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Why your company should practice radical transparency (and how to do it)

Many businesses shy away from being open—to their detriment. Hotjar’s CEO, Mo, shares how and why the company maintains radical transparency as a core value.

Behind the scenes

Last updated

18 Aug 2022

In business, true crystal clear transparency is still the exception and not the rule. 

Most companies operate on a need-to-know basis and keep everything from salaries to the decision-making process secret—even from employees. 

But a lack of transparency can have damaging effects on a business. A study published in 2020 found that three in 10 employees surveyed in the US left a job due to lack of employer transparency regarding job growth.

For us, radical transparency is one of our core values. 

Radical transparency means we’re open about as much as possible. As long as we’re legally allowed to disclose information and it does not violate the privacy of our employees or others, we will share it.

How we practice radical transparency

Transparency is about access to information, and the overarching principle is to never withhold information from people unnecessarily. We practice transparency in several ways.

Transparent salary bands 

All company salary ranges are available to company members. We also share our guidelines for setting salary and compensation bands.

Although people have varying opinions about the benefits of pay transparency, one thing is true: people want to understand the criteria for determining salary ranges. 

According to a survey by Glassdoor, more than 36% of employees don’t understand how people are compensated at their company. And 69% of employees wish they understood how pay is determined at their company and in their local market.

A lack of pay transparency can make workers feel undervalued and can contribute to the prevalence of pay inequity and employee retention

While making pay transparent doesn’t eliminate issues like the gender pay gap, it does force companies to re-evaluate their pay criteria and show employees what salaries they can expect as they rise in the ranks.

Shared company financials

Since founding in 2014,  we’ve shared the company’s financial reports with our employees. 

This includes yearly totals and a line breakdown by department so everyone can see how much each department spends on various endeavors. This helps employees determine how much their efforts contribute to the bottom line.

We also report business performance month to month and compare the figures to our predictions. This helps us monitor our growth and keeps us focused on our shared goals.

When sharing company financials, we’re open about the good news and the bad. Transparency means that we don’t hide bad news from the team. We trust that as adults, they can handle the information we share with them.

Open to input

Transparency goes both ways. We’re open with our teams, and we encourage them to communicate openly with those in leadership, too. This means they can ask questions and provide feedback without fear of repercussions.

At times when we’ve needed to make far-reaching decisions for the company, we’ve sought our employees’ opinions. For example, in 2020, when we chose to terminate the Trump account, we discussed the situation with our team in real-time and asked them for feedback. 

Even outside tough circumstances, we encourage regular dialogue with our employees. One way we do this is through our monthly meetings when we have live, no-holds-barred question-and-answer sessions with our teams. 

Creating a platform for feedback helps leaders stay accountable and keeps the lines of communication open between leadership and employees.

3 Important benefits of transparency in business

Transparency is more than a buzzword. It can be hugely beneficial for companies, both internally and for their reputation with customers. 

Transparency builds trust

Successful companies are founded on a high-trust culture—especially trust of those in leadership. 

By sharing wins and losses, explaining the processes behind their choices, and being open to feedback, leaders can create trust among their employees, which goes a long way toward making work environments productive and psychologically safe. 

Transparency can also win your company credibility with customers. A full 89% of people report that a business can regain their trust if it admits to a mistake and is open about how it will resolve the issue. 

It’s a win-win.

Transparency fosters a sense of ownership

Providing access to information about company financials, letting employees share their opinions about company decisions, and being open about decision-making criteria can feel like sharing too much. Especially if you’ve never worked with a transparent employer.

But in my experience, being open about these details shows employees that their work matters. It engenders a sense of ownership among employees.

Seeing how much revenue their department generated in the past year can be a self-esteem boost that encourages more focus, renews purpose, and increases output. Even when the numbers aren’t great, it can make employees more determined to change the situation.

Transparency dignifies employees

Trusting employees with information about the company’s finances, salary bands, and tough choices dignifies them. It’s an excellent way to show respect for your team—as opposed to keeping them in the dark about changes that could affect their livelihood.

I’ve found that transparency makes employees feel like equals and can be the driving force that makes them want to step up. 

Transparency wins every time

It’s true; being transparent takes effort. It’s easier to be tight-lipped about organizational information. But taking that path can cost your company in the long run. Leaders need to make an active effort to communicate clearly and openly with their teams.

As long as you’re not sharing private information, transparency will always be the right decision.

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