Think about your favorite organizations or brands. What makes them your favorite? Is it because you trust that they are a good organization? Is it the way they treat you as a customer or treat their employees? What about their product or service stands out from their competitors? How do you know the company is accountable? Do they facilitate open communication with their customers? Is it because some of their proceeds support a cause you care about? Maybe they have an app that provides you with up-to-date information about your recent purchase.
Many companies are inviting consumers to take an inside look into their operations and become more involved in what goes on behind the scenes. Why are organizations making this a priority? Because increasing transparency between an organization and its community or its employees builds trust and credibility.
Embrace Free-Flowing Information
An organization that values transparency knows it’s more than just reporting financial information to investors. Transparency is the open, honest, flow of information from an organization to all its stakeholders, both employees and the external community. When transparency is done correctly, employee engagement increases and it’s more likely customers will be loyal to your brand, and associate a higher value to your products. Yet, according to 2017 Gallup global research, a whopping 60% of adults believe corruption is widespread among businesses in the U.S. This doesn’t exactly paint a picture of accountable business practices or a population that is receiving honest, open communication from organizations.
No one wants to support or work for a company if they don’t know what it values, what its plans are, or how it’s operating. Individuals want to support organizations that are accountable for their actions. Research shows people feel valued when they are included in the process, whether they are employees or customers. When customers are shown all the work that goes into a process, such as booking a flight or manufacturing a scarf, they are more satisfied with their purchase and service.
This works full circle, too. When employees see customers enjoying or benefiting from their service, the employees are more satisfied with their jobs and willing to put in extra effort. For example, explore the stories of these five companies who know how to succeed through transparency.
Transparency Inside the Organization
Your employees, board members, and other internal stakeholders deserve, respect and appreciate honesty. A lack of hidden agendas and timely free-flowing information paves the way for collaboration, cooperation, and decision making on your teams.
However, a study by OC Tanner Institute reveals 35% of employees do not trust senior leadership at their organization, and 1 in 4 employees don’t trust their direct manager. Another study by Ultimate Software shows that trust in management is crucial for employee engagement; 93% of employees said trust in their direct manager is important to remain satisfied at work. One reason for mistrust is lack of transparency.
In ‘The Case for Transparency,’ Quint Studer describes 10 reasons your company should keep no secrets from employees and embrace transparency;
- People assume the worst when they don’t hear from leaders.
- Transparency helps employees connect to the ‘why’.
- Employees may not understand how the external environment affects the company.
- Transparency allows for consistent messaging across the organization.
- This, in turn creates organizational consistency.
- Transparency leads to faster, more efficient execution.
- It heals we/they divisiveness.
- Transparency keeps good people from leaving.
- It eliminates Park Ranger Leadership.
- It facilitates the best possible solutions.
Transparency helps to unify people on teams and keeps high performers motivated and on board with the organization’s goals. Honest, open communication informs employees and aligns them to the organization’s interests. Even if the information you need to share with the employees is focused on the challenge your organization faces, it will relieve anxiety if you share as much information as you have and the plan for going forward. Leaving employees uncertain will reduce their productivity and cause rumors to spread.
This alignment creates a better experience for the customers. When the organization listens to what customers want and empowers employees with the information and tools to better serve the customers, everyone wins.
Transparency with the Community
An organization’s community is made up of anyone who has a stake in the way the organization represents itself. This can be the physical community that surrounds the organization, its investors, its customers, anyone that benefits from the service it provides, etc.
Transparency works best when the organization is truly the kind of business it wants people to think it is. The community will sense if an organization puts on a façade for the sake of transparency. Whatever you’re trying to hide will eventually come to light anyway. One of the most prominent examples of this is the big tobacco lawsuits. Tobacco companies knew for years their products were causing cancer and death of its customers, yet they thought they could keep that information hidden. Food brands such as Fruit Roll-Ups, Kashi, and Naked Juice had to settle lawsuits brought against them for using “All Natural” or “Naturally Flavored” language on labels when the products did, in fact, contain artificial ingredients. For some consumers, deception is unforgiveable and, thanks to the internet, can spread rapidly.
If an organization treats transparency merely as a crisis communication strategy, they will never gain their customer’s loyalty and trust. Reacting to a negative situation is not transparency. Acting in a transparent manner holds organizations accountable. A proactive approach rather than reactive is what’s recommended. If information is only given after the fact, mistrust will ensue. The same goes for organizations who only embrace transparency due to regulations. Customers will see through the forced attempt at transparency and seek an organization that practices open communication and honesty because it’s the right thing to do. If you’re in a regulated industry find ways to put customers first and be transparent beyond what is required of your organization.
Customers enjoy transparency that is on their terms. Most likely you wouldn’t appreciate the post office spamming your inbox with tracking updates for your package. But you would appreciate a link that allows you to check on those tracking updates when it’s convenient for you. For example UPS receives an average of about seven lookups per package, could you imagine getting 7 involuntary phone calls from UPS about your incoming package? Transparency that puts the customer in control provides a better customer experience.
Think about the popular new organizations that make up the “share economy” like Airbnb or Uber. These businesses use a transparent rating system that increases trust with its consumers by displaying real reviews for the experience. People know exactly what to expect before they book the service thanks to open communication. The reviews gave Airbnb & Uber credibility, held them accountable, and increased their sales. When you order pizza from Dominos, customers can choose to watch a ‘pizza tracker’ that keeps customers informed on the stage of their order; making, baking, on the way, delivered, etc. which decreases customer anxiety and increases the overall customer satisfaction.
The community especially appreciates transparency from its nonprofit organizations. People like to know how their contributions are being used. It makes us feel good knowing our donation made a difference. People also like satisfaction that non-profits are using donated funds in the way they say they will. Charity organizations are often scrutinized for how much they spend on overhead rather than programs that serve the public. Being as proactive as possible to explain to donors where funds will be used is the best way to prevent loss of trust for a non-profit brand.
Transparency in 4 Steps:
- Think proactive v. reactive.
- If you don’t have all the details, say so. Don’t lie or avoid disclosing information.
- What can be revealed with respect to privacy and regulations?
Give Access to Information
- Incorporate tools that support transparency and make processes easier for your employees and customers.
- What do employees need to know to feel secure in their jobs and the direction or the organization?
- What can you tell customers to provide them with value and help them make better decisions?
Empower employees to take ownership
- What can employees do daily to be transparent with the community?
Avoid 1-way communication channels
- Feedback is a valuable gift. Listening to employees and the community can provide you with crucial information.
- What opportunities currently exist during interactions with the customer that you can use to listen and gather information?