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The Pros and Cons of Transparent Corporate Cultures

Posted by Sarah Greesonbach

December 1, 2016

There are a number of different kinds of transparency we could talk about when we talk about building a transparent corporate culture. There’s pay transparency, like Buffer and SumAll, in which employees know how much their coworkers earn or salaries are listed publically; there’s internal transparency in regards to information and communication; and there’s external transparency regarding the public.

At Glassdoor, we’re pro-transparency in all of these categories. Our research and studies have shown that a transparent corporate culture improves morale and increases the bottom line, and our own experience has confirmed those results: launching the Know Your Worth™ tool prompted our executive team to quickly examine total compensation, but, in the end, the new information and honest discussion empowered and educated our employees.  

[Related: How to Nail an Interview With a Values-Driven Company]

That said, there are situations in which a transparent corporate culture could have a negative effect on productivity. For example, keeping too many people informed of too many projects or updates is a leading cause of organizational drag. Companies that need to develop innovative products quickly, like Apple and Google, may intentionally limit transparency between departments so that each team can focus on what they do best.

So, how do you know which type and how much transparency will create the most effective corporate culture for your company? Here are a few guidelines to consider:

A transparent corporate culture can help when…

  • Employees don’t have access to the information they need to do their jobs

Information is a valuable asset within a company. However, when something is of value, it can intentionally or unintentionally become a bargaining chip, leading individuals to withhold information or avoid sharing it unless it’s need-to-know.

If you see a disturbing trend of employees unable to make decisions or move forward on projects because of a lack of information, a more transparent corporate culture may help. Making free communication a company-wide priority can put pressure on information withholders to change how they communicate with their peers and subordinates.  

[Related: A CEO Reveals How to Increase Your Value as an Employee]

  • A lack of trust is creating a toxic company culture

Information silos and communication blocks make individual employees feel sabotaged, excluded, and uninformed. Eventually, these feelings cause trust issues within your organization, which in turn will damage your team’s ability to function effectively.

If you see a lack of trust developing among your team members, your management team needs to be more transparent about intent, expectations, perceptions, and information. Open communication and transparency can help prevent a borderline company culture from becoming completely toxic.

  • You want to communicate your values

When it comes to external transparency, many companies focus on simply meeting minimum compliance standards. However, if your customers are values-focused, you can earn a lot of trust by being transparent about those values.

For example, at Glassdoor, we’re very passionate about closing the gender pay gap, and we’re transparent about how our products support that mission. Whole Foods, on the other hand, is troubleshooting a class action lawsuit by working to become the first national grocery chain to offer full GMO transparency on all food products.

[Related: What's Your Unique Value Proposition?]

A transparent corporate culture can hinder when…

  • You already have a deeply toxic culture

If you see clear signs of a toxic culture (chronic information silos, back-biting, and gossip), throwing transparency into the mix may not help. For employees who are accustomed to negative behavior in the workplace, initial efforts to build a transparent corporate culture may simply add more fuel to the fire. Instead, you should first focus on cleaning up toxic behaviors and troubleshooting employee situations that contribute to a lack of trust, productivity, and communication.

  • You have bigger fish to fry

Transparency should be embraced for its own virtues, not as a quick solution to an acute problem. And even in the healthiest and most “ready” companies, transitioning to transparency is difficult. If your organization is going through a crisis or reacting to a large change in your industry, it’s not the best time to shift gears and implement a transparent corporate culture.

  • You want “all or nothing” transparency

Like most business principles, transparency can be applied along a spectrum. It’s just as possible to embrace a transparent corporate culture and not go far enough as it is to embrace it and go too far.

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For example, if innovation is a prime value for your organization, the intense scrutiny that can come from complete transparency may limit creativity and risks within your workplace. That’s why it’s important to embrace just as much transparency as your company needs to be more efficient without going over the line and losing productivity. In this example, it would be smarter to embrace transparency with “zones of attention, slack, and time” that place smart boundaries between those who need to know, who can make decisions, and who can interrupt.

While a transparent corporate culture can deliver powerful results, isn’t a cure-all for every organization. Consider the pros and cons of bringing more transparency into your workplace before you take action.