Today, when fact checking can be accomplished via the internet, it’s a wonder that we’re even talking about the need for transparency. However, transparency remains a buzzword in today’s society: transparency in government (such as Sunshine Laws), transparency in politics (revealing sources of donations), transparency in finance (SEC regulations), transparency in relationships.
The pharmaceutical industry, of which I am tangentially a part, has recently been under pressure to increase transparency in drug pricing. At TrialScope, we focus on a different area of pharmaceutical transparency: clinical data disclosure.
In my opinion, all companies, regardless of the industry, should revisit their commitments to transparency. Here’s why:
1. Transparency boosts brand reputation. From a public relations perspective, transparency is a plus. A company that is forthcoming with journalists and the public is more likely to enjoy a positive brand image. According to a 2018 survey by Sprout Social, 86 percent of Americans say transparency from businesses is more important than ever before.
2. Transparency attracts quality candidates – and retains employees. Just as you vet job candidates, any potential employee worth hiring will do a bit of reconnaissance on you before committing to an interview. If company information is difficult to obtain, the candidate may opt to interview with a competitor.
Once hired, employees who have access to upper management via an open-door policy will feel valued and heard. They also will have more trust in their employer. When it comes to employers/employees, trust is a two-way street. According to the 2019 Edelman Trust Barometer, employees who have trust in their employer are more engaged (33 points), and remain far more loyal (38 points) and committed (31 points) than their more skeptical coworkers. And a TINYpulse survey revealed that management transparency was the No. 1 factor contributing to employee happiness.
3. Transparency puts your company in a favorable light with investors. If you were thinking about investing in a company, would you invest in one that withheld information or one open to sharing? Investors must conduct due diligence when deciding where to spend funds. Any areas of concern, such as a lack of transparency, will raise a red flag. A company that is less than transparent may be perceived as trying to hide something, even if that is unfounded. When in doubt, transparency is the best policy.
Insights from the Kellogg School of Management at Northwestern University show that “transparency benefits companies as well as investors. A number of studies have shown that investors are more willing to buy stock in a company when they have a clear understanding of the company’s finances.”
4. Transparency can keep you compliant (and keep you honest). In the pharmaceutical industry, it’s the Food & Drug Administration that monitors and enforces federal compliance. Some states have enacted laws mandating business transparency (The California Transparency in Supply Chains Act a case in point). At the city level, San Diego has a seldom-enforced “Mandatory Disclosure of Business Interests” law that would make it one of the transparent places to do business.
The U.S. government is attempting to take transparency a step further, with the bipartisan Corporate Transparency Act of 2019 introduced in Congress. The bill would “require companies to disclose their true, beneficial owners at the time the company is formed to prevent bad actors from using anonymous shell companies to thwart law enforcement and hide their illicit activities.”
In the healthcare industry in particular, however, there is a constant push-pull between the need for data transparency and the patient’s right to privacy. Another perfect example of the struggle between transparency and privacy is the European Union’s General Data Protection Regulation (GDPR) of 2016. Under the GDPR, transparency “requires that any information addressed to the public or to the data subject be concise, easily accessible and easy to understand, and that clear and plain language and, additionally, where appropriate, visualization be used.”
This brings to mind the concept of health literacy, defined as “the ability to obtain, read, understand, and use healthcare information in order to make appropriate health decisions.” So the act of being transparent not only encompasses what you are sharing with the public but how you are sharing it.
5. Transparency is the right thing to do. Beyond regulatory requirements, being transparent is simply the right way to do business.
Does your company have a formal transparency policy? Typically, this falls under the auspices of human resources. While a harassment policy is mandated by the states and a safety policy mandated by the Occupational Safety and Health Administration (OSHA), just because your industry may not require a transparency policy doesn’t mean you’re off the hook. And simply having a transparency policy means nothing if it is not adhered to by management.
As long as transparency does not jeopardize a company’s proprietary information, I say it’s a good thing. Transparency will go a long way toward building trust – and growing your business.
This article originally appeared on the Forbes Technology Council.
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