Why has Clear stopped its business

Transparency: secrecy or total openness - how transparent should companies be?

Hide decisions and key figures from employees - or reveal every smallest detail? How much transparency makes your employees satisfied and encourages them to perform better.

Some companies only vaguely indicate to their employees how much revenue and profit they are making. And if things go very badly, the employees only find out from the press that a company location is closing or the company is going bankrupt. For some years now, start-ups in particular have shown that there is another way: In some companies, employees determine their own salaries and can view the company account and all business key figures at any time. Transparency is very important here.

Transparency doesn't mean sharing everything

But is it too much of a good thing when bosses disclose everything?

Yes, would the American author and management consultant Simon Sinek answer. “Being transparent doesn't mean sharing every little detail,” he wrote in one of his daily newsletters. "Being transparent means always providing context for our decisions."

Columnist, coach and entrepreneur Marcel Schwantes wrote down for the US business magazine Inc what Sinek's statement means for everyday bosses.

“Transparency is a management buzzword that you didn't hear 10 or 15 years ago,” says Schwantes. It used to be normal for company bosses to make decisions in secret. Today it strengthens the trust of employees when they learn more - especially younger employees expect and even ask their bosses to do so.

A start-up even lets customers make decisions

Two examples: The condom manufacturer Einhorn gives its employees a look at the company account and disclosed all salaries. The beverage company Premium Cola allows not only employees, but also customers, freight forwarders and restaurateurs to have a say and make decisions - for example about the origin of the ingredients or the background to account movements.

Both companies landed in the media with these unconventional steps and became known to a wider clientele. A pleasant side effect of transparency, but: "The real reason transparency is important: employees have to understand how and why things happen and decisions are made," says Schwantes. If, for example, the owner of a sporting goods manufacturer decides to increase the prices of all products but does not explain his reasons for this step to his employees, this can cause frustration - because the employees find it difficult to explain when they meet angry customers.

A lack of transparency means that employees are at a standstill

According to Schwantes, such non-transparent companies are often characterized by “command-and-control hierarchies” and determined by fear. Managers would hoard information and keep employees at a standstill. The boss is practically a dictator here and risks dissatisfied employees venting their anger on employer rating portals and in social networks.

In transparent companies, on the other hand, the boss takes on a different role: instead of ruling over his employees, he serves them. He supports them in doing a good job.

If, for example, the sporting goods manufacturer were to justify the price increase to its employees, they could also explain to customers why a soccer shoe suddenly costs 20 euros more. For example, because the boss wants to pay the seamstresses in the country of manufacture fairer wages or the material costs have risen sharply. In this way, the employees can understand the decision and also explain it to the customer.

Admit your own mistakes

Working transparently also means admitting your own mistakes - as Joel Gascoigne, managing director of the social media management tool Buffer, showed. He had to lay off eleven percent of his employees in 2016. Instead of giving flimsy reasons, he publicly stated, “This is the result of my greatest mistake. It is not the result of a changing market, but completely self-inflicted. I made bad decisions. ”He simply hired too many new employees too quickly. On the Buffer website, Gascoigne writes in detail about the mistakes he has made and the changes he is trying to make.

Some would describe this public admission of guilt as naive or entrepreneurial suicide, says Schwantes. "But it strengthened Buffer's corporate culture," said the coach. His advice to bosses: “Managers should work transparently in order to create trust and solve problems. Otherwise, confusion and uncertainty will create new problems. "

Perfectly prepared for employee appraisals

With the checklist "Perfectly prepared for employee appraisals" you, as a manager, go into conversation with your employees with a good feeling - and you know exactly what you want to say. Download the checklist now!