The Case For Radical Transparency

Being open and honest about all aspects of a business — including workers’ compensation information—may be uncomfortable at first, but it’s likely the best way to improve in today’s business environment.
pay transparency

Collecting baseball cards was one of my favorite hobbies as a kid. Back before the internet, baseball cards were your best bet for learning players’ statistics like batting average and home runs. They were fun to collect, share and use to talk baseball with my friends. We would get into endless debates regarding our favorite players based on the stats we could find on the back of those cards.

Today, I still have a lot of those same debates about baseball and sports in general with my friends — although instead of using baseball cards as our primary source of information, we use the internet. The fun thing about being a baseball fan — or fan of anything these days, whether it’s sports, theatre, movies, television, etc. — is that there is a treasure trove of information available on those things for us to collect and use to fuel conversation and debate.

Right now, I can not only look up the statistics for any baseball or football player, but the revenue figures for any pubic company, the pay of any public chief executive, as well as a company’s stock price, which is an indication of both the current health of the business and where investors thing it’s headed in the future.

In all of these cases, transparency and access to information is a good thing. It allows almost anyone to have access to information and data, draw conclusions as a result of it, and take actions or make decisions.

However, when it comes to the workplace, especially at companies that aren’t publically traded, such information flow likely comes to a complete stop. Put simply, inside most companies, employees hardly know anything about anything.

Executives maintain a fine seal of secrecy on company strategy; a firm’s financials are largely kept out of reach for most employees; and, most of all, people definitely don’t know anything about their co-workers’ performance ratings or compensation. By and large, people know how to do their jobs, what is required to do it, and that’s about it.

I’m currently reading “Principles: Life and Work,” by famed hedge fund manager and entrepreneur Ray Dalio. Among the lessons he offers in the book is one of having complete radical transparency in organizations. This is a tactic he learned to implement early on at his own hedge fund, Bridgewater Associates, which is likely best known for foreseeing the financial crisis before most anyone else.

Dalio believes that, in general, people should say what they think, even if it isn’t pleasant. He also believes that keeping this information secret in the interest of sensitivity is counterproductive because it ultimately holds people and the organization back from improving their performance in the long run.

Part of this culture of radical transparency is having employee baseball cards. Yes, every employee at the firm has a baseball card that openly displays their strengths and weaknesses and other performance measures for everyone to see, including compensation and salary information. And like baseball, this gives the entire company the ability to talk open and honestly about everyone’s performance, while also allowing its leaders to properly deploy the firm’s talent to tasks that will give it the best chance of reaching its long-term goals.

This culture of radical transparency applies to Dalio as well. According to the book, he constantly invites — and receives — radically transparent feedback from employees at the firm.

Some traditional corporate management experts may find this approach bizarre or offensive. This isn’t a surprise. Dalio definitely isn’t known for being conventional, according to his book. Still, the more I think about it, the more I realize that this level of transparency is what’s needed in today’s organizations.

Being able to walk into work and know everyone’s salary — and why they’re paid what they’re paid — may at first sound inappropriate, but like baseball players on a team, there’s tremendous value in having this information out in the open. It takes away any form of resentment between co-workers regarding pay, because any unfair discrepancy is immediately identified and corrected. Moreover, the open and free flow of information allows the organization to work in tandem toward a shared goal, and the idea of having everyone’s strengths and weaknesses out in the open allows it to properly strategize how to get the most out of its talent to get there.

On an individual level, being frank and honest about your strengths and weaknesses — and being able to share it with everyone in your company — may be painful at first. But it will ultimately force individuals to own their weaknesses openly and work harder to correct them.

The same goes for the culture of radical transparency in terms of feedback. If people hold back honest feedback from me for fear that it’s not socially appropriate, etc., I’m likely to keep making that mistake over and over again. In the end, receiving painful frank feedback is the best way for me to open my eyes and realize I need to improve.

This likely isn’t something every organization will want to embrace. And depending what line of business a company is in, it may not work exactly as it does for Dalio and Bridgewater. Still, companies that remain bent on keeping all information a secret risk creative an unproductive and perhaps toxic environment.

That’s bad for business.

Frank Kalman is Talent Economy’s managing editor. To comment, email editor@talenteconomy.io.