In a time when businesses are facing ever-increasing scrutiny, transparency is becoming more prevalent and attainable for organizations everywhere. Employees want to work for a company they can trust. So, to attract the right people, radical transparency right for your company? Here are some things to consider.
While anything with the term “radical” may seem like something to avoid, this trend is leading many business owners and executives to ask if radical transparency is right for their team.
In a time when businesses are perpetually facing ever-increasing scrutiny, transparency (radical or not) is becoming more prevalent and attainable for organizations everywhere. Employees want to work for a company they can trust, and consumers support companies with a transparency into their ethos.
What is radical transparency?
Radical transparency pushes the practice of honesty to its limits– absolutely no pretenses, no beating around the bush, not even for the sake of social etiquette. Ray Dalio, founder of Bridgewater Associates, developed the concept in the early 1990s. After associates told him his brutal honesty was damaging the company, he progressed to create a culture that supported “thoughtful disagreement.” He was free to be candid with employees, even publicly, and they had the same rights.
The belief is that people should be allowed to exchange ideas, even those that are controversial, without fear and without creating conflict. It also includes practices such as allowing employees’ salaries and performance to be accessible to anyone in the company.
The company has held to the practice for over 20 years and currently, the hedge fund is worth over $160 billion. Although Dalio and his staff practice radical transparency, Bridgewater does remain secretive when it comes to trading.
What radical transparency looks like in the workplace
The practice creates an environment in which all employees are encouraged to participate in openness surrounding compensation, executive decision-making, hiring decisions, and more. Companies that use radical transparency assure all meetings are open to all staff; salaries (even the CEO’s) are available; decisions, raises, performance evaluations, and even disciplinary actions are for public consumption.
At Rubrik, a cloud management company, radical transparency includes every employee (all 600) invited to and encouraged to participate in board meetings, to ask questions with no topic taboo. The company was named one of LinkedIn’s Top Startups in 2017.
At Bridgewater, each employee has a “baseball card,” listing stats: strengths, performance evaluations, and weaknesses, along with compensation. They also include how coworkers rate you across a selection of metrics. Ratings are even compiled during meetings in real time.
In a 2017 TED Talk, Dalio explained the practice and presented an email he received from a coworker, publicly chastising him for coming to a meeting unprepared (publicly because everyone in the company was able to view the email). His response to the is was, “Isn’t that great?” He believes the ability to express opinions openly allows you to separate from them to “see things from a higher level.”
S0– is radical transparency right for your business?
As with all business practices, there are cheers and jeers. Let’s look at both sides of the argument.
For companies looking to create a culture of openness, in which every employee believes his or her voice has value and can be heard, radical transparency could be beneficial. As businesses strive to increase engagement, knowing that your opinion is valuable could be a tool to drive innovation. To motivate staff, transparency can often be inspirational. If even the newest, most entry-level staffer can read a path to success in the organization, they could become more driven and hold a greater sense of ownership.
For companies looking to increase wage equity, radical transparency could force a business’ hand to affect change. For small business and startups the level of collaboration required could be the ‘secret sauce’ to success: provided each member of the team is considered an equal, and can appreciate feedback as constructive. It holds coworkers accountable, and it helps to promote equal pay.
But radical transparency may not be the right fit for every organization. Not all staffers may feel the need to be that informed, or perhaps they don’t have the emotional maturity to allow their own shortcomings to be on display. While some might view pointing out weakness as an opportunity for growth, others might consider it public shaming. Trust levels must be extremely high to avoid pitfalls with radical transparency.
Being open to routine public performance measurement could feel stifling and fear-driven. An idea that could be the ‘next big thing’ could as easily become the subject of criticism, demotivating employees from participation.
Data even suggests salary publication reduces productivity. In a study published by MIT, productivity fell 52% and absenteeism in lower-paid employees rose 13.5% when they were aware of salaries of their coworkers. For larger businesses, those losses might be more easily absorbed than in their smaller counterparts, where even a small drop in productivity could be damaging.
In many small to midsize businesses, where the owner might be on staff, providing salary data could be too much information to share within a group that works closely together, as it could promote resentment.
Radical transparency is not a new concept, but it is seeing a recent resurgence. Whether it is right for your business should be a thoughtful discussion long before implementation.