Why Transparency Is Your Biggest Untapped Competitive Advantage

For Buffer's Leo Widrich, it's much more than a buzzword. So why isn't everyone embracing it?

"Default to transparency" is one of our deepest values at Buffer and it's been absolutely instrumental in our growth from making nothing just two years ago to making over $1 million a year today.

To us, transparency isn't a buzzword--it's a huge competitive advantage when everyone knows what everyone is working on and getting done. It seems obvious, right? But I'm constantly shocked by how many companies say they understand the importance of transparency but don't make any steps to make their companies more transparent.

Then I read a quote from Marc Effron, president of The Talent Strategy Group, that made it crystal clear to me why that happens, and it changed the way that I thought about transparency forever.

Transparency at Buffer

We've taken slightly crazy steps to make transparency real at Buffer. Everybody who works here knows how much everyone else gets paid, what steps everyone is taking to improve, and even how much everyone sleeps.

To make Buffer totally transparent on employee salary and equity, we created a formula that calculates the amount of compensation for any present and future employee. The power of the formula is that it not only answers the question of "how much," but it also explains why. Every employee knows what goes into the compensation calculation and that there are no backroom deals--and this has created an incredible bond of trust among the team.

Everyone on the team uses an amazing productivity app called iDoneThis, where everyone shares what they get done every day, with a twist. In addition to sharing daily learnings and progress, everyone on the team also shares where they struggled and how they're trying to improve. We envision a company where people are treated as full human beings, not productivity automatons, with a complex set of motivations and aspirations. Our team inspires and shows us how openness about vulnerabilities leads to greater collaboration, trust, and personal growth.

New employees all receive a free Jawbone UP wristband that automatically tracks your sleep, your steps, your health, and much more. The data is shared among the whole team, which has an awesome side effect. Whereas at other companies you might hear watercooler talk about the football game last night, at Buffer, fellow employees share deeper personal conversations about how they're really doing and feeling that start from seeing how their teammate is sleeping.

The Fundamental Question

Transparency isn't all rainbows and unicorns. It was actually incredibly nerve-wracking to make the company more transparent. Before we made all salaries public knowledge in the company, I was terrified.

Both the great strength and cause of pervasive fear of transparency in corporate America is that, with transparency, you show your employees the company for what it is and you expose how it works. That's disastrous at terrible companies.

This brings me back to Marc Effron's transformative insight about transparency. Effron consults leaders at global conglomerates on talent issues and he's often confronted with executives' fear that if employees know the whole truth about the company, individual employees' potential to advance with it, and how the company is actually run, employee engagement will tank. Effron's response is straightforward but absolutely crushing: "Here's the fundamental question: How long do you feel it's appropriate to lie to your employees about their future?"

For us, the process of making Buffer more transparent started with improving ourselves. It meant stopping to reflect on our values, how we ran our company, and how we could do better. We took transparency as a call to action to become the company that can be completely open and honest with its employees about how it works--and that's the ethical imperative that inspires us to make Buffer more and more transparent.

Don't Be Evil at Google

The power of transparency then is that it drives us to be better--to create a company that's both great and good.

The prime example of that for me is Google, a company whose mantra "Don't be evil" went hand in hand with its value of corporate transparency. Google's goodness as a company and its transparency with respect to that goodness drove an external marketing story that turned an unknown company into a global brand bigger than Coca-Cola, and it created an internal employee environment that's annually regarded as one of the best places to work on Earth.

We take inspiration from what Google has done and we've put our own personal stamp on it. Google is known for its amazing, playful employee perks. At Buffer, because we're focused on personal productivity and growth, every employee has a link they can use to buy Kindle books on the house, no painful reimbursement request required, no questions asked.

Google uses an internal system called Google Snippets, which is a simple place that shows what everyone in the company is working on, so that every employee has the information they need to work autonomously and make decisions. That limits the power of bad bosses to control the flow of information and makes everyones' accomplishments recognizable by everyone. At Buffer, we use iDoneThis for that purpose, but with the twist that we also share our struggles alongside our plans to improve.

When you're treating employees well, transparency is a very simple proposition--it's just telling people what you do. Or, as Marc Effron might say, it's as easy as telling the truth.

[Image: Flickr user Chad Kainz]

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18 Comments

  • Fred Magovern

    Hi Leo. I'm always closely following everything you and your team does - I get so much inspiration from it. As such, I've been thinking about transparency for some time. I'm trying to think through the positive/negative implications of bringing complete transparency to our pricing. We sell electric bikes - I'm wondering what would happen if we broadcast to the world what we make off each bike... Have you put any thought into this type of transparency?

  • Rick Noel, eBiz ROI, Inc.

    Excellent post on Transparency Leo. Based on your example of Google and Buffer, it would sure seem that corporate transparency fosters a healthy corporate culture that breeds innovation. Transparency to the market build trust and loyalty. On a side note, Buffer is an awesome app. 

  • Sebastian Frias

    I kept thinking of how you and Marc described the way employees were feeling great and couldn't stop thinking about customers, what if we made them feel so confident about the product they are buying, and suppliers as well, everyone knowing you are actually concerned of paying them fair but also having customers informed about what they are buying.  

  • Jussi Wacklin

    I am pro-transparency but cannot agree all the statements in this article. Company is still great based on the products and services it offer. Company culture drives the well-being and image of the company. Transparency can certainly be a great tool, but that doesn't make great companies.

    I also agree with Nancy that personal privacy is something that cannot be ignored. Total transparency leads to big brother society and that will result in revolution (ok, I got carried away here). My point is that transparency is not the answer to every question, not eve in the most of them.

  • Walter Chen

    Tony Hsieh (Zappos) talks about this: the best way to build a great product is to build a great team.  The best way to build a great team is to invest in culture.  Transparency is a way to invest in your team to drive big results.

  • Jussi Wacklin

    I agree that transparency helps in some cases, but it doesn't guarantee good people, thus good team, thus good culture, thus good product. 

    My point was simply to state that transparency is not the solution for all things. Vision, passion, tools, competencies and processes and little bit of luck can yield better results than being transparent. 

    I guess that was not the point of the article but it wanted to discuss transparency and promote one company that has taken this very far?

  • Jussi Wacklin

    Apple is also very successful company, full of great people and talent. Yet transparency is not one of their major values. What I mean is, swearing in the name of transparency and expect success is just silly. Success is never contributed to single factor.

    Transparency is nice way to build your company culture, but it's not miracle maker.

  • Marc Effron

    Another company that has near total transparency about business issues is Qualtrics, and TOTAL transparency is Bridgewater Associates -- an extremely successful investment firm.  

  • Nancy_governor

    interesting article but i think the important gray area here is where transparency crosses into invasion of personal privacy. if you want to treat employees as humans and not as productivity automatons then you need to also need to respect their right to individual privacy.

  • Cari Turley

    I totally agree. While I love the idea of a clear and transparent salary plan, sharing health information with my co-workers crosses the line. Sharing work information: great. Sharing personal information (involuntarily): invasion of privacy. I would feel very uncomfortable being forced to share personal information that has no relevance to our business.

  • Marc Effron

    I'm confused -- which employer forces employees to disclose personal information? I'm not familiar with any who do, or who legally could. 

  • Alessia

    I suppose they see the physical health and how much you sleep bit as invasion of privacy because "it's not about the business" but when you have sleep issues that go beyond I didn't sleep many hours tonight because I went clubbing and brought someone home or you have other severe health problems you end up with people having to take over your share of work if the company has to go on while you are dealing with it. 
    I doubt people at Buffer are asked to disclose the why and hows of what the Jawbone wristband says but when it signals I never hit REM phase when I sleep or I do close to waking up for a continued period of time I think it's rightful concern for an employer whether or not I can be fully productive during my working day. At least this way you can see a problem and not just a symptom and try to fix it before you get the talk about how this is not working out and you are left without the job. 

  • Adam Komar

    How much you sleep? That's personal time, not business time. Unless you're paying your employees to sleep.

  • denysedd

    Leo, thanks for this great post.
    Transparency is just one aspect of customer centricity, that so many companies still struggle to achieve. It's not (just) for your employees, but everyone who makes your business.
    Buffer is the latest organisation to join Zappo's, with their founders having more than just transparency and customer centricity in common.
    They are my heros!

  • Marc Effron

    Leo -- Thanks for supporting transparency!  Life is so much better for everyone when we're transparent with our teams!

  • LeoWid

    Hey Marc, a huge honor to have you stop by and thanks for the kind words. It's a great inspiration to have you lead the way with transparency! 

    Leo