Why Transparency Matters…Impacting Reputation

Why Transparency Matters…Impacting Reputation


What does it mean to be a transparent organization?  While transparency includes honesty, it is more than just telling the truth when asked.    Transparency at its best involves pro-actively communicating with stakeholders (consumers, suppliers, employees, shareholders, etc) on all aspects of  business.  Being transparent does not mean one has to reveal confidential information or give away company secrets.  Rather, it can entail explaining an organization’s motives, responsibly alerting customers to potential product risks or setting expectations with employees.

Why does transparency matter? Importantly, transparency can make a significant impact on a company’s reputation and ultimately their bottom line.  Pro-active communication can foster greater trust with consumers, employees and suppliers—enabling them to give an organization the benefit of doubt in tougher times. Transparency is not about being “nice” to stakeholders or doing what “feels good”—it serves a critical business purpose.

Edelman Public Relations recently released its 10th annual Trust Barometer, a global survey of nearly 5,000 adults.  This year’s study reveals “trust and transparency are as important to corporate reputation as the quality of products and services.”  When survey respondents were asked about factors that contribute to a company’s overall reputation, transparent and honest practices rise to the top of the list.  Interestingly, financial returns are at the bottom of the list. (Disclosure: I am a former employee of StrategyOne, a Daniel J. Edelman company.)

Transparency is critical for all types of organizations and activities, as even the best-intentioned efforts can cause stakeholders to question a company’s motives if they are not clear.  Most recently, the Chase Community Giving contest was called into question because of lack of transparency around contest rules and the winner selection process.  This example demonstrates the degree to which today’s consumers are evaluating the companies they engage with.

Becoming a truly transparent organization is easier said than done.  Transparency is deeply linked to a company’s corporate culture.  Leaders need to set the tone at the top that transparency is fundamental and create environments in which employees are applauded for coming forth with information and potential risks.  Executives and employees need to feel comfortable identifying potential shortfalls or errors in the system and not be afraid that it will put their job at risk. History has shown that fear of losing one’s job has led to significantly greater unintended consequences (e.g. company bankruptcy, deadly product recalls, etc).

How is your organization enabling and demonstrating transparent practices?


Courtney Zegarski is an experienced research and communications professional with a passion for corporate social responsibility and social entrepreneurship. Courtney holds a B.A. in Political Science from Washington University in St. Louis and a M.B.A in Leadership & Business Ethics from DePaul, and writes extensively for the Social Endeavors Blog.