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The cost effectiveness of transparency

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The cost effectiveness of transparency

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Earlier this week I wrote about the importance of transparency to a social business.  The decision making lever for instance relies upon a transparent approach to how decisions are made.  It requires making clear and visible the thinking and rationale behind strategies, plans and metrics, with an ideal scenario seeing employees contributing fully to all three.

This connection between strategy and execution then impacts upon the information lever.  If the connection is broken then it encourages teams to horde information and ideas.  It encourages them to keep to themselves when things aren’t going well, with employees simply keeping their head down and hoping no one notices.

In that previous post I mentioned five particular aspects of transparency that you could look to for your own organisation.  One of those is around expenses.  A powerful example of this in action is provided by Roche, the Swiss pharma company.  A few years ago some Roche managers met up with the aim of reducing bureaucracy at the company, and they wanted to use transparency to do so.

The focus of their attention fell upon travel expenses, which at the time were costing the company 450 million Swiss francs a year.  At the time, these expenses required sign-off from managers, as is common one suspects.  To test out their transparency theory, they created two groups, one in Germany, the other in Switzerland.

One group continued as usual (the control), whilst the other group could book travel without requiring prior sign-off, but their expenses would henceforth be available for all to see on the company intranet.

This simple step achieved a number of key benefits:

  1. People were more motivated – the simple act of assuming trust unless proven otherwise improved motivation by around 45%, with nearly all participants very comfortable with the level of transparency involved.
  2. The system was more efficient – with an impressive 80% of participants believing the new system to be faster and more efficient than before.
  3. Costs went down – with a significant saving seen in the newly transparent group versus the control group.

So one simple change made a big difference in a wide range of areas.  Makes you wonder why it doesn’t happen more often doesn’t it?  Does your company take a similarly transparent approach to expenses?

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