What is business transparency?
In a business context, transparency requires companies to openly share information about their operations, performance, and objectives with customers, employees, and other relevant stakeholders.
Why is transparency important in business?
Business transparency is key to building both customer and organizational trust.
The importance of external transparency in business
Making transparency part of your corporate culture creates and maintains trusting customer relationships, which in turn builds loyalty and customer retention. Since customer loyalty and customer retention both impact a business’ revenue, external transparency ultimately improves profitability.
Moreover, external transparency establishes a solid foundation of trust and credibility with investors, business partners, and the general public. Investors associate corporate transparency with good management and future market opportunities. On the other hand, a lack of transparency is often associated with a hidden agenda, which can halter or even stop investments in the long run. Hence, transparent businesses are less affected by recessions, tend to do better on the stock market, and attract more investments.
The importance of internal transparency in business
External and internal transparency go hand-in-hand. Openly sharing information about the company’s strategy and objectives creates employee trust and confidence in the business’ actions.
Keeping employees in the loop about important business decisions and activities makes them feel more valued and engaged. On top of that, transparency in the workplace fosters innovation and creativity. Moreover, a transparent working environment creates bonds of trust between management and employees.
Employees working for transparent companies have a higher emotional connection to their workplace, which ultimately results in their willingness and commitment to contribute to the business’ success.
What are the benefits of transparency in business?
Nowadays, there is increasing pressure on businesses across all industries to become more transparent. Customers, employees, investors, and the general public expect companies to timely and openly inform them about business operations, financial outlook, and overall performance. Transparency in business is not just a “nice to have” anymore, it’s a “need to have”. The good news is, there are numerous advantages that come with business transparency:
It builds and maintains trusting customer and employee relationships.
It gives companies a competitive advantage.
It increases companies’ profitability.
It increases employees’ engagement and emotional commitment to the business.
It attracts more investments and builds stronger partnerships.
How can businesses become more transparent?
There are several ways to improve transparency in your business. Hence, we’ve put together a list of actionable steps you can take.
Run regular company-wide town hall meetings
Company-wide town hall meetings are a great way to share company news and interact with your employees. During these meetings, all employees have the opportunity to ask questions regarding the company and receive clear and honest answers from top management. As a result, these meetings make employees at all levels feel valued and listened to.
Admit your mistakes
Everyone makes mistakes - it’s how you handle them that matters.
Always admit your mistakes and take responsibility for them. Customers appreciate companies that own up to their mistakes, apologize, and try to come up with solutions.
On the other hand, customers are not fond of companies that try to hide their mistakes or, even worse, get defensive and deny them.
The sooner you own up to your mistake, the sooner you can find a solution and move on.
Make financial information readily available for investors
A transparent company should make all relevant financial information readily available for investors so they can easily understand the risks and opportunities associated with their decisions.
You can create a website page dedicated to your investors where they can easily access your company’s full financial information.
Discuss expectations with your business partners
Business partnerships should be founded on mutual trust. That’s why you should always discuss expectations with your business partners.
Make sure your business partners know exactly what you expect from them and clearly explain what they can expect from you in return.
Ensure transparency in the companies you work with
If you want to take transparency one step further and contribute to also establishing transparency in the companies you work with, you should definitely consider implementing digital signatures.
The Penneo digital signing solution ensures transparency by guaranteeing:
The identity of the signer
The integrity of the document
The validity of the document
On top of that, Penneo provides digital KYC, a process that allows companies to digitally verify the identity of the beneficial owners of legal entity customers. KYC and AML compliance boost the company’s transparency and create a network of several transparent and trustworthy businesses.