transparency sets the stage for trust to develop

Business value increases with transparency.

‘In 2006, restauranteur Jay Porter banned tipping in his San Diego restaurant, the Linkery. Instead, he implemented a service charge, and split it—transparently—amongst staff. Porter also ran a second restaurant that still allowed tipping, and this made for a useful comparison.

“Once established, the tipless/service charge model made us more successful in every dimension,” he said. The staff worked as a team, instead of selfishly trying to maximize their own tips. Servers and chefs enjoyed equal status, and staffed turnover dropped. The policy was so successful, says Porter, that it “gave us a huge competitive advantage in the marketplace; this in turn allowed us to serve a much higher quality of food and take lower margins on it.”‘ —FastCoExist

Businesses that are open, transparent, and cooperative are more resilient because they rely on people, not processes. In the second example above, people worked together because the remuneration was transparent. There was no way to game the system as an individual. This type of business model focuses on long-term value, not short-term profit. It can also foster innovation, as diverse ideas come to the fore when people openly share their ideas. The workers became a social network, cooperating in order to make the whole restaurant better.

Knowledge networks are similar. They function well when they are 1) based on openness, which 2) enables transparency, and 3) in turn fosters diversity – all of which reinforce the basic principle of openness. In such a transparent workplace, the role of management is to give workers a job worth doing, the tools to do it, recognition of a job well done and then let them manage themselves.

A socially networked business that enables open conversations around work can make better and faster decisions. This is the business value of social networks. But it is all based on trust, for without trust, there is no sharing. Transparency sets the stage for trust to develop.

9 Responses to “transparency sets the stage for trust to develop”

  1. Lori Polachek

    Great post.

    In the spirit of cultivating a high trust climate through an open, transparent culture, are there any self disclosure restrictions you would advise leaders to avoid? What, if any, are the new boundaries in a transparent, open culture between leaders and team members personal and professional lives? I’d love to hear your thoughts

  2. Lori Polachek

    Thanks so much for taking the time to respond. realize my question wasn’t so clear. I am wondering more about sharing can ever be too much, in an open culture- whether in the interests of trust, there are any restricted lines around information sharing, that ought to be respected

    By way of backgroubd or context for my question- I am involved in an exciting process of helping to shape a sustainable, thriving culture for our entrepreneurial, Gen 2, family business.

    It is clear that transparency, connection, caring, empowerment, alignment of values, purpose and passion.. will be important stepping stones as we lay the ground for the way forward.
    What is less clear to me, is whether there are restrictions to sharing that ought to be respected. ( ie. Is there diminishing trust when sharing beyond certain boundaries)-

    My inclination is to share my awareness of own imperfections, blind spots, challenges, very openly. Firstly, I believe it helps those around me understand in what ways I might need supports. And secondly, equally importantly it sends the message that its ok to be imperfectly human, to have blindspots or challenges and to need help. In fact, I’d prefer to have people that know their limitations and feel comfortable sharing that, then wearing masks to prop themselves up in inauthentic ways.

    I’ve gotten feedback recently that people ( fairly new team) were surprised about my openness and I”m not yet sure how to make use of the feedback.

    I’m not sure whether it is a function of something they are not accustomed to from leadership-and are reacting in familiar ways from their own experience in cultures of concealment, where people prop their fragile, concealed selves up thru gossip, put downs and politics- or whether I am being insensitive to necessary boundaries between professional and personal, that ought to be maintained, even in an open, transparent, caring culture. My sharing is not so much about my personal life- but about my own professional blind spots, which comes out through humor, in stories I share.
    I’m interested in your thoughts

    • Harold Jarche

      I think it’s important to discern when, with whom, and how we share. This is highly contextual and shows how important social intelligence is in the emerging network era. Of course, being open makes you vulnerable, and may be too much for some people, but I think it is the best long-term strategy, with the inevitable bumps along the way.

  3. Lori Polachek

    Please excuse my typos- typing on my iPhone!
    I shared your posts with various colleagues.
    Have a great day!

  4. David Becker

    Riffing further off the example, suppose you had a learning environment, (like the collective tips approach), in which learners could only succeed as individuals if all learners succeeded? This has been done small scale with peer coaching and ‘learner as teacher’ models, and even through behavioural economics tactics, but I like the idea of raising the stakes.

  5. deb lavoy

    Hi Harold. I’m writing a paper for a client who is interested in how leaders build trust. I’m looking for ways leaders build and erode trust. There are many lists associated with these things. Do you know of any research i can read? – Deb


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