Business Ethics and Social Responsibility Chapter 1 Lesson 2

CHAPTER I
The Role of Business in Social and Economic Development

Lesson 2
FAIRNESS, ACCOUNTABILITY AND TRANSPARENCY IN AN ORGANIZATION

Business leadership affects the moral capability and performance of organizations and the people within
it. They influence the scope and character of formal ethical programs and the integration of ethics into
everyday organizational life. However, most practicing business leaders in most countries most of the
time are not held accountable for dysfunctional moral, social, and environmental performance. Many
are seldom held accountable for adverse impacts of their decision-making, for example, deepening
poverty, social disintegration, and environmental degradation. There is a need to convince managements
that they should develop their “integrity capacity” which is the individual and/or collective capability
for repeated process alignment of moral awareness, deliberation, character, and conduct that
demonstrates balanced judgment, enhances sustained moral development, and promotes supportive
systems for moral decision-making. These four key dimensions of integrity capacity—process, judgment,
development, and system—should present challenges for business leaders so that they become more
aware of moral concerns and thus respond more effectively to the problems that arise.

FAIRNESS IN BUSINESS

Beyond many mundane inequities, many experienced the genuine pain and outrage of racial, religious,
or even gender prejudice. This doesn’t change as we become adults and is also true even in the workplace.

The workplace is where we tend to feel injustices most acutely. Money, competition, and pride are at
stake, both petty and serious unfairness treatments are common — taking credit for another’s work,
shifting blame, inequitable allocation of work load, promotions of the less competent for political reasons.
And then there are all those double standards. Some do less work, and what they do isn’t good. They come
in late, miss deadlines, and make mistakes. Yet they get the same raise as the other. The company has
strict rules, but when bosses do something we would get fired for, they receive only a slap on the wrist,
if that.

As it happens, what is or is not fair is much more complicated and ambiguous than it seems from the
vantage point of the person who feels shortchanged. Even though the underlying concepts of fairness and
justice are simple, almost intuitive, applying them in real life proves very difficult. Distinguishing real
injustice from self-serving justifications has become harder in recent years. It seems that whenever
someone is denied something they want — a job, a promotion, a contract — they file a protest. As Ralph
Waldo Emerson said, “one man’s justice is another’s injustice.”

Successful relationships always work if there is fair dealing within the organization. If we need growth,
we need to be fair with them. Sometimes we tend lose something but for long term relationship we always
win and get value and the fair deal is always the one that nets the most amount of value for both sides.

Fairness is the quality of making judgments that are free from discrimination. Judges, umpires, and
teachers should all strive to practice fairness. Fairness comes from the old English fæger, meaning
“pleasing, attractive.” This makes sense given that the word is also used to describe physical beauty.
Fairness can refer to someone’s good looks, or if someone is very pale and blond, we might notice the
fairness of her complexion. When someone shows fairness in making a decision, he is pleasing all parties
involved and offering a solution that is attractive to everyone.

Fairness is concerned with actions, processes, and consequences, that are morally right honorable, and
equitable. In essence, the virtue of fairness establishes moral standards for decisions that affect others.
Fair decisions are made in an appropriate manner based on appropriate criteria.

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Fairness in business is the value of treating people with a standard of performance that is consistent and
equal based on commitments. It means giving customers a fair value for their money. It also means
providing a non-discriminatory work environment where employees have equal opportunities to good
benefits and working conditions. Treating community members and business partners with the same level
of fairness we expect from them is also important.

The moral obligations arising from the core ethical value of fairness are almost always associated with
the exercise of power to render judgments that bestow benefits or impose burdens. Almost everyone has
the power to give or withhold benefits (including approval, praise, honor, and support) and to impose
burdens (including disapproval, criticism, blame, and condemnation). Parents, teachers, employers,
college administrators, building inspectors, and innumerable others make daily judgments that
significantly affect our lives.

The moral duty to be fair places constraints on our judgments and actions. There are two aspects of
fairness: fair results (substantive fairness) and fair procedures (procedural fairness).

Substantive Fairness

In general, a fair result is one in which people receive what they are due and what they deserve, their
just deserts. Unfortunately, there is no agreed criteria to determine what a person “deserves.” Some argue
that true fairness is equality (each person receives an equal share of benefits and burdens). Others believe
the better criterion is merit (those who are most competent and who produce the most deserve the most).
Still others believe that benefits should be allocated based on need and burdens on the ability to carry
them. Other theories of “distributive justice” include resource allocation based on effort, social
contribution, seniority, and legal rights.

The wide variety of approaches to fairness means that for every decision there will be people who claim
it is unfair. And they’re right —according to their personal criteria. Thus, in making difficult decisions
that affect several stakeholders who have conflicting interests, it is impossible to come to a single,
indisputably fair result. Nor is it possible to satisfy everyone. Generally, those who consider themselves
winners in the decision will consider the result just, and those who see themselves as losers consider it
unjust. This observation suggests three important rules about the fairness of decisions.

First, since disagreement and criticism are inevitable, we must content ourselves with doing our very best
to reach a fair judgment based on personal conscience and ethically justifiable standards of fairness. If
you need to be liked or approved of by everyone, avoid accepting any responsibility that requires tough
choices. Charges of unfairness come with the territory.

Second, we should be clear in our own minds about the criteria of fairness we are using and let others
know, ahead of time if possible, what those standards are. For example, in making a hiring decision, we
evaluate “qualifications” and make comparisons. It is helpful to everyone if we know and disclose what
we think is relevant and irrelevant to the decision and, if we can, how we rank various factors. It is likely,
for example, that all of the applicants will have one or more attributes that they think should be given
great weight — seniority, experience, academic credentials, a proven track record, excellent references,
evident potential, good interpersonal skills, blood kinship to the president of the company, etc.

In addition, a fair decision has to weigh deficiencies or blemishes. Applicants tend to believe that flaws
in their competitors should be fatal while minimizing their own shortcomings — absenteeism, lack of
pertinent experience, erratic personal relationships, a drinking problem, an opinionated personality, a
bad reference, etc. In fact, all of these positive and negative factors are potentially relevant. With so many
potentially relevant factors, any decision will be arbitrary unless there is some orderly way to sort and
rank the issues. And though any good-faith decision that balances the strengths and weaknesses of
candidates according to stated criteria is fair, one must still expect charges of unfairness from those who
weigh the factors differently. The third rule in making decisions is that the procedures used must be and
appear to be fair. In many cases, a judgment is defended primarily in terms of the process used to reach
it. In effect, one can argue that a fair process always yields an ethically justifiable result.

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Procedural Fairness

Fairness requires that the process of decision making reveals a conscious concern with reaching a fair,
just, and equitable result. Decisions should be made, and should appear to be made, carefully, honestly,
and objectively, with the knowledge that even a process of the greatest integrity does not always produce
certainty and that something less will have to do.

There are two major types of decisions that are subjected to the scrutiny in terms of fairness: comparative
selections (whom to hire or fire, which applicant to admit to medical school, who should be cut from the
team) and factual determinations, often of an accusatory nature (did a person lie, cheat, or steal). Though
personal and business matters should not be encumbered with the formal due process requirements of a
court case, there are five principles derived from the judicial system that help assure fairness: notice of
the standards by which a person will be judged, impartiality of the decision maker; thoroughness in
gathering facts; in cases concerning blame or punishment, the opportunity of the accused to be heard;
and careful evaluation based on an appropriate standard of persuasion.

Suppose e have good reason suspect, but are not sure, that our child lied to us; that our mate cheated on
us, that our baby-sitter molested our child, or that our employee came to work intoxicated. How do we
deal with these matters fairly, short of having a full-blown trial?

• Fair Notice. we should determine whether the person accused had fair notice that the conduct
was wrong. In the case of lying, cheating, and stealing, this is not a problem, but more technical
violations, such as accepting improper gifts or using company assets, require more inquiry. If we
determine that the person knew or should have known about the proper standards of conduct,
further action on our part is fair. If, however, we decide that the person did not know and
reasonably could not be expected to know of a rule, fairness may dictate nothing stronger than a
warning.
• Impartiality. we should be sure we are a fair and impartial judge. This means we are willing to
suspend judgment until all the information is in. It also means we have to set aside any
conclusions we may have made and clear our mind of prejudice (prejudging) or predispositions
about the person or issues involved.
• Gather Facts. we must make reasonable efforts to gather facts. Thoroughness without being
compulsive is important. What do we actually know? Are there ambiguities that can be clarified?
If we are making comparisons do we have sufficient information on each candidate concerning
the factors we think are most important? If we are adjudicating facts, is there any way of
confirming our suspicions or the accused’s claim of innocence without unduly embarrassing that
person (a significant injustice could result simply from disclosing our suspicions to others)?
• Fair Hearing. in an accusatory setting we should allow the person accused an opportunity to tell
his or her side of the story. This means confronting the accused with our suspicions and the facts
or inferences we have to back them up. The “right of confrontation” is not only an essential
Constitutional safeguard in criminal cases, it is a fundamental prerequisite of fairness in personal
and business relationships. What is worse than discovering that we have been judged a liar, a
cheat or a thief without a chance to stand up for ourself? The confrontation phase can be informal
but it should allow the person to explain, clarify, and ask questions, and we must listen with a
truly open mind.
• Evaluation. we must carefully weigh and evaluate all the information we have, separating facts
from opinions and opinions from speculation. Don’t be afraid to draw reasonable inferences but
know when we have done so and the premises on which we base our conclusion. Before we reach
a judgment, we have to take up the issue of burden of proof. Does the accused person have to
persuade us that he did not do it or do we have to be persuaded that he did? In most cases, if we
are assigning blame or imposing a punishment, the “innocent until proven guilty” maxim of
criminal law is the proper standard. That doesn’t mean, however, that we need to be convinced
“beyond a reasonable doubt.” In most matters it is quite enough that after considering the facts,
we are persuaded that the person did or did not do whatever it is he is suspected of doing or in
comparative judgments that the balance of the evidence supports our decision.

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Generally, the higher the stakes in terms of consequences to the accused, the higher level of certainty we
should have. For example, our confidence in the person who takes care of our baby is so important that
even small, lingering doubts may be enough to persuade us that we don’t want this person around our
baby any longer. On the other hand, our level of confidence in the baby-sitter’s guilt should be
considerably higher if we are going to report the matter to the police or make a damaging public
accusation (something we may have a moral duty to do for the sake of other children and other parents).
Similarly, if an inquiry into an employee’s drinking is likely to result in counseling, we don’t need to be
as convinced as we should be if the employee will be fired.

Principles of Fairness

Fairness requires that we:

• Treat all people equitably based on their merits and abilities and handle all essentially similar
situations similarly and with consistency.
• Make all decisions on appropriate criteria, without undue favoritism or improper prejudice.
• Never blame or punish people for what they did not do, and appropriately sanction those who
violate moral obligations or laws.
• Promptly and voluntarily correct personal and institutional mistakes and improprieties.
• Not take unfair advantage of people’s mistakes or ignorance.
• Fully consider the rights, interests, and perspectives of all stakeholders, approach judgments with
open-minded impartiality (setting aside prejudices and predispositions), conscientiously gather
and verify facts, provide critical stakeholders with an opportunity to explain or clarify, and
carefully evaluate the information.

ACCOUNTABILITY IN BUSINESS

Most people fear the word accountability. They are afraid of expectations and how they will measure up.
They are afraid of being held responsible for poor decisions and mistakes. To them, accountability is a
heavy burden that was created to crush them.

Business Dictionary’s meaning of accountability is: “The obligation of an individual or organization to

account for its activities, accept responsibility for them, and to disclose the results in a transparent
manner.” The words obligation and responsibility are both scary in a sense that we have no choice but to
do it and whatever happens will all be on our head. When accountability is defined like this, it’s no
wonder why people think of it as a punishment for something that went wrong.

However, accountability simply means owning up to our actions and becoming committed to achieving
the result that we want. Whether we like it or not, people will judge us based on what they think we’re
doing and not what we want them to think we’re doing. Accountability is just fulfilling these
commitments in the eyes of other people.

Accountability by fact is an acceptance of responsibility for honest and ethical conduct towards others .
In the corporate world, a company's accountability extends to its shareholders, employees, and the wider
community in which it operates. In a wider sense, accountability implies a willingness to be judged on
performance.

To management coaches, accountability goes beyond giving each employee a task to complete in a project.
It also means making each individual accountable for the success or failure of their contribution to the
overall project. In other words, it's all about ownership of success—or failure.

Understanding Accountability

Accountability has become an essential concept in corporate finance. It is particularly relevant to the
accounting practices that a company adopts when it prepares the financial reports that are submitted to

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shareholders and the government. Without checks, balances, and consequences for wrongdoing, a
company cannot retain the confidence of its customers, regulators, or the markets.

However, in recent years corporate accountability has come to encompass the company's activities as they
affect the community. A company's environmental impact, its investment decisions, and its treatment of
its own employees all have come under public scrutiny.

Special Considerations

Some high-profile accounting scandals in the past demonstrated that a public company cannot continue
to exist if it loses the trust of the financial markets and regulators.

The erstwhile energy giant Enron collapsed in 2001, taking the venerable accounting firm Arthur
Andersen with it after its false accounting methods were exposed. The global financial crisis in 2008–
2009 revealed gross financial speculation by some of the nation's biggest banking institutions. The LIBOR
scandal revealed currency rate manipulation by several London banks.

But many leaders have called for the creation of a new culture of accountability in finance—one that
comes from within.

Types of Accountability

At least three major institutions have a universal impact on citizens: corporate, political, and
governmental accountability. Not surprisingly, they overlap each other.

• Corporate Accountability. At its most prosaic, accountability is about the numbers. Every public
company is required to publish a financial report quarterly and annually detailing its income and
expenses.

An auditor reviewing a company's financial statements is responsible for obtaining reasonable

assurance that the financial statements are free from any material misstatements caused by error
or fraud.

Accountability requires corporate accountants to be careful and knowledgeable, as they can be

held legally liable for negligence. An accountant is responsible for the integrity and accuracy of
the company's financial statements, even if an error or misstatement was made by others in the
organization.

This is why independent outside accountants audit the financial statements. Public companies are
required to have an audit committee within the board of directors. Their job is to oversee the
audit.

• Political Accountability. Political accountability in recent years has focused on money.

Specifically, it requires transparency about corporate donations to political causes and
candidates.

For example, the non-partisan Center for Political Accountability and the Wharton School at the
University of Pennsylvania jointly publish an annual index rating the disclosure and oversight
policies of major public corporations regarding their donations to political causes and candidates.

These scandals resulted in tougher regulations, and there are armies of regulators and private
watchdogs working to make sure that companies report their earnings correctly, that the
exchanges execute trades in a timely fashion, and that information provided to investors is timely
and accurate.

The Center shines a spotlight on corporate spending to influence politicians. Recently, the Center
reported in-depth on a campaign by the pharmaceutical industry to head off a proposal to allow
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Medicare to negotiate drug prices with vendors. The report named the names of members of
Congress who accepted political donations from drug-makers.

• Government Accountability. The role of corporate cash is only one of the global issues regarding
government accountability.

USAID, the federal agency that administers civilian foreign aid, defines measures government
accountability by these key factors: a free and fair political justice system; protection of human
rights; a vibrant civil society; public confidence in the police and courts, and security sector
reform.

• Media Accountability. The media have long been under the constant scrutiny of a number of
watchdogs, internal and external. In the internet era, these have been augmented by independent
fact-checking organizations such as FactCheck.org, Snopes, and PolitiFact.

These and other organizations monitor the media for bias and errors and publish their findings
for all to see.

• Social Media Accountability. What if a publisher had 2.8 billion contributors, and all of them
were free to say whatever they wanted?

That's roughly the position that Facebook is in, although it is arguable whether the social media
site is or is not a publisher. In fact, denying that it is a publisher may be a good defense strategy
for Facebook, which is now under fire for spreading dangerous misinformation and providing a
platform for hate speech.

At this writing, some are proposing that Facebook be held accountable for the posts it publishes,
or the ways in which it promotes and distributes those posts to its vast membership.

The standards for accountability have still to be written for social media.

• Drug Accountability. Drug accountability is specific to the requirements for the proper conduct
of clinical trials in the pharmaceutical industry. The part of a clinical trial termed drug
accountability requires the proper storage, handling, dispensing, and documentation of drugs
during a trial, ending with the destruction of leftover supplies of the drug.

A component of drug accountability is a daily log recording the use of drugs in a clinical trial.
This is required by the Food and Drug Administration.

Importance of Accountability

Sound accountability structures are the most important aspect of prevention and detection of corruption.
A civil society organization without proper accountability systems is fragile and open to rumors about
mismanagement and abuse of power. Worst of all, it will prevent it from enjoying respect and full
legitimacy in the eyes of its stakeholders including those duty bearers whom it intends to engage with
advocacy.

Accountability – what it is:

• To be accountable is to be liable to explain or justify one’s actions and decisions.

• Accountability is the process of explanation and justification.
• Holding to account is the process of requiring explanation and justification, but it is also about
testing, forming a judgment, and if necessary, taking action.
• Accountability implies responsibility: it is reasonable only to hold people to account for those
things for which they are responsible.
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Accountability what it is not:

• It is not synonymous with responsibility.

• It does not imply a management relationship.
• It is not a “one off” annual event.
• It is not the same as appraisal.
• It is not about confrontation, “putting someone in his place” or “giving him a hard time.”

Examples of Accountability

Corporate accountability can be hard to quantify but that doesn't stop anyone from trying. The
publication Visual Capitalist ranked the best performing U.S. corporations on environmental, social, and
corporate governance issues. The top performer on environmental issues was HP, which has decreased
its greenhouse gas emissions by 44% since 2015. General Motors got the highest marks for social
responsibility as the only U.S. company with a woman as both CEO and CFO. Qualcomm topped the list
in corporate governance due to its introduction of STEM programs for women and minorities.

Difference Between Accountability and Responsibility

A responsibility is an assigned (or self-assigned) task or project. Accountability implies a willingness to

be judged on the performance of the project. Accountability does not exist in a vacuum. It requires
transparency and effective communication of results with all parties that may be affected.

The Oz Principle

The Oz Principle has a different definition of accountability. It is, “a personal choice to rise above one’s
circumstances and demonstrate the ownership necessary for achieving desired results to See It, Own It,
Solve It, and Do It.”

• See It – Acknowledging the problem

• Own It – Taking responsibility for the problem and the results
• Solve It – Determining what we can do
• Do It – Taking action

In Oz Principle, there’s a line that separates success and failure.

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Above the line is where we’ll find the steps to accountability. Below the line is where we’ll find the blame
game, finger-pointing, excuses and just basically waiting for something to happen.

We have to take note that the definition above states “a personal choice.” It is our choice to either stay
below the line and gets stuck or to go above the line and get results.

With this definition of accountability, we can help ourselves and our organization to do whatever it takes
to overcome circumstances and achieve our desired results.

How to be Accountable?

Here are some tips on how to be an accountable individual.

• Set SMART Goals

SMART stands for Specific, Measurable, Attainable, Relevant and Time-bound goals. We have to
first clearly define the goals that we want to achieve in our business. It has to be well-defined and
specific that everyone in our company knows and understands what it is.

Here lies the difference between, “I want to be the best builder in our area” and “I want to have
10 projects every month for the next 15 years by providing great quality service and rewarding
loyal customers with promotions and discounts.”

When we say measurable, it means that we need to have evidence that we are accomplishing our
goals. We need to be able to identify what we should be able to see and feel when we reach our
desired goals.

Even if we dream a bit too far it doesn’t mean that it’s impossible for it to be attained. Although
we need to consider your out capital, workforce, etc., with proper planning and executing it, we
will still get there.

Our goals need to be relevant to us. What’s worse than trying to achieve a goal that we don’t
really want? It’s wasting time on something that doesn’t mean anything to us.

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Lastly, our goal has to be time-bound. Goals that have no time limit might go on forever and will
be eventually put off. Set deadlines for us and our team, but make it realistic and flexible. That
way, we will be motivated to finish tasks quickly but at the same time removing some of the
pressure.

• Ask for Feedback

Actively ask for feedback from our team, our customer or our business coach on what we can do
to improve. Thinking that we alone can do all the decision-making in our business is a mistake.
We might not be able to see a problem ourselves. But when we ask help from other people, we
can have more ideas on how to tackle such problems.

We also have to ask for feedback from ourselves. Just waiting for something is below the line of
accountability.

Asking for feedback can promote joint accountability and teamwork. That way, we will not be
able to say that we did our job when the team has not achieved its goals.

• Be Honest

Being honest is hard when we have to admit to a mistake and the need to blame others or make
excuses will naturally be there. But if we really want to become an accountable individual, we
have to be honest and own up to the results of our work: good or bad.

Our honesty and ownership will show people that we are really doing what we need to do and
we are not trying to hide anything. But it pays if we have a solution ready, as that will ease the
tension.

Taking accountability can help us direct our path to our desired outcome. It is there not as a
punishment for our actions, but as a way influence the outcome and prevent mistakes from
happening.

TRANSPARENCY

Transparency in business is the basis for trust between a firm and its investors, customers, partners, and
employees. Being transparent means being honest and open when communicating with stakeholders
about matters related to the business.

Transparency is the quality of being easily seen through (brainly.in). In context, there is nothing hidden
within. Transparent companies share information relating to performance, small business revenue,
internal processes, sourcing, pricing, and business values. When something goes wrong in business,
transparent companies don’t try to hide it. Instead, they’re upfront about the issue.

Transparency in business can take many different forms depending on the nature of the communication
and which stakeholders are involved, but the core objective is always the same: to establish trust and
goodwill by building and preserving the firm’s reputation for openness and honesty in its business
dealings.

Examples of Transparency in Business

• Transparency with Investors and Shareholders – Investors think about transparency in terms of
how readily they can access financial information about a company, including its price levels
and audited financial reports. Investors must be able to trust that your organization produces
financial reports that are informative, accurate, and independently audited.
• Transparency with Customers – Customers want to see transparency from the businesses where
they choose to spend their money. To achieve transparency with its customers, businesses should

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respond to customer inquiries and feedback in an honest and timely fashion, and increase the
accessibility of information about their products and services. Transparency also means
admitting to mistakes instead of trying to cover them up, and working to make things right with
customers. When executed well, transparency with customers results in elevated brand loyalty,
increased sales, and stronger employee satisfaction.
• Transparency in the Supply Chain – Transparency between an organization and its vendors and
suppliers is essential for ensuring a productive ongoing relationship. An organization may cease
doing business with a supplier who fails to honestly communicate about the sources of its
materials or labor. Supply chains are increasingly being scrutinized by governments, consumers,
and NGOs who are concerned about ethical sourcing of labor and materials.
• Transparency with Employees – Transparency with employees is centered around honest, two-
way communications between employees of the business and their managers. This can include
transparent discussions about business goals and objectives, challenges, employee performance,
and other work-related issues.

Benefits of Transparency in Business

The primary benefit of transparency in business is that it produces trust and goodwill while safeguarding
the firm’s reputation among investors, partners, employees, customers, and other stakeholders. Other
benefits of transparency in business include:

• Increasing employee morale

• Rising customer loyalty
• Boosting employee engagement and retention
• Demonstrating stability and encouraging investment
• Leveraging honest feedback to improve processes and drive results
• Demonstrating integrity and ethical behavior

The Quest for Transparency

In our quest for transparency, we have to be careful not to be too transparent. We can be transparent but
we have to be transparent without jeopardizing what makes our business so special. We shouldn’t go
around giving away trade secrets so our competitors can sweep the rug from under us. We may even
consider creating a confidentiality agreement so we and our employees don’t cross into the too-
transparent territory.

Being transparent in business is a long-term effort. We have to consciously work towards transparency
day after day. It’s not always easy, especially when we worry about how people will respond.

If we’re ready to make the commitment to transparency, we can follow these five tips.

• Solidify our Business’s Core Values

Our business’s core values should always guide our decision-making and push us to be
transparent. We should strive to be honest and have integrity. Solidifying our business’s core
values makes it easy for our employees to understand and follow them. If we want our business
to be transparent, everyone in our company needs to be on board.

• Share Information with our Employees

Another way we can work towards transparency is to share information about our business—
both the good and bad—with our employees. Chances are, our employees will find things out
through the rumor mill, so we might as well beat them to the punch and keep their trust.

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Rumor mill can cause problems with trust and hurt feelings. Not to mention, it promotes a culture
of gossip. Rather than withhold information from employees, regularly keep them up to date with
the business’s latest news.

• Don’t Mask our Prices

Plenty of businesses try to hide or manipulate their prices. This is a mistake in the quest for
transparency. We have to understand that prices can vary in some industries, especially if we
need an overview of a project first. However, we should try to disclose everything you can about
our prices.

We should avoid using confusing language or a complicated system to withhold price

information. If our prices are higher than other businesses in our industry, be upfront about our
pricing. Explain what is included in our pricing. Or, consider lowering our prices.

• Get to the Point

Some businesses that aren’t comfortable with transparency beat around the bush before getting
to the point. Whether updating employees on new systems, revealing financial information to
investors, or raising our prices, we need to get to the point. People prefer a business that doesn’t
hesitate to share information.

• Be Candid about our Experiences

We need to be candid about our entrepreneurial experiences. This not only benefits our audience,
but it also is great for us. When we own up to setbacks we’ve faced and mistakes we’ve made, we
can learn a great deal.

Being transparent about our experiences doesn’t make us look like a failure. It gives other current
and potential entrepreneurs hope and startup tips. Plus, it humanizes us, which helps us connect
more with our customer base.

Perceived Barriers to Transparency

Sometimes a lack of transparency in the workplace comes from the fact that businesses simply keep doing
things the way they have always done them, with no thought about the effectiveness of their workforce
management strategies. In other instances, executives believe that opening up information for everyone
to see would have a negative impact on the business.

Open-book management strategies are geared toward bringing transparency to business financials such
as a company’s profits and losses. A main concern here is the fear that competitors could end up getting
hold of key financial information. While it’s true that outsiders could theoretically obtain financial data
from our employees, the reality is that this doesn’t happen, and even if it did, it wouldn’t make much of
a difference. In open-book management, the financial information that is shared is simplified data that
just doesn’t provide any competitive insights.

Another common concern is that giving employees financial information might lead to unintended
internal consequences. These include having staff members find out how much revenue the company
generates and consequently requesting a larger salary or finding out how little the company makes and
jumping ship. However, in reality, with open-book management, employees feel more involved in driving
the company’s success, while salary figures are never shared and privacy is protected.

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Business Ethics and Social Responsibility Chapter 1 Lesson 2

How to Measure Business Transparency

Organizational transparency is an approach that tends to fluctuate, as certain business events and
scenarios require a greater degree of discretion. As the amount of transparency changes, each individual’s
perception of that transparency will change over time as well.

A great way to gauge company-wide perceptions about transparency is to conduct employee surveys.
Through these surveys, trends can be analyzed and areas for improvement can be identified and
addressed. This allows you to implement policy changes that move the company in the right direction.

The following are general areas to cover in employee surveys to measure transparency in the workplace.

• Secretive communication
• Participatory communication
• Accountable communication
• Substantial information disclosure
• Company integrity and goodwill
• Overall trust
• Overall transparency

Business Transparency Trends

With today’s changing workforce demographics, creating a fun, cohesive work culture is becoming more
important. Contemporary work practices encourage transparency, open communication, and
collaboration instead of traditional top-down, “command and control” style. This doesn’t mean that no
work gets done. In fact, it’s quite the opposite. When employees realize they are trusted by, and can trust,
management, they are more likely to step up and perform their work in an engaged and thoughtful
manner.

Organizations are learning what best motivates millennials in an effort to reduce turnover and retain
good talent. Consequently, trust in the workplace is becoming more of a priority. An SHRM job
satisfaction and engagement report indicated that the two most important factors in job satisfaction are
respectful treatment of employees and trust between employees and management.

Prepared by: sahidalgo ACLC College Tacloban

Business Ethics and Social Responsibility Chapter 1 Lesson 2

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The Great Game of Business. Transparency in Business. https://www.greatgame.com/the-

fundamentals/business-transparency. March 16, 2022

Prepared by: sahidalgo ACLC College Tacloban