If you type “company culture” into any search engine, you’ll quickly see the term “radical transparency” rise to the top. First coined in the early 1990s by stock market guru and hedge fund founder Ray Dalio, it’s become a hot topic over the last few years as more and more companies adopt the concept.
Radical transparency is exactly what it sounds like – when companies are brutally honest about the good and the bad… and make it public. When it works like it’s supposed to, radical transparency is thought to build trust between a company and its employees and increases loyalty to the business. But when it doesn’t work, it can leave people feeling dejected, undervalued and ready to jump ship.
Does Radical Transparency Even Work?
The jury is still out on whether or not radical transparency does what it’s intended to do. Some studies have shown that radical transparency does work, and that it’s especially effective in increasing positive perception of companies from the general public. One study, in which multiple organizations used the same response to a crisis, found companies that had a history of transparency were rated significantly more trustworthy than companies that had traditionally been more opaque.
But do employees actually want it all out there? While knowing what other people are paid might seem good, 80 percent of people said they would pay to keep coworkers from knowing their salaries. Clearly, there are topics that are still taboo in professional environments, and even honest employees don’t want to share.
Given these statistics, it’s unsurprising that Bridgewater, Dalio’s hedge fund that actively practices radical transparency, has an incredibly high turnover rate at 25 percent. While radical transparency might sound good from the outside, once you work somewhere with that level of honesty, it can be difficult to adapt to.
Why Don’t People Like Radical Transparency?
We all want honesty, right? Whether it’s from our families, friends, employers or colleagues, we like knowing that the people in our lives are up front with us. If that’s true, radical transparency should be a smash success.
When you really take a look at it, there are a few reasons why employees may not like radical transparency:
- It can make people feel unsafe: If everyone in a company knows who is a high earner, it may make people feel as though they are targets for theft.
- It can make people feel judged: If someone isn’t making a lot of money, but eats lunch out every day or wears nicer clothing, their coworkers might question their choices outside of the office.
- It can spread jealousy: If multiple people work in similar jobs, but are paid differently, it can breed jealousy and resentment. It also doesn’t take into account reasons for the discrepancy, such as years of experience or regional differences between offices.
- It can make people feel afraid to express themselves: In theory, radical transparency should make people feel free to share exactly how they feel. However, it can do the opposite – people may begin to feel afraid that their words will come back to haunt them publicly.
So, What Should You Do?
Given the conflicting research, it can be hard to decide if radical transparency is right for your company. Like all trends, it involves careful evaluation of your company culture as it stands now, and where the executive team and employees feel it should go.
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