How to Define Transparency in Business: The Hidden Key to Corporate Profits

Transparency in business is the practice of providing visibility into day-to-day operations, compliance, and key business decisions for customers, employees, and investors. 

If your business hasn’t placed a strong enough emphasis on transparency, it turns out your parents were right all along: honesty really is the best policy. 

Why does transparency matter? Transparency in business is the key to building internal and external relationships. Customers, employees, and shareholders want to be in the loop, and transparent practices can help create connections based on mutual trust and respect. 

Transparency is the new normal: Gone are the days of painstakingly guarding “company secrets” and evading employees’ questions about profits. The new way of working is about sharing what makes you successful and using that to attract talent, increase profits, and build partnerships with other businesses.

How leading companies are modeling transparency: Businesses like Whole Foods and Atlassian exemplify how transparency can take you to the top. In this post, we’ll define transparency and give examples to help you implement transparent policies.

Before we get started on how you can improve transparency across your organization, let’s make sure we’re on the same page about defining it. 

How to define transparency in business

Transparency in business means being honest and forthcoming with employees, customers,  and stakeholders. Transparent business leaders disclose knowledge and company information so their team and customers can make informed decisions and keep shareholders informed.

For example, let’s say a rising tech company is on the verge of going public if they can string together a few solid quarters. By sharing this info with employees and even offering some equity, they can bolster the team to reach peak performance and reap the rewards. Everyone wins.

However, this example is a lofty one. To be a transparent business, you’ll need to start small. As the old saying goes, you have to give trust to get trust — that is the crux of business transparency.

While this concept can be difficult for leaders to accept, transparency has undeniable benefits.

Why should businesses aim for transparency?

Businesses should aim for transparency for the moral reasons we pride ourselves on as human beings, as well as for the financial and social benefits this openness provides. It’s more than just a cultural PR stunt, as it provides real value in the form of:

• Increased profits: The Harvard Business Review found that high-trust companies are 2.5 times more likely to be high-performing revenue organizations than low-trust companies.
  
• Heightened customer satisfaction: In 2016, Label Insight found that 94% of consumers prefer brands that practice transparency. That number has only increased in subsequent years, with 86% of Americans saying business transparency is more important than ever.
  
• Reduced employee turnover: According to SHRM, pay transparency decreases employee’s intention to quit by 30%.”

• Better employee experience: In a study by Slack, 80% of employees said they want to learn more about how leaders make decisions in their organization. 87% want their future employers to be transparent.

How to show transparency in business

If you’re trying to better understand how you can show transparency in your organization, there are a number of different directions you can go. Start with a few simple ideas, like: 

• Providing better clarity in job descriptions. Start from the source. Ensure job descriptions include salary expectations, benefits, job duties, and anything prospective candidates need. This will not only cut down the applicant pool and help you speed up your search, but it also shows that you’re fostering employee trust from the beginning.
  
• Sharing DEI updates and goals. Be open about your aspirations around Diversity, Equity, and Inclusion (DEI) goals. More importantly, be open and honest about the current state and what initiatives you’re trying to reach these goals.
  
• Prioritizing financial transparency. Look to technology to provide regular updates on the state of the company’s earnings, revenue breakdown, and financial goals. Transparency in this area helps build trust with employees, customers, and potential investors.
  
• Increasing clarity on data collection and protection. Work with sensitive data or manage hybrid teams. You might benefit from employee monitoring software — but only if you’re transparent about how you use it, what data you collect, and how you protect your team.

Transparency with employees, customers, and stakeholders

While the ideas above are a nice starting point, it’s important to note that transparency looks different for employees, customers, board members, and other key stakeholders. You’ll need to approach transparency differently based on the types of people you’re working with:

• Employees. Transparency with employees often starts before they join the team. Foster trust by providing insight into job descriptions, salary, expectations, and company culture in the hiring stage. For current employees, keep them in the loop on career growth opportunities and decisions about the tools you use daily. If you lead with transparency, you can simplify onboarding and improve retention. 

• Customers. Winning new customers costs 5 to 25 times more than keeping an existing one. 94% of consumers prefer brands that provide transparency, and 87% are willing to pay more for these trusted brands, so establishing transparency around pricing, product updates, and overall company direction is crucial.
  
• Board members. Would you invest in an idea if you had no idea how your money was being spent? Probably not. Transparency with investors, board members, and C-Suite executives is crucial for establishing trust, lowering risks, and ensuring that money is safe and being used correctly. 

Now that you’ve got a better understanding of how to foster transparency across different demographics and key stakeholders, let’s delve into something a bit more challenging: how you can build transparency across remote and hybrid teams. 

Building transparency in a remote or hybrid team

Now that you understand the benefits of fostering transparency and have seen some real-world examples, it’s time to take a look at some key strategies you can employ as a remote team.

Here are some ways you can create a culture of transparency for your remote business: 

Create open communication channels. Whether it’s Slack, email, or another tool from your tech stack, encourage transparency through regular check-ins and provide updates to keep your remote team on the same page. 

Share goals and performance metrics. How can you expect teams to reach their full potential if they don’t know what they’re working towards? OKRs, Goals, and other performance metrics are intended to be shared to better align team efforts with strategic objectives.

Transparent time tracking and task management. Finding and implementing the right time tracking and task management tools is especially important for remote teams. Work to establish communication guidelines and lead by example to ensure others follow suit.

Be open about the use of monitoring tools. 60% of remote teams are using monitoring software, but what percentage of those companies keep their employees in the loop? If you plan to use employee monitoring software, be vocal about what you’re going to track.

Create Diversity, Equity, and Inclusion (DEI) initiatives. Make sure you’re open about DEI policies and progress towards your goals there. Remote teams can reap the benefits of a wider, global talent pool, but only if they make strides to prioritize employee well-being. 

As we briefly touched on before, there are several things you can do to become a more transparent company. Here is a list of things you could share with employees to help your business create transparency:

• Overall site visits
• Overall profit
• Number of total customers
• Number of new customers
• Net revenue
• Fees they’ve accrued
• Public revenues
• Wages
• Hiring policies
• Diversity stats

There are also many actions you can take as a business that can lead to more transparency, such as:

• Engage customers on social media.
• Invite responses from your customers on your product or service.
• Make sure to have a good response time when it comes to answering customers’ queries.
• Build experiences or services that benefit your customers more than yourself and still reflect your company’s values.
• Don’t wait to dispense information.
• Another great way to promote internal transparency is to utilize a few tools that allow everyone on your team to be on the same page.our

Using a time tracking software like Hubstaff promotes transparency between clients, employers, and employees. This provides insight into how your team works, where time is spent, which projects are taking too much time, and how productive everyone is week to week.

Managers can see screenshots of work being done while team members log billable time and track everyone’s activity levels and see how engaged each team member is. Hubstaff will even monitor which apps and websites they spend the most time on. Also, all this information is compiled into reports so you can see exactly what services you and your clients are paying for.

Because managers and clients get a clearer picture of the work being done, employees don’t have to spend time sending weekly email reports or justifying their time. Transparency in business means additional accountability and less wasted time clarifying what work is getting done.

Examples of transparency in business

Trust is a real commodity that businesses can prioritize for higher profits, better retention, and improved culture. However, there are still skeptics or those looking to reach this highly elusive and sought-after goal. Let’s take a look at how well-known businesses are establishing a culture of trust and transparency across their organization: 

Atlassian town halls: Atlassian hosts weekly half-hour all-hands meetings with their entire team. Then, the leadership ends the meeting with a Q&A so anyone can ask questions. This company-wide meeting helps them remain transparent and update their team on crucial information.

Whole Foods’s GMO disclosures: Whole Foods communicates transparently with customers about its GMO standards and is the first grocery store to require all the products it sells to be non-GMO. On top of that requirement, they expect transparency from their supplies, requiring all non-GMO labels in their store to be third-party verified or certified. This establishes customer trust and establishes transparent expectations for their suppliers.

Mailchimp Transparency reports: Since 2019, Mailchimp has published transparency reports to publicly share their method of responding to information requests. This information sharing, in addition to a plain language Privacy Policy, helps ensure that customers trust Mailchimp with their data.

Hubstaff ProfitWell earnings: At Hubstaff, we share our earnings company-wide using ProfitWell and openly discuss our failures and achievements on our blog. This helps us remain truthful with our team and customers and has also helped us partner with investors like WestView Capital.

Values and ethics: transparency as a north star

Transparency works best when it flows from a clear set of values — the standards a company uses to make decisions when no one’s watching.

Whole Foods, as an organization, lives by six core values. They are, according to their website:

1. We Sell the Highest Quality Natural and Organic Foods

• We appreciate and celebrate great food.
  

2. We Satisfy and Delight Our Customers

• Our customers are the lifeblood of our business and our most important stakeholders.
  

3. We Promote Team Member Growth and Happiness

• Our business success is dependent upon the collective energy, intelligence, and contributions of all our Team Members.
  

4. We Practice Win-Win Partnerships with Our Suppliers

• We are part of an interdependent business ecosystem.
  

5. We Create Profits and Prosperity

• We earn profits every day through voluntary exchange with our customers.
  

6. We Care About Our Community and the Environment

Values provide consistency in decision-making and give teams something to stand for and aspire to. It might take some careful thought, but find that thing that makes your business unique. 

Whole Foods summarizes their values as “Our purpose is to nourish people and the planet.” This is the perfect example of integrity in a business: a place that truly wants to help and is doing its best to do so.

It’s one thing to lay out your values, but it’s another to put them into action. Let’s explore the more sensitive side of transparency: how you see the work itself. 

Transparency and employee monitoring: why “silent” isn’t “secret”

‘Silent’ or ‘background’ tracking apps can evoke the opposite of a transparent company culture — but silent doesn’t have to mean secret. Silent, background-tracking apps are designed to streamline the tracking process and reduce the likelihood of manual errors. These apps aren’t a pass to dishonesty surrounding what’s being tracked, why, and how user data will be stored and protected.

The opposite of transparent monitoring isn’t silent monitoring. It’s actually intentionally undisclosed monitoring that’s the issue. In fact, we’d argue that silent monitoring that’s explicitly disclosed via a clear written policy is more transparent than overt monitoring without a predisclosed purpose. 

With that in mind, here’s a checklist of things to consider when disclosing background monitoring to your team: 

• Create a clear tracking policy. No matter the tracking method you use, a written, clearly communicated tracking policy is essential. Share what’s being captured (hours, activity, apps/URLs, etc.) and during what hours.
  
• Articulate what devices you’ll monitor. Do you plan to monitor your team on personal or company-owned devices? Will you need mobile device monitoring? These questions are important and can lead to serious legal consequences if overlooked.
  
• Commit to proper data protection. If you plan to monitor employees, you’ll need to adhere to encryption and compliance standards like GDPR, SOC 2 Type II, HIPAA, CCPA, and LGPD. It’s important to follow regional laws and best practices on data collection and usage, create clear policies, and effectively articulate that info to your teams.
  
• Clearly explain your monitoring goals. It’s important to disclose your desired outcome. Are you looking to increase timesheet accuracy? Ensure billable hours are accurate? Preserve records and create better audit trails? Your team deserves to know your true intentions. 

If you’re looking to implement ethical company-owned device tracking that monitors time and activity in the background, look no further.

With Hubstaff, you simply define your tracking policy upfront, share it with employees per our guiding principles, and deploy the software to company-owned devices for seamless background tracking. There are no start-and-stop timers, and all data is encrypted and maintained in compliance with GDPR, SOC 2 Type II, and HIPAA standards. 

Are there risks to too much transparency?

We’ll be the first to admit that while there are undeniable benefits to increasing transparency at work, that doesn’t mean that transparency won’t have some drawbacks, like:

• Too much transparency. You risk overwhelming executives and hindering decision-making when too many people have access to information. Make sure you don’t overload employees with information and meetings on their calendars that they don’t need to attend.
  
• Communication gaps. With limited opportunities for face-to-face interactions, language barriers, and cultural differences, even transparent remote teams can experience miscommunications and other issues.
  
• Data privacy and security. The globalization of remote work has countless perks, but it does make security more challenging. Remote teams will need to balance transparency while still protecting sensitive information. 

The Harvard Business Review cites an example where transparency didn’t work out.

“In a tragic example, at a Dutch energy supplier that used rigorous, transparent safety standards to deal with toxic waste, employees came to work one day to find the company’s safety officer dead of a workplace accident. It appeared he had violated the careful standards he himself had implemented. Rather than asking why or how this happened to a person with an almost perfect record of past behavior, the company focused on the facts instead of the reasons for those facts. This gave the impression that the safety officer was being blamed for what had happened. That, in turn, hurt morale and left employees feeling mistrustful.”

Transparency is objectively the right approach to employee monitoring, but businesses will still need to learn from others’ mistakes to prevent their own. Without data for context, monitoring often backfires. That’s why it’s crucial to communicate and have sound policies in place on the exact data you plan to collect. 

How we define and enable transparency at Hubstaff 

At Hubstaff, we feel that transparency is crucial to building trust — and that it’s a two-way street.

Our software gives leaders a glimpse into our work schedules, activity, the websites and apps we use, and how often we spend time on focus work vs. meetings. In turn, we’re free to create our own asynchronous schedules, decline meetings on Fridays, and see company performance in real time with ProfitWell.

At Hubstaff, work-life balance is one of our core values. You can break up your week however you like, but once you hit 40 hours, our hourly limits feature stops the timer automatically. This saves the company overtime costs and creates a culture where employees are never expected to work overtime.

Using the Insights add-on, employees can track productivity, time spent in meetings, and how they stack up with industry benchmarks. Managers know how much time their team spends on tasks without micromanaging and constant check-ins.

These features are just a few of many built around our guiding principles of transparency, access, and control. At the end of the day, it really boils down to creating a culture and product that: 

• Prioritizes honesty
• Challenges others and ourselves
• Emphasizes both creativity and accuracy. 
• Supports teams around the globe

Transparency fosters trust. Sharing your company’s successes and failures helps you build a reputation with employees, customers, and stakeholders that you have their best interests at heart. When you genuinely value those who drive your success, the results will surely follow. 

Start your transparency transformation

Building a transparent work culture doesn’t happen overnight, but the benefits of investing in honest communication are too critical to ignore. Luckily, you don’t have to navigate it alone. Hubstaff is time tracking and workforce management app that helps you maintain your culture whether in-person, remote, or hybrid.

How do you define transparency in business? How have you adapted various company operations and culture to make a more transparent organization? We’d love to hear from you.