Transparency is becoming increasingly important for startups, both as an internal policy and as a way of engaging with the industry and external world. In case you aren’t familiar, transparency is operating in a way that allows other people to see how those operations were performed. In the physical sense, you could think of this as offering a literally transparent “window” to the actions you’re performing — but of course, in the startup world, things are a bit more complex.
Why exactly is transparency so important for budding startups, and what steps can you take to ensure you’re operating transparently in your organization?
The Value of Transparency
Let’s start by examining the importance of transparency. What is it that makes this approach so valuable?
- Your online reputation. First, your transparency will play a massive role in determining your online reputation. If you operate transparently, both internally and externally, you’ll instantly be seen as more trustworthy. People will feel as though you have nothing to hide and that you’re a positive force in the world. Obviously, transparency also means disclosing bad or questionable news, so your reputation may take temporary hits—but overall, transparency will only help your brand’s reputation flourish.
- Internal trust. You can also foster more internal trust with higher levels of transparency. Employees who feel they’re working in a transparent environment will naturally have more faith in their leaders. They’ll have more trust in major decisions and will become more loyal followers. They’ll also feel more comfortable voicing their opinions and contributing to the shared conversation.
- Openness to criticism and feedback. Sharing information about your decisions and policies will leave you more open to criticism and feedback—and that’s a good thing. Employees, customers, and public onlookers alike will be willing to explain the flaws in your plans and approaches, and you can use this information to improve.
- Higher morale and happiness. Employees who work in transparent environments tend to be happier, with higher morale. They’re much more appreciative of their workplace and are better collaborators. They also tend to be more productive. Compare that to a workforce that feels the organization they work for is unnecessarily secretive or even deceptive; such a hostile work environment can only increase employee turnover and reduce internal trust.
- Thriving in an untrusted industry. Let’s face it. Tech companies tend to be untrusted by default. Too many big (and small) players in the industry have violated consumer trust with shady practices, lax security, and unclear motivations. Being forthright and transparent will help you overcome the stigma of being a tech-related company and will help you forge a good reputation from scratch.
- Brand differentiation. Not all companies are transparent in your industry. Marketing yourself as more transparent and working harder to provide full disclosure is an important way to distinguish your brand. You can instantly set yourself apart from the competition.
- Meeting public expectations. Public consumers are increasingly demanding transparency from the companies they buy from and work with. Consumers are more likely to spend money with companies they trust, and companies that are transparent, than they are with companies that attract skepticism and distrust.
Internal vs. External Transparency
It’s important to note that internal and external transparency are somewhat different and will need to be practiced with different sets of strategies.
Internally, transparency is all about sharing information with your employees, partners, and coworkers. An internally transparent environment is one in which everyone within the company knows what’s going on and feels free to share information independently.
Externally, transparency is all about sharing information with customers, shareholders, followers, and the general public. You’ll use press releases, social media, and other outlets to ensure that your public audiences are up to speed on your latest work.
Internal Transparency Strategies
Here are some “tried and true” strategies you can use to increase internal transparency.
- Explain your decisions. As a leader in your organization, explain your decisions. If you decide to change a work policy, or stop offering a specific service, state the decision clearly and explain why it’s happening. This is especially important if something employees could be concerned about; for example, if you’re cutting hours, they may be worried that the business is going under.
- Encourage employees to voice their opinions. Next, work to make sure every employee feels they have a voice. When someone expresses an opinion, thank them for their contribution even if it goes against something you said. Make them feel heard. This is conducive to an open, expressive environment, and it will increase trust throughout the entire organization.
- Keep workflows open. The workflows in your business are responsible for its overall productivity, and the average experience of your employees. They should be justified—and frequently updated. Make it clear why you work the way you work, and be open to hearing new perspectives on whether those workflows function efficiently.
- Collect (and listen to) feedback. Go out of your way to collect feedback from people of all levels and share that feedback publicly when it makes sense to do so. Act on feedback when appropriate, improving the business in some small way, and if you’re not going to act on feedback, explain why.
- Answer questions directly and honestly. When employees ask questions about your decisions or your business practices, try to answer those questions as directly and honestly as possible. You won’t always be able to give a clear and concise answer, but even something like, “I don’t have the answer to that question right now,” can go a long way in building trust.
- Openly socialize. People trust each other more when they have a bit of a personal bond in place. Encourage employees to openly socialize with each other and get involved in those conversations whenever you can.
- Be honest when it’s hard to do so. The best test of transparency is being open and honest when it’s hard to do so. Don’t be afraid to share bad news or admit to your mistakes; being honest during these difficult moments will build significant trust.
External Transparency Strategies
External transparency is a bit more complex, not only because you’re working with a much larger audience and more potential channels, but also because there’s more room for misinterpretation.
Let’s look at some of the best strategies for improving external transparency:
- Publish public reports. Consider publishing more public reports about your company’s performance in various areas. For example, it’s increasingly common for businesses to publish sustainability reports, acknowledging their impact on the environment.
- Get ahead of bad news. If your company has bad news to announce or if there’s a scandal involving your company, get ahead of the news—be the first to share it, and share it openly and honestly. If it seems like you tried to hide or lie about the news, it will work against you.
- Report honestly. It’s common for startups to stretch the truth to make themselves look better, even if it’s just inflating a few numbers. It’s much better for your reputation long-term to report honestly to the best of your ability.
- Answer questions directly and honestly. Just as you did with your employees, it’s important to answer public questions directly and honestly. Don’t change the subject or give empty, generic answers; provide whatever information you can, and if you can’t provide information, explain why you can’t.
- Coordinate your PR team for consistency. Ensure you train everyone on your marketing and PR teams on the importance of transparency and educate them on best practices. This will ensure that you have a consistent approach across all channels.
Achieving transparency in an organization is often easier said than done. However, with the right strategy and a coordinated team, almost any startup can adopt transparent practices and make themselves more visible, both internally and externally. From there, the benefits will become evident.