4 Areas of Business That Need More Transparency
The rise in business transparency can be attributed largely to two factors. First, digital technology has raised the curtain on information availability (a la the Wizard of Oz). Second, in an era of rampant misinformation, most people simply want the truth.
Some companies have fully embraced transparency in all aspects of their operations. Others are dipping their toes into the clear waters. As more and more research indicates that transparency bolsters a company’s bottom line, every business should be exploring its options.
Customers are loyal to brands they trust, and trust is built by transparency. It’s certainly easier to become transparent in some areas of business than in others. But here are four you should look into right now.
1. Salaries, Wages, and Benefits
One way businesses can bring transparency to salaries, wages, and benefits are by using an online payroll platform. Payroll software can help employees see exactly what they’re getting paid and how much is being withheld for taxes, benefit premiums, etc.
But while payroll software can provide transparency about what a company is paying a particular individual, what about that person’s colleagues? Companies should strive for transparency here, too.
Some employers bristle at the very thought of employees discussing their pay and benefits among themselves. It could be because they aren’t paying workers equitably. It could be because they doubt employees will understand pay differences due to factors such as education or expertise.
If your business isn’t being equitable, that’s a problem you need to address immediately. If you’re worried about employees not having the full picture, that’s a prime opportunity for transparency.
Who gets paid what should be a calculus of various factors, and companies should be open about that general formula. If an advanced degree will up a person’s salary by a certain percentage, say so. If a particular certification will produce a bump in pay, state that, too. Disclosing these factors helps employees not only understand why some co-workers are paid more but also what it takes to get a raise.
Transparency regarding salaries and wages from the top down can help in the recruitment and retention of great employees. If what you’re paying and why is on the up and up, you have nothing to hide.
2. Supply Chain
Human rights, sustainability, purity of ingredients, animal abuse, and the environmental impact of products and services are growing concerns. More and more consumers base buying decisions on where, how, and by whom a company’s products are manufactured.
Moreover, consumers want confirmation that products comply with or exceed established safety standards. Whether they’re eating a product or using it, they want to know it won’t harm them.
Depending on where you fall in the supply chain, verifying your product’s path can take a few steps or a lot. The closer you are to the source, the less time it will take. If you’re just placing the item on your retail store shelf, though, you’ll have more work to do.
Customers are no longer satisfied with a business owner’s shoulder shrug when asked about working conditions in an overseas factory. They expect you to know where your goods come from. Moreover, you, as the owner, should want to know.
Explore your product supply chains, adjust as needed, then let your customers know where your products come from. Such transparency will speak volumes about your company’s values. That, in turn, will keep those customers coming back for more.
3. Diversity, Equity, and Inclusion
Diversity, equity, and inclusion are hot topics in a world seeking to correct long-practiced injustices. Of course, there are federal, state, and local laws regulating DEI practices in hiring. However, many companies are motivated by doing the right thing regardless of the law.
It’s difficult for many business owners to know where to even begin with these issues. This is especially true for small businesses with a handful of employees they hire from the local community. Businesses in predominantly white rural and suburban areas may really struggle to diversify their workforce.
The good news is there’s an abundance of step-by-step guidance available about subjects like hiring practices and racial diversity. The first step is learning what your company needs to address. The second is to put related policies in writing.
Many small businesses don’t have written policies for these issues, although they should. Such policies demand that business owners give these issues meaningful thought. It’s also much easier to be transparent about them because written policies can be made easily accessible.
Employees who understand an employer’s workforce goals tend to be more content and invested in their work. Customers want to support brands that have made the effort to be deliberately inclusive regarding the composition of their workforce. Put your policy in writing, and let your stakeholders read all about it.
4. Financial Performance
A growing number of companies of all types, from start-ups to major corporations, are going public with their financial figures. Isn’t the profitability of your business just your business? Not if you’re a publicly-traded company, it’s not. And even if your company is private, this information doesn’t have to be and perhaps should not be.
As noted, financial transparency is a must if a business has investors. They are entitled to full disclosure about money in, money out, and the true bottom line. There are, however, good reasons for even private companies to bear those figures for all the world to see.
If customers see what you’re spending to produce your product, they’ll understand why they’re paying the price on the tag. Perhaps they’ll learn your products are being manufactured in an overseas factory that pays a living wage. That fact may make them willing to pay more for your product than another company’s less expensive one.
Disclosing financial information means disclosing all the costs of doing business. If your company’s stakeholders like what they see, they may just keep doing business with you.
For all the benefits your company may garner by becoming more transparent, be wary of giving too much away. Trade secrets, for example, are justifiably secret, and it’s wise to keep them so. Allowing your competition to know too much could put you out of business.
Business transparency breeds trust and trust breeds loyalty. You have a problem if there’s something about your business that you want to keep hidden. Choosing to be transparent will force you to address that issue. For businesses of all types, it’s wise to pay attention to the man — and everything else — behind the curtain.
This article has been published in accordance with Socialnomics’ disclosure policy.