- As HR leaders face increasing pressure regarding corporate transparency, an October report from research and advisory firm McLean & Company said there are five criteria that determine whether an employer is ready to increase its transparency.
- According to the firm, a company may be ready if: it has a healthy work culture, which provides psychological safety, collaboration and aligned organizational values; it has a strong communications foundation; its stakeholders — particularly those who control access to information, such as CEOs, executives, senior leaders or managers — are open to sharing accurate information and are fully on board with increased transparency; it has a suitable timeline for sharing information; and it has change management initiatives and processes in place.
- Transparency, as defined by the report, means “being open and sharing information” about companywide decision-making and direction. Pay issues are just one aspect, and levels of transparency range from zero to radical, according to McLean’s report. Companies can use different levels for different HR programs, organization processes and business operations, Janet Clarey, McLean’s director of HR research and advisory services, said in a press release. Companies can also vary the levels of transparency between internal and external stakeholders, she said.
The report confirms a new workplace reality: Employees and others want more transparency, and transparency seems to benefit business. That is, employees are more likely to be engaged if they understand the reasoning behind leadership decisions, and those who feel their organization is transparent about HR functions are 1.4 times more likely to rate the HR department as highly effective, an earlier McLean report found.
“Transparency is one of those often-used buzzwords that people like to use when trying to distinguish their company culture from others,” Sarah Wilson, chief people officer at Rokt, wrote in a 2021 op-ed for HR Dive. But that shouldn’t subvert its importance, she emphasized.
Workplace transparency means operating in a way that creates openness and builds trust between managers and their teams, Wilson explained. Cultural trends and human behavior prove over and over again that people like people who they can rely on and trust, she noted.
However formidable the change may seem, company leaders need to be having discussions about transparency now, reports say. A growing number of states and localities require pay transparency in some form, sometimes upfront in a job posting, for example.
The push is also coming from employees. Lattice survey results released in June found that 51% of employees surveyed want their companies to share how much everyone at the organization is paid. Expectations around compensation also are high: 58% of employees said they’re seeking compensation increases more than once a year, a response Lattice attributed to the uncertain economy and high cost of living.
Beyond pay transparency, employees, especially millennials and Gen Xers, are demanding that companies be transparent about environment and social governance efforts. Although ESG reporting is increasingly important to stakeholders, it’s not mandated and only 46% of companies are sharing ESG or corporate social responsibility reports that include key information about diversity, gender parity, carbon emissions and other issues, Nneoma Njoku, head of Labrador U.S., a firm focused on corporate disclosure, previously told HR Dive.