To promote transparency in business, many company owners and managers have to decide how much information they disclose to their employees. They are forced to consider letting employees know about changing company revenues, internal reshuffling or downsizing, and other issues. It is, however, necessary to measure the consequences of these actions. Confidentiality is important to ensure transparency in business, but sometimes, hiding too much can end up creating legal or trust problems for you and your team.
Why Transparency in Business Is Necessary to Success
1) Transparency Prevents Discrepancies
Transparency in business, specifically salary transparency, can shield a company against lawsuits. If all employees know the salaries of everyone else, they know exactly how they really compare with their peers (at least financially). For employees to avoid a discrimination lawsuit over a payment discrepancy, two coworkers should not make different wages while having identical titles and responsibilities, unless there is a clear and solid reason.
2) Creates Confident Employees
Whenever revenue is on the rise, businesses often celebrate by offering rewards like bonuses and raises. However, when the revenues are low, the employees may not actually be aware. This is where transparency in business should come in because this bad news could mean that layoffs or cutbacks would happen. Whenever employees are aware of what’s happening, they can easily make better decisions and adjust expectations. Your team cannot be expected to solve problems by themselves if they are unaware of what the business is facing.
3) Helps with Fraud Prevention
Fraud can be a few employees stealing a $20 bill and stashing it for themselves, or it can be an employee siphoning off millions of dollars from a company. Staff can more easily be involved with the latter kind of fraud when nobody else knows what they are doing—which is why transparency in business is important. Extreme secrecy, all in the guise of confidentiality, can actually result in terrible losses, not just in cash but in investor lawsuits as well. Whenever you put any fraud prevention actions in place, what you are really doing is including transparency into your policies.
4) Prevents Data Loss
Coca-Cola’s formula is a trade secret, so guarded carefully. It’s kept confidential and shared with just a few people, with no written recipe. Coca-Cola admits that its recipe is simply known by a small group of individuals at any point in time. What actually happens to the company if these people die? Will the company fold? Transparency in business should be upheld even if your business doesn’t have this kind of secrecy on anything at all.
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