4 ways to instill and promote transparency

Conventional wisdom says knowledge is power, and earlier in my career I always associated this mantra with those leaders who protected and validated their positions by hoarding and hiding knowledge from their competitors - and often their colleagues - as a power play.

But recently, this age-old adage has taken on a new meaning for me. As we've built our business, I've realized this concept, that knowledge is power, can also be interpreted and applied in the workplace in a really positive way. A happy and productive workplace is one that shares information freely to empower employees. This is a transparent workplace, one where knowledge and ideas flow in all directions so everyone has the information they need to feel truly invested in the company's growth and success, and ultimately perform their own jobs better.

Transparency matters for a company's culture, because it builds trust and stronger relationships between employees, management and the company itself. Keeping everyone in the loop leads to more collaboration and shared learning, greater creativity, faster problem-solving (there's less back and forth!) and ultimately improved performance. Most important, it keeps leaders honest. It's hard to hold an out-of-whack perspective if there's an abundance of open information pointing in a different direction.

For my company, a global marketplace for small-business loans, the cultural significance of transparency runs even deeper. Indeed, a frustration with the lack of authenticity and opaque practices in the banking sector was one of the main factors that inspired my co-founders and I to build the business in the first place. Transparency (or as we say, "Be Open) is one of our core company values, and I spend a lot of time thinking about how we keep it truly ingrained in our culture as we continue to grow.

But maintaining authentic transparency in a fast-growing company's culture is not as simple as rolling out an internal chat tool or unveiling fishbowl meeting rooms.

Here are my top four tips for business owners who are committed to instilling and promoting transparency in their cultures as they grow:

1. Promote candid conversations with your team.

Encourage employees of all levels to ask tough questions to members of the senior leadership team about what's on their minds, whether that's the status of a contentious project or the strategic direction of the company. Your employees are the ones on the front lines so they are more likely to spot the glitches or issues percolating in the background more quickly.

To help everyone feel comfortable speaking their minds or raising concerns, construct a range of regular opportunities for different types of people to ask sensitive questions in different ways. For example, I host a monthly Q&A where employees can anonymously submit questions that I address in a company-wide presentation. I also hold bi-monthly check-ins for a more intimate dialogue on what's on different team members' minds, and host office hours monthly to encourage one-on-one conversations.

2. Access isn't enough.

Transparency sometimes requires opening up what can seem like a floodgate of information and data for public viewing. But providing access isn't always enough. When you're offering a clear view across departments, the sheer volume of information or industry slang can be intimidating and often debilitating for peers in different functions. It's critical to provide context, commentary and clarity around what this information actually means for different people.

Ask employees what they want to know, and then set up processes to deliver that information in an efficient and digestible way. For example, we have a series of live scoreboards around the office, regular product demos, a weekly global team meeting and a quarterly off-site session where each team provides a deep dive into a challenging project it is solving. When we measure something (such as a recent culture survey) we share the results with the team.

3. Teach people how to give and receive honest feedback.

Training is key here. For example, we've just started running a leadership-training session for our managers where one of the key focus areas is how to give honest, constructive feedback to lift the team's peak performance. As part of this, we train managers on how to respond positively to honest feedback from their own direct reports.

4. Proactively share bad news.

Employees don't like to be kept in the dark, especially if they sense something important or unsettling is going on behind closed doors. They want to be kept informed about important issues, blunders or changes, even if it's not great news. Understanding the context around a sticky situation will at least help your team better empathize with any hard decisions you will no doubt need to make in time.

If you withhold information, people will simply make up what they don't know, often assuming the worst, and a dramatic game of telephone may ensue. Rumor propagates anxiety and tension at every level of a company. If you only share good news people will immediately think you're looking at the world through rose-colored glasses or purposefully misleading the team. Sharing bad news is valuable in building trust.

The big challenge here is being upfront, honest and reassuring without provoking alarm, unrest or distraction from broader team goals. Use your discretion on the best channel to deliver the news, and then work with a small team you trust to nail your narrative and key messages around the perceived problem and your game plan. In my experience, teams that openly embrace mistakes as learning opportunities are less likely to be disrupted by big shifts or bad news in the long run.

To encourage transparency around mistakes, we've introduced a "D'oh! award (a Homer Simpson figurine) that goes to a team member willing to self-nominate and share their lessons from a recent bungle at our weekly team awards.

Engendering a transparent workplace should be a key organizational focus for every business, particularly those looking to scale quickly. Embracing transparency not only allows individual team members to make better choices, it also helps build trust that management is making good and balanced decisions. There's no magic formula, but a commitment to authentic transparency and small steps can go a long way.