Most companies have secrets. They’re not necessarily sinister, but many things – salaries, profits and losses, failures, personnel issues – tend to be kept close to the vest, known only to a select few at the very top of a company’s ladder.
But a lack of transparency has been a workplace problem for years. A 2013 survey showed management transparency to be the top determining factor in employee happiness; data from Slack’s 2018 Future of Work Study, which surveyed 1,400 US workers, showed that “80 percent of workers want to know more about how decisions are made in their organization and 87 percent want their future company to be transparent”. Not only are workers happier in transparent workplaces, but they may also be more likely to stay in their jobs; research shows when communication is poor, many workers are more likely to consider leaving their positions.
Red-flag data like this has pushed some companies to pivot toward “radical transparency” – pulling back the curtain on corporate innerworkings, once held back from collective view.
The term radical transparency isn’t new; it emerged in the early 1990s, as Ray Dalio founded Bridgewater Associates, now the world’s largest hedge fund management firm. In his book, Principles, Dalio explained the choice to institute policies that allow anyone at Bridgewater to access everything from financial records to the minutes of meetings among executives, and to weigh in on company direction and decision-making.
“I want independent thinkers who are going to disagree,” wrote Dalio. “The most important things I want are meaningful work and meaningful relationships. And I believe that the way to get those is through radical truth and radical transparency. In order to be successful, we have to have independent thinkers – so independent that they’ll bet against the consensus. You have to put your honest thoughts on the table.”
Perhaps the most high-profile example of radical transparency in action is global streaming-media company Netflix, which employs more than 12,000 people. In Netflix’s set-up, decision-making processes are public: the company uses a tactic called “sunshining”, where people openly explain their controversial decisions. Anyone at the director level and above has access to the salaries of every company employee. And when employees are pushed out of the organisation, executives are encouraged to explain publicly why people were fired.
There’s plenty of evidence to suggest radical transparency can be helpful for companies and their workers – but only if organisations employ the policy correctly. Implemented wrong, this practise can mire organisations in politics, kill creativity and innovation and even scare workers out of being open – entirely defeating the purpose of transparency.
Open for debate
Companies across the globe have leaned into their own versions of radical transparency.
At Finnish software consultancy Reaktor, radical transparency means company policy and business decisions are put up for discussion in an open online forum. Through their policy, says Kati Vilkki, an organisational coach at the company, workers at all levels are able to weigh in on company policy and strategy. This not only makes them privy to internal discussions, but also invites them to join in conversations that might have once happened privately.
As a result, there’s often wide-ranging debate, says Vilkki; input comes from people who are brand new to the company, those with years of experience and everyone in between. Hearing feedback from everyone, as opposed to depending on a tiny group of senior managers to make decisions and then decrees, levels the playing field, she adds.
“People immediately feel valued and that they’re contributing and their opinions matter,” she says. “You don’t have to wait until you’re there five years and somebody asks, ‘What do you think?’. We believe there is so much wisdom, and so much experience embedded in the organisation and in the people we have, we want to get all the possible arguments in order to make good decisions.”
In many corporate situations, set-ups like this can benefit employees. This model of “top-to-bottom, inside-out transparency has the benefit of inspiring trust among workers, and a greater understanding of decisions”, says Ethan Bernstein, an associate professor of business administration at Harvard Business School.
You don’t have to wait until you’re there five years and somebody asks, ‘What do you think?’ – Kati Vilkki
However, radical-transparency policies aren’t a silver bullet for innovation and equity – they may even gum up the works for progress. Bernstein says soliciting input on every decision, from the very start of a debate, can complicate things.
“Politics can get in the way of a decision being made,” he says. “Every time you made a statement, it’d be public, and people would have opinions that are then necessary to address.” He doesn’t believe radical transparency is a “bad practise”, but he believes “you maybe can’t have every conversation out in the open and get things done”.
If all goes well, radical transparency can create an open environment, levelling the playing field across employees of different ranks. But this result is contingent on each member of the organisation trusting their opinion will be equally heard and respected. For instance, situations in which teams openly pick apart failures and shortcomings of employees at any level can only work if the company has a foundational environment in which workers feel comfortable speaking up without retaliation.
“If you have openness but people don’t feel respected and trusted, it won’t work,” says Vilkki. “It can cause people to start protecting themselves, because we all want to look good. If you make a mistake and you don’t feel respected and trusted, you’re more likely to hide it.”
This can breed fear and an unwillingness to share, she says, which stunts innovation – and poisons the entire purpose of implementing radical transparency. READ MORE
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