I’m sharing another great Value for you to build into your growing business. It’s another one I call a Super Value, introduced in episodes 2 and 3. Transparency is also one of the principles used by some of our greatest contemporary businesses. Without doubt, embracing this will add to your phenomenal business building success. You’ll see why as we go.
While you’re preparing for or improving your entrepreneurship, I’m sure you’ve run across the term”transparency” as it relates to business. Interesting questions you might ask are: how does that apply to you as you are building your new business? Why is transparency important? What are the benefits of business transparency? How is it done? What are the limits?
Larry Alton in”How Transparency Became a Top Priority for Businesses, and Why You Should Care” described what transparency means to the entrepreneur. He writes:
“Transparency in business requires entrepreneurs to remain open and informative about key points of information, including their business’s goals, history, performance and operations. And it’s a goal that’s risen in importance and continues to do so.”
He also shared a study by label insights:
“According to a recent study by Label Insight, they study the labels on products and how people react to them. They found that up to 94 percent of consumers surveyed indicated that they were more likely to be loyal to a brand that offers transparency, while 73 percent said they were willing to pay more for a product that offers complete transparency”MUSIC
So fist let’s look at Why is transparency is important?
4 Reasons transparency is important:
1. Transparency is becoming more important to people in general. Think about your own experiences. We are drawn to people who are transparent. We are also drawn to businesses that are transparent. That is, we like to understand the nature of the entity we are dealing with. We like to relate to the person or business and know as much as we can about who they are and what their guiding principles are. What’s important to them.
Just think of the popularity of ratings and reviews when we are preparing to engage with a business or purchase a product from a business. We like to know as much as we possibly can about the business or product before we get involved .
That’s because Transparency promotes trust. This bring us to the second reason Transparency is important.
2. Transparency promotes trust.
This is good to remember if you don’t remember anything else in this podcast. According to Integrity Solutions: “Customers and clients want to do business with a company that is trustworthy. When trust is at the core of a company, it’s easy to recognize. They [the customers] know you are reliable and capable. Over the long term, business success is dependent upon a network of positive relationships. Trust is invariably the critical component in enhancing business relationships and transparency builds trust.” We must have trust to grow our businesses.
3. People contributing to your business (workers, customers, investors and all affiliates) need to feel important to your business. Think about your team members.When team members understand the who, what, when, how, and why of a system, decision or requirement, it gives them the clarity and freedom to do their jobs or engage with your business in any way necessary. Your operations will be transparent. Nobody likes to work or contribute without knowing why and how their contribution fits in. That’s why, the more you can share with your customers, employees or other affiliates, the more comfortable they will feel when dealing with your business. This leads to the fourth reason transparency is important.
4. Public knowledge of your Purpose and Principles are important to success. In episodes 2 and 3 of my podcasts, I talked about “the superiority of a Purpose Driven Business. Many people are drawn to the ideal of contribution to society. They like charity and philanthropy. You’ll notice many businesses tie purchases to company contributions.
Clear promotion of your Mission/Purpose and Values/Principles to everybody involved with your business will be the beginning of your practice of transparency.! That’s how you start it. Customers, investors, employees and others will begin to understand your business as you promote and practice your fundamental business building blocks, your Purpose and Values.
I think the best way for us to understand the importance of transparency is to look at some contemporary businesses applying this principle successfully.
Jonha Richman, guest writer for Entrepreneur and Digital Marketer, shared:
“By being proactive in opening up its information, smaller businesses can establish relationships and avoid the mistrust that can happen when information is revealed after the fact.”
Here, I’m exploring 1 of the most popular transparent businesses Richman included in the article.
Buffer is known for open salaries. You’ve probably heard of them. They are a social media management company.
Buffer makes their Values/Principles well known by using different methods to ensure everybody knows what their values are. The second principle on Buffers list of Values is “Default to transparency”. That let’s everybody know how important it is to them. The social media company applies this Value to every area of their business. One way the company has demonstrated its commitment to transparency is through revealing the salaries of employees throughout the organization. Through a publicly-available spreadsheet, Buffer has revealed the pay rate of every employee by name, from co-founder and CEO Joel Gascoigne (gascoin)to engineers, content crafters, and “happiness heroes”(customer service reps).
In addition to posting its salaries, Buffer also reveals the formula it uses to create these salaries. Each employee goes through a 45-day boot camp, then qualifies for a salary under the business’ formula,.The 4 factors in the formula are Salary, Job Type, Choice(profit sharing or salary addition), and the fourth is Loyalty( years in service). They use weighted values for some of these factors. Buffers’ system is easily accessible on line. Check it out! It’s very interesting!
As your business grows and adds employees, this process is a great reference. Buffer shares where they got their base salaries and regional differences from, this could be quite helpful to you. This type of transparency also shows a level of fairness that reduces a lot employee frustration. When employees know the role factors like seniority and experience play in determining pay, those employees are more likely to understand when somebody else makes a higher salary than they do.
By the way, other businesses have understood the merits of Buffers’ formula and have adopted some form of this salary plan for themselves. Buffer is also continuously improving their formula for determining salaries and delivering transparency in many areas of their business.
The people at Buffer shared a post about their salary formula: This was some ago but I’ll still share it.
“It’s been over 2 years since we first shared our transparent salary formula; we’ve been truly blown away by the response we’ve seen.” They received many positive responses from customers and other businesses who where intrigued by their processes.
Buffer continually works on all of their operations, and continually strive to improve business the results. Continuous improvement is best practice for any 21st century business.The bottom line is.. they make transparent whatever they think would help their customer. (Think about this practice. It’s key) For example, they are working on sharing Buffer’s pricing process, their real-time revenue, and of course, their Values and the changes they make to them. They’re also sharing their fundraising process and the level of diversity in their team makeups. The impact of their business practices has strongly influenced the business community. Will your business make such an outstanding impact?
Remember the four advantages of adopting transparency as a principle:
1.Transparency is becoming more important to everybody.
2. Transparency promotes trust. (You’ll have No repeat customers without trust)
3. It helps everybody involved in your business feel important to the success of your enterprise.
4. Public knowledge of your Purpose and Values is known through transparency. Your Purpose and Values attract a base of customers who share or believe in the Purpose and Values.
In my next episode, I’ll share one more contemporary transparent business, to help you get a deeper understanding of this principle and how it works. We’ll continue to explore how it works in actual business operations. I’ll also describe the parameters of transparency. There are times when transparency should not be used. Stay tuned for the full story.