What makes Zappos competitive

Transparency in companies: the next change in corporate development

In the past, transparency was a taboo subject in companies. From recipes to employee salaries - the more opaque the operation of a company was, both to the public and to its employees, the greater the chances of success.

In today's market, however, companies that jealously guard their secret of success are increasingly risking the opposite, namely slowing down employee engagement and stifling their potential for brand affinity in the market. In an increasingly networked world, transparency is the ultimate. Emerging companies make big profits - both economically and in terms of their image - by publicly sharing everything - from executive income to the diversity of their employees to the manufacturing process of their products.

What exactly does a company gain by opening up to scrutiny and competition? Here are some of the biggest benefits cited by companies that already do it, employees who want more, and consumers who make decisions based on it.

1. Transparency attracts top talent

The data available that link employee satisfaction with transparency in companies speak for themselves. A staggering 87% of employees surveyed by Slack in the Future of Work 2018 study said they hope their next job will be transparent. Another study by the company for employee feedback TINYpulse, in which more than 40,000 employees were surveyed, showed that transparency is the most important factor for their overall satisfaction.

This means that the majority of employees, who are more mobile than ever before, want to work for ethical companies today. When the best professionals choose the jobs that make them happiest - including current employees who might consider new opportunities in more open companies - then transparency is more valuable than ever.

2. Transparency creates trust

It is also in the eyes of the customer transparency a synonym for in business life ethics. A survey by the consulting firm Label Insight showed that 94% of consumers prefer brands that are transparent. If companies don't communicate openly on their own initiative, consumers are likely to look elsewhere for the information they want. Why should you allow a third party company to woo customers whose loyalty you could earn yourself?

The demand for transparency is likely to be loud in your company too. Slack's Future of Work study also showed that 80% of employees want to know more about how decisions are made by their employers. 55% of executives believe that their companies are very transparent, but only 18% of their employees agree.

And when psychological security has become important for high-performance project teams, you gain the trust of your employees above all because they have access to information about their company and can make it their own.

"My job was so much easier after admitting that I have some great ideas, but I don't know the answer to all of my questions," said Katy Shields, vice president of People and Places for the photo app start-up and the creative community VSCO. “Our employees are closest to their work and customers and know what is best for our company. Of course you know context yourself that you may not be familiar with, but they also have ideas for it that you cannot come up with yourself. Therefore sharing must be part of the corporate culture. "

3. Company transparency leads to better performance

Employees can only be as efficient as the information they have and the decision-making power that is given to them. Therefore, VSCO has transformed its originally hierarchical decision-making strategy into a more decentralized one. The following steps helped:

  • Creation of internal wikis
  • Publication of all Slack channels (except budget planning and confidential HR matters)
  • Empowering employees to make important decisions and influence potentially groundbreaking ideas without waiting for managerial approval

“All employees think like a responsible person because they are, too,” says Shields. “The more and the sooner companies can give up control, the more the right kind of self-correcting culture is created in which employees are as much the best advocates as the biggest critics when the necessary work steps are not carried out as a team. Those who give employees responsibility and information, in turn, receive the necessary information themselves. "

4. Transparency improves efficiency

The online shoe retailer Zappos has made a name for itself because it has committed itself to exemplary transparency in the company, away from a “retailer extranet” and towards internal databases that enable employees to process every transaction, every budget and view every issue as well as everything about individual roles and team projects. According to Fred Mossler, who headed the Zappos merchandising team for almost two decades, these measures ensure that employees and business partners understand each other, which saves time and resources that would otherwise be mistrusted by a lack of employee commitment or simply a lack of understanding of the bigger picture would be lost.

5. Transparency strengthens business accountability

We just have to look at the effects of Fast Food Nation (2001) and Super size me (2004) look at the fast food industry to understand why it is also bad for corporate health to compromise on transparency for reasons of competitiveness. In today's world, companies - especially large ones - have to fight against widespread public distrust.

By making data easily accessible to employees and the public, executives can hold their companies accountable, ensuring that every step the company takes is in the interests of its well-being. This then also has an impact on the external return on investment. Numerous studies, including the aforementioned Label Insight survey, have found that consumers are willing to pay more for products from transparent companies.

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