Last year, PBS highlighted a paper written by a group of economists explaining why Uber drivers chose to fight back against the company’s lack of transparency. Drivers are managed by an algorithm—almost from the moment they submit their application, all the way through to their daily route assignments. This opaque form of communication led to a lack of trust on the part of the drivers, ultimately causing them to pursue a variety of retaliatory strikes against Uber, including organizing mass switch-offs to increase surge pricing payouts.
This is an extreme example that highlights something that is inherently true: trust and transparency are deeply linked.
There are also times, however, when too much transparency can also be difficult. For instance, Time reports that oversharing pay data can lead to dissatisfaction, even in a group of previously engaged employees. The question is this: how can business leaders walk the line between too much and not enough transparency?
It all comes down to what and when they choose to communicate.
Types of Openness and Transparency in the Workplace
There are several types of transparencies that matter to employees, such as how policy decisions are made or how performance management processes really work. Additionally, pay information is a common target for transparency conversations as well, though it can be tricky to navigate (as referenced above).
The thing to remember is that transparency isn’t as simple as an on/off switch. Instead, think of it as a spectrum. Consider the following examples:
Buffer is a company that is at the leading edge of transparency. Want to see what the CEO earns, how the company makes decisions, or other important information? It’s all available on the firm’s website. This type of transparency has been built into the company’s culture from day one, and it’s one of the things Buffer believes differentiates itself from the competition.
The other end of the spectrum is a bureaucratic organization where the owners share no information about operations, finances, or other pertinent decisions. Employees may get information that trickles down through the chain of command, or they may be totally in the dark because transparency is not a priority.
The reality is that, for most employers, the right place is somewhere in the middle. You don’t have to post your pay grades on your website, but your default practice also shouldn’t be to keep information from employees. Instead, default to transparency unless there’s a compelling reason not to. It’s a great way to help workers feel connected to the culture and the purpose of the business.
The Business Benefits of Trust
Trust is more than a buzzword—it’s a powerful business performance enabler. A variety of research and anecdotal data point to the fact that transparency and trust lead to positive outcomes. Think about the below:
- Towers Watson research shows that open communication is one of the top three practices of high-performing employers.
- SHRM reported on one study showing that high-trust companies outperform others by 300%.
- Academic research by Helliwell & Huang shows that a 10% increase in organizational trust is equivalent to a 36% increase in pay for workers.
In a practical sense, look at what Salesforce has done with its gender pay equity focus in recent years. The firm realized several years back that its female workers were earning less than their male counterparts and therefore made a public adjustment to correct the issue. A few years later, the firm realized that the underlying practices still hadn’t changed, leading to yet another unequal distribution of compensation. This prompted yet another public adjustment and a promise to work on the core practices and processes that caused the issues. While a public statement (or two) could be misconstrued as a PR tactic, actions speak louder than words. Salesforce executives were candid about their process and the flaws they found. The public statements, therefore, provided opportunities for transparency and built long-term trust with employees.
This is a great example of how to balance trust and transparency. While the firm was transparent about the problem, nobody’s pay rate or job information was shared. In the end, the workers believe the company is more transparent and they are more likely to trust what the leaders have to say.
A Framework For Building Organizational Transparency
There’s obviously a clear case to be made for transparency in the workplace, but knowing you need transparency and building it into your culture are two very different things. One model that’s designed to help employers take a practical approach to improving transparency in their systems (particularly around pay) is the PRESS Framework. It walks through a series of steps to guide employers to better outcomes:
- Process: All too often the only people that understand compensation processes are those that work in compensation. Managers and employees are deeply affected by how these decisions are made, and helping to lay out the process for all of those involved can create more trust around compensation decisions.
- Ranges: Even if pay ranges are not shared publicly, employers should have those internal ranges available during salary conversations. Longstanding research tells us when employees don’t know what the range is, they often overestimate what their peers make. This can help to level-set expectations.
- Equity: Transparency can be more easily pursued if employers put fairness front and center. As with the Salesforce example above, transparency doesn’t have to be about opening the books on individual pay. It can be about trends and issues that need addressing from a more global perspective.
- Stretch: Some leaders shrink back at the thought of defaulting to a transparent approach. One way to ease into that mindset is to share something that makes them feel a bit uncomfortable. This isn’t about sharing data that would harm the organization, it’s just about being more open about decisions, processes, and other information.
- Solicit: Gather feedback in a survey to understand changing expectations around transparency. For instance, the #MeToo movement has changed expectations around certain types of behaviors in the workplace and employers need to be aware of this. If similar changes happen around transparency, whether related to pay or not, employers should respond appropriately.
At the end of the day, communicating clearly is the key to better transparency in the workplace. Transparency drives trust, and trust is deeply connected to business performance. Employees want to work for an organization that treats them fairly, and a certain degree of openness can breed trust in a powerful way.