Radical transparency in the business world is the theory that everyone who works at a particular company should be fully honest about all matters from the top leadership to entry-level new hires [i]. It effectively means that everyone in the organization knows almost everything about the company both internally and externally.
Company transparency has been around for a long time and has shown to improve employee engagement, reaction times to problems, alignment to overall goals and better performing teams. The term “Radical Transparency” was popularized by billionaire hedge fund owner, Ray Dalio. He went a step further by empowering employees to bring ideas, mistakes, problems and other matters they might typically hide to the forefront for open discussion. The thought was that giving this freedom would remedy problems, make decisions and uncover new ideas much quicker and mitigate being blinded by confirmation bias (Only seeking evidence that agrees with your view).
The concept has excelled as the business evolves and populations want more equalized distribution of resources. Numerous well-known brands champion radical transparency such as Patagonia, Got Junk, Fiix, Fit Bit, Narrative Science and Buffer. Many go so far as to publish employee salaries and discuss lay-offs in the public forum. As ethics, traceability and sustainability continue to shift into societies view so too will radical transparency [ii].
Introducing radical transparency to your team after the company has been founded is not a simple task. Provided the company fit with this model, it must be championed directly from the leadership team and permeate all the way through the company culture underpinned by high levels of trust. [iii]. Leadership exemplifying these attitudes is the only effective way to offer confidence to the workforce and inspire trust without fear of exposure, punishment or embarrassment. Displaying financials, discussing pain points, targets, weaknesses, competitors, and many more allows a company to promote employee inclusion and develop trusting attitudes. Full trust, clear expectation and free-flowing employee contribution are key performance indicators of successful radical transparency [iv].
At first glance, the concept may seem utopian and simple with the sense that every organization should adopt these practices. However, there are practical considerations to raise and accept. The degree to which the model relies on trust between all members of the organization is fundamental. Trust gives the foundation for psychological safety which is what any team member requires to contribute, admit mistakes and share ideas [vi]. Psychological safety is regarded as the confidence and safety from embarrassment, social risk or punishment for contributing to their views and issues. Unfortunately, the Edelman Survey reflected in the World Economic Forum suggests that as many as one in three employees do not trust their employer [vii]. In a cyclical sense, this survey also suggests that trust issues are rectified by further transparency [vii].
Introducing radical transparency also invites interpersonal challenges. Decisions taken by CEO’s and upper-tier management have implications for everyone involved. Enacting full transparency demands courage and ownership from middle management and employees who need to avoid being viewed as incompetent. Specifically, leadership figures as the key influencer must deliberately structure and communicate the goal of transparency to their team. Fostering psychological safety implores leaders themselves to exemplify this attitude by asking for help, admitting mistakes, and accepting that a ‘subordinate’ may contribute better ideas on occasion than them [viii]. Demonstrating courage and championing this requirement is inclusive of correcting discouraging behaviours and actively removing fear and uncertainty from the employee base [ix]. Leadership must also understand the complexity of sharing good and bad feedback and the different weights each needs to be delivered with. Additionally, knowing when your team needs to move on from a topic or decompress from a discussion is very important.
The successful introduction of radical transparency can show impressive results. Having an employee base able to disagree with leadership and ask questions undeterred by fears has resulted in failures being avoided and quicker and more varied solutions [ix]. Further to this, full disclosure of company finances instils trust but also removes the nature of people to question their earnings against the peers. Finally, by understanding organization problems and threats and feeling involved in the direction taken, teams become more invested in the success and thus take ownership of outcomes [ix]. Each of these benefits improves productivity and efficiency while also boosting sales. Individuals and teams who feel fulfilled in their roles tend to champion their employer.
As exceptional and inviting as those benefits are, there can be drawbacks as not every stakeholder might want full transparency. Radical transparency makes significant demands of the leaders who can cause burn out from the weight of difficult conversations and the possibility of doubt in themselves occurring [x]. When there are negatives to share, valid concerns for staff internalizing feedback arise, which damages psychological safety [xi]. Employees tend to steer clear of people who give feedback that contradicts their own self-view [xii]. The Big Brother effect can also set in when everything is open for discussion as employees can feel monitored. Employees are shown to be less productive under surveillance [x]. Many of these issues can be mitigated by effective preparation of management staff, accepted norms of safety and careful hiring processes [x].
Similar to the impact on the company, it is worth considering the impact of radical transparency on the emotional safety of teams [vi]. The workload, successes and failures of each team are made visible, which exposes a team positively and negatively depending on how effectively established psychological safety has been [viii]. Transparency takes the decision to share any concerns or problems encountered away from a team. While exposure of concern to peers can be intimidating to teams, well-established norms of safety prevent this from being a negative experience [ix]. Rather than feeling alone in problem-solving or unable to make mistakes, teams can benefit from the support and collective input of others. Likewise, it empowers teams to assist their counterparts and a sense of mutual achievement in success. The sharing of success and the support through challenges allows teams the freedom to feel safe but also become more efficient at problem-solving [viii].
Discussion of the organization and team funnels perfectly into the individual impacts. Radical transparency is experienced differently throughout an organization and is entirely dependent on how it approached in the company. For management figures, delivering negative feedback may challenge their own safety and that of the individual team member, but the pressure and stress of decision making is shared among each contributor. Where it is correctly enacted, transparency fosters trust [vii], and when a climate of safety is enforced individuals are free to ask more questions, feel a sense of belonging and relieved of numerous concerns. A reduction of in-house dramatics, elimination of salary comparisons and welcoming platforms for ideas and input positively benefit each person and their emotional safety. When emotionally safeguarded, team members are seen to actively contribute and challenge in a supported and fulfilling manner [viii].
As an industry professional working with teams on company culture and values, there are many lessons to be derived on transparency practices. While there is no one size fits all remedy, and every organization is different, the most agile, adaptable and problem-solving companies have a higher degree of transparency. From experience, these companies tend to lose less time on the wrong projects or making mistakes and have a far more involved and motivated staff body. Giving space for the employees to contribute to solutions by providing an open environment improves their decision making drastically. Although challenging, correct transparency implementation results in much tighter knit teams, who are aligned in their focus on success. In fact, this opinion corroborates with Google’s Project Aristotle findings which showed that psychological safety underpinned by trust gained from transparency was the most significant factor in team performance [vi], [viii] and [xiii]]. The evidence from companies, economic reports and employee satisfaction statistics suggest that radical transparency, while challenging, can be exceptionally rewarding.
[i] Heemsbergen, L. J. (2013) Radical Transparency in Journalism: Digital Evolutions from Historical Precedents. Global Media Journal (2013).
[ii] Bonanni, L. (2011). Sourcemap: Eco-Design, Sustainable Supply Chains, and Radical Transparency. The ACM Magazine (2011).
[iii] Zak, P (2012). The See-Through Organization. The Drucker Institute (2012).
[iv] Veselinova, E., Gogova Samonikov, M. (2018). Building Brand Equity and Consumer Trust Through Radical Transparency Practices (2018).
[v] Myers, J. (2016). Why don’t employees trust their bosses? World Economic Forum (2016).
[vi] Delizonna, L. (2017). High-Performing Teams Need Psychological Safety. Here’s How to Create It. Harvard Business Review (2017).
[vii] Edelman Trust Barometer 2016: Employee Engagement Executive Summary (2016)
[viii] Edmondson, A. (1999). Psychological Safety and Learning Behavior in Work Teams. Harvard Administrative Quarterly (1999).
[ix] Edmondson, A. (2002).Managing the risk of learning: Psychological safety in work teams. International Handbook of Organizational Teamwork (2002).
[x] Gino, F. (2017). Radical Transparency Can Reduce Bias — but only if it’s done right. Harvard Business Review (2017).
[xi] Bernstein, E. (2014). The Transparency Trap. Harvard Business Review (2014).
[xiii] Duhigg, C. (2016). What Google Learned From Its Quest to Build the Perfect Team. The New York Times Magazine
[xii] Gino, F. (2016) Research: We Drop People Who Give Us Critical Feedback Harvard Business Review (2016).