Transparency in business is, to be completely transparent, a highly debated topic. While businesses have traditionally had limited transparency – justifying that decision as a necessary evil to avoid internal conflict – modern businesses, especially technology startups, have started a movement in the opposite direction.
Successful startups have shared salaries companywide, made company performance reports accessible to all employees, and generally built transparency into everything they do. The results are striking: an increase in employee morale, higher retention rates and a boost to the bottom line.
At Unito, transparency in business is something we take very seriously. Here are ways we’ve increased transparency that you can apply to your own company.
Why is transparency important in business?
We’ve already mentioned some of the potential outcomes of greater transparency, including higher employee morale and retention. Here are a few benefits you can add to that list:
- A larger pool of job candidates
- Greater internal collaboration
- Quicker project turnarounds
But why are these potential outcomes of transparency? The real reason transparency is so important in business is that it levels the playing field through information accessibility.
It is a powerful sign of trust when your employees all have the same access to information, regardless of role or seniority. You’re showing the team that you trust them with the information and have nothing to hide, which in turn increases their trust in you. This has a massive impact on retention and team morale.
Plus, by providing an even playing field, you’re empowering your team to make more educated decisions independently. They no longer have to pry information from those in the know in order to move projects forward. This leads to more accurate deliverables and quicker turnarounds. In addition, since people are more informed when entering conversations, transparency reduces the duplication of work and increases the efficiency of your internal communications.
How to implement transparency in your business
For the past decade, salary transparency has been a huge topic of debate. Companies like Buffer have made waves by making their salaries visible to all employees (and even the general public). Generally, people recognize that being open about salaries can play a significant role in helping to end salary discrimination based on gender or race. This is one of the reasons we have embraced total salary transparency at Unito.
At the same time, even business leaders who don’t discriminate on salaries tend to fear internal repercussions. One of the main arguments against salary transparency is that employees who get paid less than their peers will either work less hard or be unhappier at work. That was shown to be at least partially true in an MIT study, which found that employees who knew they were making less would reduce their output by over 50% and actually attend work less. However, this same study found that you can mitigate these effects if you’re able to justify the differences in pay.
We provide this justification through an accessible salary matrix. Within the matrix, each department’s roles are listed vertically by seniority (think entry-level marketer up to head of marketing). Then, each individual role has an assigned salary and projected salary increases. These are set using the following system:
Yes, this involves a lot more upfront effort. You really need to put in the work to build a solid compensation system, since you will be held to it. But isn’t that what you should be doing in the first place? Cutting corners on compensation will always bite you in the end. Salary has been proven to be a poor motivator at best, but it’s proven to be a strong de-motivator if someone feels underpaid.
Oh, the silo: the most used metaphor in business. We hear so much about breaking down silos because, unfortunately, it’s an almost universal issue. Information gets stuck at the individual, team and organizational levels (as well as inside software).
- People keep information that could benefit colleagues in their brains or their inboxes.
- Teams don’t share achievements, learnings or insights that could help other teams.
- Over time, organizations develop cultures of intentionally or accidentally hiding information from employees, partners or clients.
These bad habits grow alongside the company, becoming bigger issues as you scale. That’s why it pays to make transparency part of the culture early.
At Unito, every Monday morning we have an all-hands meeting during which the leaders of each team share wins and fails from the previous week and check in on team goals. This is a pretty common way to provide visibility across teams and create a culture of openness on both positive achievements and areas that need improvement. During these meetings, we also provide strategic and financial transparency. We share how much cash is in the bank, how the business is performing and whether we’re hitting our targets. We feel this knowledge empowers every individual to make better, faster decisions and prioritize – without having to constantly involve senior leadership. It’s by improving decision-making on all levels that you become a high-velocity company.
We recognize that companywide meetings might be difficult to scale as we grow (does your office even have a space that could fit 50 or 100 employees?). With that in mind, all employees, myself included, also participate in an asynchronous daily scrum. Everyone is asked to post what they worked on yesterday and what their focus is for today in a public Slack channel for the entire company to see.
The benefits of this system have been stark. Our team is constantly finding new opportunities in the work of other teams or colleagues they may not have otherwise encountered. Someone on the data team might encounter a marketing initiative that they feel deserves more testing. Our customer service team might have a call with a client who could make a good beta tester for the product. This Slack channel is such an easy but effective way to promote work transparency. Even if nobody else reads your daily update, the few minutes you spend thinking about the previous day and planning the next one has huge value. It keeps the team on task, and just the fact that these lists can be scrutinized by anyone at any time provides healthy pressure to follow through on your planned work. There’s nowhere to hide.
We also host all non-confidential documents and files in a companywide Google Drive. Everyone is able to view and usually edit investor pitch decks, the upcoming blog post draft, and recorded client demos. Not only does this save us the effort of sharing files and setting permissions for each file, it again provides companywide transparency into the work we all undertake each day.
People might balk at the idea that a developer should have edit access to blog posts. But the fear (of judgment, of criticism, of unwanted advice or changes) at the root of that argument has proven, at least in our case, to be unfounded. First of all, version tracking allows us to see what any individual has changed so we can revert any changes we disagree with. Regardless, our employees recognize their own expertise and that of their colleagues. They use this access to achieve the following:
Did your company achieve its goals this quarter? Did you? What about your boss? What about the person in the standing desk across the open office?
As mentioned above, company performance is shared openly in our weekly meetings. In the past few decades, companies have warmed to sharing progress on companywide goals (though many businesses still choose to keep this information from staff members or pump the numbers). Progress on personal goals is a far more controversial topic. Why should staff members know whether or not their colleagues are achieving their goals?
We measure performance using OKRs (objectives and key results). There are companywide OKRs, team OKRs and individual OKRs, and all of them are built into our project management tool for the entire staff to see. As we progress through each quarter, these OKRs are updated to reflect percentage completed – again, so everyone knows how close the goal is to completion.
Visibility into goals and progress on those goals helps employees both prioritize and empathize. If you see that a colleague has only achieved 10% of a complex key result with two weeks left in the quarter, you may not bother that employee with small passion projects. Maybe, if you’ve made better progress on your own OKRs, you even offer to chip in. Knowing that certain OKRs are not being met also prompts important questions. What are the blockers? What is holding this up? Was the goal too lofty, or is there anything we can do to support it? These are conversations that don’t happen naturally for everyone. This type of transparent forum on OKRs leads to a far more collaborative culture in our workplace.
You also need to push for transparency when it comes to feedback. Like many startups, we have embraced the ethos of “work fast, break things, but own your mistakes.” Owning your mistakes means being open to feedback, and I try to push that to the extreme. We periodically have 360 reviews that prompt our staff members to provide feedback to colleagues. When that feedback is shared, the source has anonymity so people feel safe to share their true thoughts with colleagues. I take it a step further, sharing all of the feedback I personally receive with the entire company and our shareholders. In being so open with people’s criticisms, I’m trying to foster an internal culture of taking feedback in stride, not personally. No one should feel ashamed for needing to improve or work on themselves.
“Hiring” and “transparency” are rarely heard in the same sentence. When you find a candidate you want to hire, you don’t want to share anything that might push them away from the job. You’re hiring because your business is facing a need or a challenge, but you still hesitate to share that with the candidates. Plus, if you’re unsure whether they’re the right fit, you don’t want to give them too much access. You also don’t want the power dynamic to shift in their favor, especially in negotiations.
One way to increase transparency in your hiring process is by bringing candidates into your work environment for a pilot project. We don’t want our new hires to come in for their first day without any context for what a workday looks like. We use a project to test the candidate’s skills during the hiring process. But we take it a step further and invite them to come work on the project at our office: to have lunch with the team, interact with employees, ask questions and get a true sense of what it’s like to work with us. No one is putting on a show for these pilotees, so they get an honest look at our day-to-day.
Is greater transparency in business such a radical idea? If you look at all of these ways to implement transparency, it can simply be summarized this way:
- Be open about salaries by using research, not negotiations to set them.
- Be open about work, because it creates accountability and opportunities for collaboration.
- Be open about performance, because it creates a culture of empathy, drive and pride in your work.
- Be open about hiring, because it attracts candidates and allows both parties to see if they’re a good fit before they go all in.
These seem like logical and forward-thinking steps, not radical changes. While transparency in business may not be the norm, when has sticking to the norms ever spawned exceptional companies?