What is business transparency and how can you promote it?
By Indeed Editorial Team
Published 22 March 2022
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Transparency in business is an important concept that helps companies establish trust with investors, employees, stakeholders and customers. It requires an honest approach to communicating with third parties and can take many forms, from clear pricing models for customers to explicit mission statements for investors. The goal of transparency in business is to build on a foundation of trust and goodwill to create a positive reputation for the business. In this article, we discuss what business transparency is, how to make businesses transparent and the benefits and potential risks that transparency can bring to a business.
What is business transparency?
Business transparency is the concept of being open, clear and honest about how a company operates and handles organisational dealings. A transparent company might offer performance-related information openly to shareholders or provide honest pricing models to customers. If there is an issue that develops within a transparent company, they strive to be open and honest about what has happened. This is all done to achieve an appearance of transparency to a business's customers, investors and staff. This transparency encourages brand loyalty and trust, strengthening the integrity of the company in the process.
How to promote transparency in business
Establishing a more transparent business is a long-term goal for many organisations as it improves their relationships with key individuals, such as investors and customers. It requires consistent management of communication and a company-wide ethos of transparency for it to be successful. To help improve transparency in business, employ the following steps:
1. Determine the business core values
A business can use its core values to help guide business decisions and ensure that the overall mission of the brand is upheld. Adopting an ethos of transparency in business could itself be a core value, but the other core values ideally acknowledge or align with transparent practices. Outlining clear core values for business makes it much easier for staff, customers and stakeholders to understand the direction of the company. For transparency in business to work, everyone in the company needs to be working towards it, which is why enshrining it in your core values is so important.
2. Keep staff informed
Clear lines of communication within a company are crucial if they are trying to promote transparency in business. This means being open and honest about all aspects of the business, which means sharing both good news and bad news. The reality is that most staff members find out about important business matters one way or another, either through the rumour mill or directly from the company.
It is almost always better for employees to hear about important news from the business itself as it promotes transparency and trust. Keeping staff informed also stops the rumours from spreading, which can cause a lot of damage to a company's credibility internally and externally. Keep employees up to date with the latest news via newsletters or catch-up sessions so that it comes through an official channel. That way, the business is more transparent and also in control of the narrative.
3. Provide clear pricing
Whether a company is selling goods or services, it's important to keep prices clear and available for customers. Try to avoid using complicated pricing structures or any form of barrier that stops customers from finding out about the offered prices. Even if prices are higher than the competition, be honest about this and use it as a selling point.
For example, higher prices often denote higher quality, so companies can use this as a marketing tactic. Maintaining a clear pricing structure makes it easier for customers to assess how good of a fit a product or service is. Moreover, it encourages trust in the brand because the company is transparent about its business dealings. This can go a long way towards promoting an honest business, which can convince potential customers to trust the work and choose the brand.
4. Keep messaging clear and concise
Many businesses that don't employ transparent practices skirt around big news reveals or information, which can be incredibly frustrating for staff and customers alike. Acting this way often leads to a loss of brand integrity, and employees might even grow disloyal and consider moving to another company. Try to keep messaging clear and concise, and don't avoid difficult discussions. Whether through internal updates or information for customers, it is important to maintain clear, honest communication. That way, if there are issues such as price increases or system upgrades, customers and staff are better informed and more likely to trust you.
The benefits of transparency in business
There are a number of benefits to endorsing a more transparent approach to business. It can strengthen a company's reputation in the industry and with customers, which ultimately could lead to greater success. Below are some of the benefits that transparency in business can provide:
Increased customers: being transparent in business shows customers that the company is a trustworthy brand, which increases customer loyalty and improves retention.
Better employee relations: giving staff the full perspective of business operations shows that the company trusts them with the information and highlights transparency. This encourages staff loyalty and key members of the company are more likely to stay, even when times are tough.
Improved brand authority: with transparency comes trust, which can greatly improve brand authority within the industry. If a company acts transparently in business, the weight of their words is heavier because they are truthful. This positions the brand in such a way that customers and competitors are more likely to trust what the business has to say.
The risks of transparency in business
Although there are many benefits to transparency in business, it does come with a few risks. Whether or not the benefits outweigh the risks is going to depend on the overall business strategy, so it's definitely worth considering both angles. Below are some of the risks of transparency in business:
It creates a cautious workforce
A more transparent working atmosphere can increase staff fears of losing, causing them to act more cautiously. In certain competitive industries, such as banking or marketing, an overly cautious approach to working can actually be detrimental. Companies that are more transparent provide staff with a lot of information, and when it's negative, this can reinforce their cautious behaviours, further stifling innovation or risk-taking behaviour.
It can be distracting
Being overtly transparent in business can actually be more of a distraction than a help. Sharing too much information with staff can cause them to feel responsible for the company, which creates a lot of excessive stress for team members. Sharing sensitive information, like the financial health of the company, can cause a business even more trouble by leaking information to the press or competitors.
Transparency isn't for everyone
Not all members of staff appreciate total transparency in business. Employees who prefer stability and structure rely on consistency and security to function well in the workplace. Often, transparency in business can cause the opposite, which is to say instability and a lack of structure. So, for some members of staff, transparency may not be the right choice.
Tips for promoting transparency in business
If a company is looking to promote transparency in business, there are a few tips they can employ to make their efforts easier and more effective. To start, use the tips below to encourage transparency in business:
Transparency in business relies on clear, effective communication with customers and staff. It ideally starts with individuals that are senior members of the company making a concerted effort to be more transparent. From here, ensure it becomes a part of the company culture as a way to improve the internal and external communication of the organisation.
It is important to remain consistent and clear with communication. Particularly if a company is trying to promote transparency in business. From making financial reports of the company public to providing clear pricing for customers, sharing information openly is a cornerstone of transparency in business.
Give reasons for company actions
Providing a rationale for why something is happening in a company is an important part of transparency in business. Whether the company has a small team of 10 or a multinational organisation of 10,000, it is vital that it gives reasons for business actions. This reinforces transparency and promotes responsibility within the company.
Make it part of company culture
Often, members of staff try to align their own personal values with those of the company they work for. To make this work to the company's advantage, transparency can help organisations align their own values with those of their employees. This helps to attract like-minded individuals to work for them.
Explore more articles
- 15 interesting foodie jobs (with salary and duties)
- The Pros and Cons of Working at a Startup
- How to become a retail banker: a step-by-step guide
- 11 Marine biology jobs (with salaries and primary duties)
- 10 Types of Engineer Jobs (With Salaries and Duties)
- How to become an x-ray technician: a step-by-step guide
- How to become an urban planner (skills and requirements)
- 14 sports and leisure jobs (with average salaries)
- I Don't Know What Career I Want: How To Choose The Right Job
- How to become a groundworker (plus responsibilities)
- How to become a financial manager (including skills)
- Financial adviser career pros and cons: a helpful guide