Importance of Transparency in Organization
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Transparency in an organization implies visibility into the functions of the organization for its stakeholders. It should be noted that transparency does not mean opening up the intellectual property files or company's classified documents. A company's action impacts its stakeholders - employees, shareholders, customers and suppliers. To be a successful and a trusted organization it is necessary to build the confidence of its stakeholders. This is best achieved through institutionalizing transparency in its policies.

It is essential that an organization articulates and practices transparency through its well defined processes. Some process where transparency is of utmost importance are discussed in this article.

Conducting business
An organization’s ability to attract and retain talent and bona-fide investors depends upon the way it conducts business. Often most organizations have a clearly defined no-bribes-for-business policy. To make its dealings transparent, the organization volunteers to go through audits. The basic premise being that any activity that the company performs, it should be able to stand up to public scrutiny. The purchase department of an organization is often the most scrutinized because of the nature of their job. Thus, many organizations such as British Telecom, Wipro, etc. implement a clearly documented gift policy. The central idea of a gift policy is to prevent favouritism due to commercial gains for an individual in the organization. If any person in the company receives gifts from its suppliers or customers, this is required to be known by the company. Such companies often define a maximum limit of gifts that its employees can accept and make it mandatory to declare gifts offered.

Transparency in accounting
In early 2000 many companies in the United States such as Enron, Tyco International, MCI Worldcom, etc. were riddled with accounting frauds. Acting quickly, the US accounting government passed the Sarbanes-Oxley Act of 2002 (also known as SOX) for accounting reforms and investor protection in public companies. Compliance to SOX or similar acts is a check; however it is up to the top management of the company to instil confidence in the investor through transparent accounting policies. Many companies in India too have detailed reporting of their financials followed by conference calls with industry analysts and institutional investors.

Avoiding nepotism and corruption in recruiting process is key to the reputation of any organization. Thus it is common for companies to implement recruiting policies which can stand scrutiny by its employees and sometimes its prospective employees as well. At top management, when new managers are brought in, it should be done so carefully, especially if it happens to be a family run business. For instance, Mittal brought in Aditya Mittal in a well planned manner so as not to give mixed signals to its investors. In spite of that Mittal had to stand criticism by Arcelor’s Guy Dolle.

Compensation, benefits and promotions
To keep up employee morale and establish a system of meritocracy it is important to have a transparent progression and compensation and benefits policy. Model organizations such as Infosys and Wipro are known to have a comprehensive and transparent progression policy. At senior management level, in India the companies are mandated to declare the details of the employees receiving remuneration above 200,000 INR per month.

Transparency in the way an organization conducts its activities is important in building and retaining the brand image. An organization with a poor brand image is one that is on the downward spiral. In the 21st century where avenues for information available are huge, it is all the more important for companies to actively function with transparency.


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