What if you went to work each day and knew everything about…well, everything? You knew the company’s goals, its sales, its successes, and its failures, all of which were published weekly for employees to read. You could look up your coworkers’ salaries and performance reviews, if you wished. You could review minutes of private meetings between various C-suite executives, up to and including the CEO.

To most people, this method of operation sounds extreme. But this type of openness is a trend that has been gaining traction in recent decades. It has been dubbed “radical transparency” because it radically changes everything about the workplace. Companies that have adopted this methodology swear by it, claiming that it has improved everything from profits to employee performance and happiness.

The idea of radical transparency first emerged in 1993 at Bridgewater Associates, the world’s largest hedge fund management organization. The idea was the brainchild of company founder Ray Dalio, who was seeking ways to improve the company’s performance. He established a culture of openness—and the organization has never looked back.

"I want independent thinkers who are going to disagree," he says. "The most important things I want are meaningful work and meaningful relationships. And I believe that the way to get those is through radical truth and radical transparency. In order to be successful, we have to have independent thinkers—so independent that they'll bet against the consensus. You have to put your honest thoughts on the table."

Dalio and many others are finding success with this approach. But it is not for the faint of heart. For leaders, radical transparency means opening themselves to constant oversight and criticism. They must be willing and able to absorb this feedback and respond to it in a positive, non-defensive way. They must also have the ability to deliver brutally honest feedback to others in a way that builds relationships rather than tearing them down.

Having the skills to walk this tightrope is a matter of both personality and education. The education portion can be gained through specialized coursework in programs such as Washington State University’s Executive Master of Business Administration Online. An online Executive MBA degree can be helpful in determining whether radical transparency is a good fit not only for your organization, but for you personally.

Advantages of Radical Transparency

Handled properly, radical transparency has undeniable benefits. On the website Copper Chronicles, sales director Marina Fishman lists some positive outcomes of this approach.

• You understand what people are actually doing. It is common in big corporations for employees to have ambiguous job titles and responsibilities. Co-workers may wonder what, exactly, other people do with their time. With radical transparency, everyone’s work and duties are out in the open. People know exactly what their neighbors are doing in their cubicle all day. And from the neighbor’s point of view, knowing they have an audience may just push them to work harder—another benefit from the company’s perspective.
• Problems are public. Every business has problem areas. In a radically transparent company, everyone knows what the problems are and what is being done to solve them, which can inspire people to pitch in to the effort.
• Goals are public. A company’s “road map” is like a set of directions for where the organization wants to go and how it plans to get there. When employees understand the company’s business, sales goals, and deadlines, they are empowered to do their best work and help the organization to reach these goals.
• The company’s finances are public. Everyone knows what the sales numbers really are, or what they are projected to be. They know how much the company has earned recently, what types of profits are being made, and where the biggest expenses are. Having this information gives employees a sense of inclusion and ownership that can inspire them to help the company succeed.
• Competitive threats are known. Every company faces competition. The radically transparent organization shares this information with employees, including plans and opportunities to best their competitors. This strategy can inspire a competitive urge and increased performance.

Disadvantages of Radical Transparency

On the flip side, radical transparency also comes with some disadvantages. Fishman enumerates some of the perils of the approach.

• Getting bogged down. When employees have a vast amount of company information at their fingertips, they may be inclined to debate every last management decision. They can end up hurting productivity and being, well, just annoying.
• Performance anxiety. In a radically transparent company, employees know that their work actions may be seen and judged by everyone. This can make people self-conscious about their actions at work and reluctant to try new and innovative ideas. They know that if something flops, the whole company will hear about it.
• Not being ready. A company must know that its operations can stand up to scrutiny. For instance, salary structures must be solid, without large pay gaps between people in comparable roles. If your organization is unable or unwilling to address such inequities, radical transparency may not be for you.
• Not everyone likes it. Radical transparency takes some getting used to, and many people just plain don’t like it. It’s one thing for a company like Bridgewater, which is famous for this culture. New hires understand it and accept it. But introducing radical transparency into an existing corporate culture is a major shock to the system that some employees will not appreciate. You may even have people quit their jobs because of it—a risk you must be prepared to take if you are determined to take the radical route.

Is It for You?

So how do you decide if radical transparency is right for your company? At its most basic level, the decision probably revolves around top executives’ willingness and enthusiasm for going along with the program. If the leadership embraces this initiative, the rest of the company will get on board.

Remember that radical transparency does not have to be achieved in one fell swoop. Top executives can and should ease the company into new practices. After all, says Fishman, “Company culture can’t be changed overnight—nor should it be.”

She suggests making one small change, like setting up an online open message board where employees can post suggestions, questions, and comments anonymously. Make sure to answer each post in a positive tone. After a few weeks, change the site so that comments are no longer anonymous. You now have a transparent bulletin board where your employees are being completely honest—and that’s a great start.

Next, tackle other challenges. You might choose to make your sales numbers transparent, or your company’s financial goals. Or perhaps you choose to be completely open with your employees about new hires. Just change something, and make sure your employees know about it. Transparency does no good if no one is watching!

As time goes by and more and more of your company’s business becomes transparent, you can expect to find that your organization develops a whole new mindset. People will start to expect openness, and they will adapt more readily to new initiatives. The goal, in the end, is to have an environment where people have great ideas and aren’t afraid to speak up about them.

Sure, you may have to defend yourself at times—but a competent CEO shouldn’t be afraid of honest feedback. You may find, as Bridgewater Associates has, that radical transparency revolutionizes both your daily operations and your long-term success. Now that’s a radical idea.

About WSU’s Executive Master of Business Administration Online Program 

Washington State University’s Carson College of Business delivers one of the top-ranked Executive MBA programs in the nation. WSU offers an Executive MBA curriculum designed to equip students with the tactics, knowledge, skills, strategies, and other MBA resources utilized by today’s high-profile business leaders. For more information, visit WSU’s Executive MBA Online website.

Recommended Reading:

Managing Human Capital

The Importance of a Business Executive’s Reputation

5 Ways Managers Can Build Relationships that Matter with Their Team Members

Sources:

History of radical transparency – Inc.

Advantages of radical transparency – Copper Chronicles

Disadvantages of radical transparency – Copper Chronicles

Online message board and slow change – Copper Chronicles