Secrecy In Business Is Dead. Here's To Radical Transparency
In one of our previous posts we wrote about the power of distributed decision-making and the importance of transparency in this process. Employees need to know what's happening within their organization to make the best possible decisions. This is just one of the reasons most progressive organizations focus heavily on a culture of transparency.
But that's definitely not all. Radical transparency seems to matter because of more reasons. It has the power to (among others) increase perceptions of fairness, increase involvement in running a business, and boost engagement in the workplace. Part of being engaged at work is to feel important enough to have the same knowledge and information as everyone else in the organization.
Sadly, still many companies are falling short. In most traditional organizations information is limited to the leaders of the organization. They make the important decisions based on the information they receive from the various departments.
Often the leadership keeps this information secret. But keeping things a secret makes people less trusting, and less trusting employees are less likely to be engaged.
A radically different path
Luckily there are other ways to go about this. Progressive organizations realize that they will do better when everyone is aware of what's going on inside the organization. They realize that transparency allows them to experience multiple benefits. It helps them to move faster, because in order to increase decision-making speed and accuracy, front-line employees will need access to the latest information.
Most of the Bucket list organizations we visited allow their people to thrive by nurturing a radical 'open by default' policy and a far reaching 'ask me anything' mentality. But how do they do this? And what do they gain from it?
Keeping employees accurately informed and constantly in the loop is important and enables employees to put more trust in both team members and in their leaders. For this to be successful, organizations grant company-wide access to data, documents, financials and other information. They embrace information sharing within the complete organization in various ways.
Before progressive organizations start sharing information extensively in a transparent manner they first make sure their employees do have the knowledge to understand this information correctly.
Radical transparency without the proper knowledge base isn't going to be very powerful; it can even be harmful. For example, sharing financial numbers like revenue streams, costs, and P&L statements without the right context is, in many cases, doing more harm than good. Instead, teach employees the basics in financials before making them public for everyone to see.
Data open by default
After the right knowledge level is attained, a next step is to open up information that has been (partly) disclosed before. Start nurturing a culture that aims to make every piece of information available to every person in the company. In reality this will not be as easy as it sounds. And each organization will have to find his own way to go about this.
To establish an 'open by default' culture start by identifying the issues that the company is currently not sharing with the employees and find out why. Ask the people within the organization to question if there is a good reason not to share this information. If you can not come up with a good reason then be brave and decide to share it.
Data available in real-time
Data is often made available in real-time, and provides people the right information at the right time in order to make better and faster decisions and solve problems quicker. Leverage the power of technology and create platforms where people can share relevant data.
This enables easy collaboration between employees and, optionally, multiple other stakeholders such as suppliers and customers.
This step doesn't have to be fancy, nor complicated. Just think about well known and low-key technology platforms that most people are already familiar with. Think about technologies like Google Drive, Trello, Slack and WhatsApp.
Goals and progress are visible
It's easier to understand data and progress once it is made visible. Therefore, progressive organizations make their goals and processes visible throughout the workplace. This way employees are constantly aware of the direction and progress of their projects.
It increases ownership, and removes big chunks of the office politics because everyone can now suddenly see for themselves how the teams are performing.
Take inspiration from well established methodologies like Agile, Lean and Open-Book Management. And ideally communicate about real-time tracking parameters in one or several specific and measurable ways. Think about increasing productivity, increasing customer satisfaction, decreasing waste, improving feedback or preventing problems before they even arise.
What transparency looks like in practice
You might be convinced by now that radical transparency is the direction to go. But how do you start and where do you begin? How do you make sure you will get beyond the buzzword and don't end up in just discussing it.
In fact, the ideas and practices of radical transparency can be applied in various ways and on various levels. The room for gossip will disappear as soon as people know how things are decided and why certain things are happening.
On a team level various organizations start with daily stand-ups where people within teams share what they are working on and what progress they made. This is often done on the beginning of the day in front of an activity board.
Such an activity board further supports in making goals and daily activities transparent and therefore makes it easy for employees to see and understand what other people are working on. It leads to increased levels of collaboration and a better exchange of ideas.
Town hall meetings
Regular information sharing can be extended within the entire organization. Have leaders meet with their staff regularly by organizing so-called town-hall meetings. In these (bi)weekly or monthly company-wide meetings leaders listen to suggestion and answer questions from employees.
Don't make the meetings mandatory and make sure the leaders act in an authentic and honest way. Employees crave for information, and if you don't provide it yourself in an honest way then they'll will find it somewhere else anyway. The meetings will establish trust in leadership while allowing employees a better understanding of what goes on inside the organization.
People in the organization will stop wasting their time on questioning decision-making as soon as they know how and why decisions are made. Make your decision-making process transparent by establishing a process (like the advice process) that at least answers the following two questions; 1) Who made the decision? 2) And who is accountable for the outcomes of the decision?
How can people ever be involved in running a business if they have no clue how the business is doing? This is the question that open-book management tries to answer. It is about opening up important financials, teaching people how they are built up and how they can be influenced, and then leaving it up to them to find ways to improve it.
So far, it's one of the most powerful tools we've seen out there and it's still a mystery that not more traditional organizations start working with this. More information on it can be found in our blog post on the practice.
The most advanced and rebellious option would arguably be to open up salaries for the entire organization. We visited many organizations that reached such a level of transparency in an attempt not to hold anything back from their employees.
And they all report the same. The initial period after salaries are made public there is big excitement among the employees and people look up each other's salaries out of curiosity. But this barely lasts for a full day. The next day it is business as usual and nobody seems to be bothered by it anymore.
Bucket List pioneer Ken Everett on how it worked in their network organization: "At one conference, we offered (in open space) a session at which Peter [Everett] would show them our P&L, and what we earn. Indeed, our full financials. Several people were curious and turned up."
We’ve offered since, but no one has turned up any more. It’s a remarkable reaction [...] once the mystery is dispelled, the curiosity disappears.
The interesting thing is, that even if people don't know each other's salaries they will surely make their own estimations. There lies a serious danger in this. David Burkus, in his TED-talk below, shares: "In a survey of over 70,000 employees, an astonishing two-thirds of people who were paid at the market rate believed they were actually underpaid".
The path to transparency
While the above practices are all very powerful in increasing organizational transparency, it probably won't be a good idea to open up all information right away. As with the other trends of highly progressive workplaces it's more important to first figure out what is the most interesting to focus on within your team or organization. What information do people desire and require to do a better job?
Two-thirds of people who were paid at the market rate believed they were actually underpaid.
Find ways to support them in this and start experimenting by opening up more and more information. The transition to radical transparency might not be easy, but will definitely be worth the effort. But ignoring transparency within your organization and continuing to keep secrets from your employees might certainly turn out to be a radical mistake.
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All for pay transparency - it should be the first act of transparency. The gender pay gap is positively impacted by transparency of salary as companies are forced to confront gendered patterns of pay differential and soon realise the bias in their decision-making. Bit disappointed you didn't pick up on this element.
As part of our collaboration with Haier - one of the world's most pioneering companies - we research and share how they work. Recently, we chatted with leaders of the company, including Zhang Ruimin (CEO of Haier), Kevin Nolan (CEO of GE Appliances - the US part of Haier) and Yannick Fierling (CEO of Haier Europe). In this post, we share the recordings.
Bags and accessories made of truck tarpaulins - that's what Freitag is known for. With headquarters in Zurich, around 250 employees work for the cult label which uses holacratic methods. They introduced a new salary model in early 2019. Pascal Dulex is responsible for Organizational Culture & Creative Direction. He spoke to us about their sometimes-painful path to a new compensation system.