maintain your financials. Additionally, having an unbiased third party evaluate your business’ financials can provide new insight that an internal employee may not be able to do.
As a reminder, trust is hard to obtain and easy to lose. By incorporating transparency within every aspect of the business, you can dive deeper into building loyalty and engagement among internal and external stakeholders.