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Improving Your Company’s Transparency to Attract Investors

It should not be news that transparency is important when you want to attract goodwill and, more importantly, investors to your company and brand. The more people know about what you do and how you do it, the more likely they are to trust you with their own money.

Of course, it’s one thing to say “you need to be as transparent as possible” and another to actually achieve that goal. In this article, we are going to show you some real world examples of what successful companies have done to make their operations more transparent.

Transparency for Employees

Open book management saved CPO Commerce, an e-commerce retailer of hand tools and power tools made by Black and Decker, etc. After expanding more quickly than execs had expected, the company needed to upgrade all of its IT and the process threw the company into a tailspin for more than six months. Even though things were hectic and frustrating for everyone, not a single employee quit. The CEO, Rob Tolleson, says that this is because they had open-book management.

Open book management is a system through which employees at every level of a company is given access to all of the company’s processes. They are free to suggest solutions, fix problems and make improvements to the company. The result has been astonishing. Companies that implement it says that by allowing employees to act as part-owners of the company, the company improves across the board.

Transparency Among Employees

In many companies, employee performance details are kept behind lock and key. Raises are given seemingly at random, performance reviews are confidential, individual tasks are held close to the vest as employees fear giving up whatever control they can manage to eke out. This sort of secrecy breeds paranoia and paranoia reduces productivity and morale.

This is why companies like Qualtrics have started implementing something called radical transparency. Radical transparency makes everything employees do open to the public. If someone gets a raise, other employees can see why. People can see what their coworkers (and managers) are working on. They know not just what their goals are but goals that have been set for and by their peers.  Employment history within the company is also made public so that employees can see who is promoted from within and why. The powers that be at Qualtrics have reported that radical transparency has helped them build trust and has definitely been a factor in the company’s success.

Transparency with the Financials

Financial transparency is incredibly important if you want to attract investors. Investors want to be able to see exactly where your money comes from and what you do with it. Many companies provide this via annual investor reports. It is important that you include as many details as possible within this report. The more you leave out, the more your current and potential investors are going to worry about what you have to hide.

Some companies have used software like Kyriba to manage their corporate treasury accounts and details (Qualcomm’s Senior Treasury Analyst and Treasury Operations Manager even made a video for the Kyriba site) and pull together the details they need to keep investors happy.

Transparency With Customers

With more and more shopping being done online and credit/debit cards outpacing cash payments, your customers need to know exactly what you will be doing with the information you collect from them. A lot of the time you can spell this out via a well written privacy policy. Other times, though, it is more about what you are doing to keep their information safe (what kind of servers process transactions, what information is actually stored, etc.).

All of this matters when you want to increase your investor base. Your investors are going to want to know who has access to what information as well as how your money is managed. The more information you make available to them, the better able they will be to evaluate your risk vs. profitability.

CEO Blog Nation

This is a post from a CEO Blog Nation writer. CEO Blog Nation is a community of blogs for entrepreneurs and business owners. Started in much the same way as most small businesses, CEO Blog Nation captures the essence of entrepreneurship by allowing entrepreneurs and business owners to have a voice. CEO Blog Nation provides news, information, events and even startup business tips for entrepreneurs, startups and business owners to succeed.

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