Transparency: Better, Easier, Fairer

A book titled 'Salaries' with a magnifying glass over it and a pencil lying next to itThere are things that we get used to very quickly and then we can hardly imagine going back to a previous state. One such thing for me, in a professional context, is transparency. My default attitude for years was to aim for more transparency than I encountered when joining an organization. I didn’t put much thought into that, though.

Things changed for me when I joined Lunar Logic. On one hand, it was a nice surprise how transparent the organization had been. On the other, I kept my attitude and over time we were becoming more and more transparent.

Up to the point now, where there’s literally no bit of information that is not openly available to everyone at the company.

Personal preference aside, my argument for transparency is that if we want people to get involved in making reasonable decisions, they need all relevant information available at hand. Otherwise, even if they are willing to actively participate in leading the company, the decisions they make will mostly be random.

From this perspective, we need to escalate transparency really quickly. Let me give you an example. If someone is supposed to autonomously make a decision whether they should spend a day helping troubled colleagues in another project they should know the constraints of both projects: the one that person is on and the one that requires support. Suddenly we are talking about daily rates that we use to bill our clients and expected revenues of the two projects in the long run.

One argument that I frequently hear against making the commercial rates transparent to employees is that they will see how big the gap is between the rates and salaries and they will feel exploited by the bosses. Well, that may be true if they do not understand the big picture: overhead costs and its value for the organization, sense of stability and safety provided by a profitable company, etc. Such a discussion, in turn, means making the financial situation of the company transparent too. We go further down the avenue of transparency.

And then, one day you realize that a professional services organization has roughly 80% of its costs directly related to labor cost. In other words, it is hard to meaningfully discuss the financial situation of the company if we have an elephant in a room: non-transparent salaries.

Books and a coffee cup on a shelf

That’s basically the path we went through at Lunar Logic. I don’t say everything was easy. Unsurprisingly, the hardest bit was the change toward open salaries. By the way, there’s a longer story how we approached this part: Part 1, Part 2 and Part 3.

There is, in fact, a meta-observation I’ve had when we’ve been going toward the extreme transparency that we have right now. Reluctance to provide transparency inside a company has two potential sources: the awareness that people are treated unfairly (more common and in a vast majority of cases true) or lack of faith that people would understand the full context of information event if they knew it (less common and typically false).

Since salaries are a fairly sensitive topic they serve as a good example here. Typically the biggest fear related to the idea of transparent salaries is the fact that what people earn, at least some cases, is unfair. Therefore, transparency would either trigger requests for raises or dissatisfaction that some people are overpaid (or most typically both). This is a valid point, but one that arguably should be addressed anyway.

The argument that people would not understand the context rarely holds. We trust people to sensibly reason when they solve complex technical and business problems when in the context of product development. That’s what we hire them for. Then why shouldn’t they be capable of doing the same when talking about the company they’re with?

Besides, transparency enables trust. In this case, transparent decision makers help to build trust among those who are affected by these decisions. It tweaks how the superior-subordinate relationship is perceived. It wasn’t that much of an issue in our case as we have no managers whatsoever, yet in most workplaces this will be an important effect of introducing transparency.

There are two key lessons we learned from our journey. One is that transparency triggers autonomy. In fact, it is a prerequisite to introducing more autonomy. And, as we know, autonomy is one of the key factors responsible for motivation. In other words, to keep people engaged we need a healthy dose of transparency.

The other lesson is that transparency makes everything easier. Seriously. While the process of enabling autonomy may be a challenge, once you’re there literally everything is easier. No one thinks about what can be shared with whom. If anyone needs any bit of information they simply ask a relevant person and they learn everything they want to know. Decisions have much simpler explanations as the whole context can be shared. Discussions are more relevant as everyone involved has access to the same data. Finally, and most importantly, fairness becomes a crucial context of pretty much all the decisions that we make.

I can hardly picture myself in a different environment, even if I spent most of my professional life far from this model.

And that’s only one perspective of transparency. We can also look how it affects our relationships with clients. But that’s another story.

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