“Transparency in business” Yes, it’s a buzz phrase. No, it’s not a trend. At Volano, we create customized software for workflows that center around transparency. When context, accountability and responsibility are incorporated into each moving part of a workflow, something beautiful happens. You see improved efficiency, better communication and a cohesive organization that in turn produces a better product or service.
Organizational workflows are just one facet of business that transparency can touch and improve. We’re going to take a hard right here and talk about how transparency in business can drastically increase retention rates. Yeah, we build software, but we build software centered around transparency and that leaks into every aspect of our own company culture. I guess you could say we’re experts on transparency, and not simply in the capacity of workflows, but as a leadership and organizational standard.
In 2011, companies spent $45 billion on recruiting, yet 46% of new hires still left after their the first year. –Fast Company
As business owners, retention is something that most of us struggle with. Between recruiting costs, the investment in training, and then the learning curve before the employee becomes profitable, you end up investing a small fortune. While there’s no fix-all for this issue, we contend that organizational transparency is an incredibly effective place to start.
Consider these turnover cost stats from a CAP study:
- 16% of annual salary for high-turnover, low-paying jobs (earning under $30,000 a year). For example, the cost to replace a $10/hour retail employee would be $3,328.
- 20% of annual salary for mid-range positions (earning $30,000 to $50,000 a year). For example, the cost to replace a $40k manager would be $8,000.
- Up to 213% of annual salary for highly educated executive positions. For example, the cost to replace a $100k CEO is $213,000.
Providing Context Gives Purpose
When employees get the big picture goals of the organization and how their individual role impacts that big picture, you’re giving them context and purpose. They can see how their role helps turn the wheel and drive success. When overarching organizational goals are shared and celebrated, employees are able to become a part of those goals and invest themselves in them.
Context in work is also known to increase the amount of discretionary effort employees give to the organization and discretionary effort is the single strongest sign of employee engagement. Context leads to engagement and engagement leads to retention. It’s really not complicated or far-fetched, it’s how humans operate. When they are given the opportunity to work toward a goal, they are more likely to do so. If they never know what that goal is, who’s to say what they’re working for -likely a paycheck, and that is not a retention strategy.
Instilling Accountability Creates Drive
Another fantastic thing that transparency brings is accountability. Sure, you might know your job, but do you have any idea what the guy behind the computer, four cubicles down does? Do you know how your job impacts his, or visa versa? Who ends up with your crap work, or who is accountable for 50% of the messed up orders that come across your desk.
When we’re held accountable to our co-workers, we are more likely to perform at the standard we would like to experience from those around us. Beyond that, when accountability is transparent, everyone is keeping everyone in check, performance reviews become more effective, and work doesn’t fall through the cracks.
Reconsider the Traditional Corporate Structure
Top-down transparency is tough; we’ve had the corporate ladder, or pyramid, whatever you want to call it, for years and for some organizations it’s not going anywhere. If you’re married to your symbols of seniority that’s fine, but consider getting rid of the idea that 90% of the information stops with the c-suite. This massive game of telephone that we’ve been playing for decades just isn’t cutting it.
Don’t conceal information, share it. Don’t decide what’s relevant or not, be thorough, give context. Don’t assume the bottom of the ladder won’t understand your vision, help them understand.
Is it even possible to be invested in an organization that doesn’t share its path, vision, goals, mission? Transparency is the key to fostering and maintaining that investment that is so crucial to retention.