A lack of transparency: Company reports may claim the organization is diverse but offer one … [+]
In 2020 and early 2021, we saw a dramatic increase in the number of executives talking about transparency in their communication with stakeholders. Amid the uncertainty caused by Covid, employees, investors, customers and consumers need to speak directly. Tell us how it really is and how you really are, they seem to be saying. Don’t sugarcoat things to make them seem better than they are, or pretend they’re okay when they aren’t.
This trend reminded us of our colleague at Benedictine University, Dr. Rob Rebman, a corporate reporting expert, particularly on the Corporate Social Responsibility (CSR) reports published annually by large publicly traded companies.
Rebman’s research highlights ways for companies to be more transparent while highlighting their company’s positive track record. This also applies to individual managers. Transparency builds closer relationships between team members and customers. It creates the reliability and trustworthiness of a company and improves internal and external relationships. It also gives stakeholders quicker access to critical information so they can make more informed decisions. The disadvantages are minimal and the advantages are substantial. Our four tips for improving transparency will help you get started. But first let’s dig deeper into Rebman’s findings.
The sad state of corporate reporting
Rebman recently selected a random sample of 143 companies from the Fortune 1000 list and focused on the social aspect of their CSR reporting. This data deals with the company’s actions in areas such as labor, human rights, and supply chain. What he found is shocking: around 40% of the companies selected had not published any reports. For those who did, Rebman compared what was published to the 34 metrics under the Global Reporting Initiative (GRI).
Of the 34 possible indicators, companies only exchanged an average of 5 or 6 pieces of information. “Companies don’t say much,” summarizes Rebman.
This silence is confusing because the data for all 34 metrics is clearly available and there is little risk associated with it. For example, one metric takes into account data breaches. Most companies haven’t had a data breach, so this should be an easy achievement. However, they don’t. “There are low hanging fruits that they just leave there.”
What are you doing instead? “Lots of fluff and nice pictures,” says Rebman.
“Companies love to say they are diverse,” says Rebman as an example, but instead of providing actual data that is in their HR systems, “they provide a picture of a woman driving a forklift.”
Rebman’s findings are consistent with other research. For example, Shift, a center that collects data related to the UN Guiding Principles on Business and Human Rights, found that more than half of companies fail to clarify which human rights are most important to their value chain, and 45% do not provide any Information on how they are pursuing their human rights performance.
Company reports can be filled with fluff rather than real reports of meaningful reports … [+]
Apply the lessons learned from reporting to be more transparent
There are good reasons to report more thoroughly and transparently. Voluntary reporting can hinder government regulation, and strong, value-driven companies tend to attract loyal employees and customers.
Based on Rebman’s work, we have identified four ways to make transparency more effective. These ideas are not only important for the executives who are responsible for a company’s annual CSR report, but also for individual executives who want to meet the growing demands for transparency in communication with stakeholders.
Reduce the fluff
On the glossy pages of a company report, images and carefully designed content often fill the space and displace the real data it contains. This may make reports look better, but it detracts from the substance.
This doesn’t just happen when reporting. Not that long ago we were in a senior team meeting that lasted 60 minutes when it should have ended in 20. Why? The executive who chaired the meeting buried his message in so much fuzz that no one could understand. As a result, his communications undermined trust and created uncertainty, resistance and anger in his business unit.
When it comes down to what you need to communicate, cut the filler and be direct and transparent about your message. Don’t add the pretty pictures until you’re sure the actual content is extensive.
Provide all the details you can
Rebman found that companies often don’t share important data, even if it’s neutral or positive. If you want your team members to see you as a transparent and authentic leader, take advantage of all the details you can.
Transparency has to be responsible. Sometimes that means not giving out information. If an employee has been fired for misconduct, colleagues who have not witnessed her behavior ask themselves what happened. You may be concerned about being discharged without warning. Responsible transparency means addressing this concern without revealing sensitive personal information about the situation.
Be honest about shortcomings and establish a plan for growth
If the information is not positive, what do you do if you want to provide all the details? Share it anyway, then share your path to improvement. Better still, invite ideas from your team and other stakeholders on how to move the needle. Create and commit to a growth plan. Good reporting helps keep metrics and the company focused on the future.
Connect your transparency with your values
Finally, Rebman’s research shows that top companies align their values with the metrics they report. If you care about people, one of the ways you can demonstrate this is by reporting on efforts to prevent human trafficking in your supply chain. Likewise, reporting on diversity and inclusion metrics shows that you are investing in justice and care for all people.
As an individual leader, you can identify your own values and let them guide your efforts for transparency. Not so long ago we spoke to a senior manager who wants his direct coworkers to feel more comfortable asking for help. Vulnerability is a value that this leader has because he believes it is important to build healthy relationships. He believes that stronger relationships lead to better results. To be more transparent, he regularly remembers that transparency is an opportunity to be vulnerable, something he wants to grow within himself and his team members.
Transparency in reporting or in relationships is an important way to build strength. It reassures the stakeholders that you are trustworthy and responsible. We hope that our four tips will help you identify opportunities for greater transparency in your work. Share your own tips on Twitter @ValuesDriven.