How would you feel if your boss told you that you’re the worst manager in the company? Would you leave feeling “energised” like this employee did? HRM speaks to experts about radical transparency.
For years, Bipul Sinha felt like an outsider. After emigrating to the United States in the 1990s, the Calcutta-born software engineer grappled with culture shock while building his career in California.
Determined to excel, he completed an MBA in his spare time and then successfully reinvented himself as a venture capitalist, making savvy investments in tech companies such as Snapchat. But he never felt fully accepted by his Silicon Valley peers.
In 2014, Sinha and three others founded Rubrik, a cloud data management company, and Sinha was appointed CEO.
For the first time in his professional life, he had an opportunity to create a workplace culture from scratch. He vowed that no Rubrik employee would feel isolated.
“When I started Rubrik, I wanted to create an all-inclusive company,” says Sinha. “To achieve that, I realised every employee needed to understand the goals of the business – so I gave them information that most leadership teams would keep private.”
Sinha reasoned that sharing financial data, growth objectives and other strategic information internally would give Rubrik’s employees a sense of ownership while encouraging them to communicate openly with each other about matters large and small. It wasn’t a new idea: other US companies were already referring to similar initiatives as ‘radical transparency’. But Rubrik was one of the first companies to embed the concept in its DNA.
In the early days, Sinha, his co-founders and their small team would convene in the Rubrik office kitchen to talk frankly about how the business was faring. As the company grew, these brainstorming sessions remained open to every employee who wished to attend.
Radical transparency seemed to be working well, so Sinha decided employees should be free to sit in on board meetings, too.
However, Rubrik’s founding board members weren’t convinced.
“They balked at the idea of radical transparency,” Sinha recalls. “Especially the open meetings.” Reluctantly, the investors agreed to wait and see how the strategy would play out. The onus was on Sinha to prove that radical transparency could help the company grow.
Seven years later, Rubrik is one of the hottest tech firms in the world. It has 1400 employees, generates US$600 million in annual revenue and is valued at a whopping US$3.3 billion. And, Sinha notes proudly, it remains radically transparent.
“Transparency creates a culture of inclusion and trust. It is paramount to empowering our teams and building a long-lasting, positive culture where people are invested and hungry to create a successful business together.
To be blunt…
The definition of the term varies. For some, such as Rubrik, radical transparency means sharing detailed information about the inner workings of the organisation with its employees. For others, such as US-based investment management firm Bridgewater, it’s about employees being brutally honest with each other which often generates mixed responses.
Tales of Bridgewater’s radically transparent culture have spread rapidly in recent years. In a 2018 episode of the WorkLife podcast, former employee Kiran Rao recalled attending an off-site leadership event during which a list of Bridgewater’s ‘Worst Managers’ was displayed on a screen in front of all Bridgewater managers.
Rao was shocked to discover his name at the top of the list – yet, surprisingly, he told host Adam Grant the feedback left him feeling positive and energised. In fact, he promptly addressed the group shortly after seeing his name at the top of the list and said, “I look forward to getting better or leaving.” According to his LinkedIn profile, he has since left.
Radically transparent pay
Elsewhere, a growing number of organisations are using the term ‘radical transparency’ interchangeably with ‘pay transparency’ to describe the practice of making everyone’s salary public knowledge. And companies such as Qualtrics, which provides technology to help businesses design and improve their employee experience, consider themselves radically transparent because they share detailed information about each employee’s responsibilities and performance in the workplace.
“Every Qualtrics team member’s key quarterly objectives and weekly focuses are available to view on our internal network,” says Jason Laufer, the company’s managing director for Australia and New Zealand.
“Making our goals visible to others helps us stay focused on the job at hand. It allows others to understand the focus of other teams and individuals, and to reach out to collaborate on projects.”
Definitions may differ, but what remains consistent between organisations is the stated benefit of adopting radically transparent practices: greater employee satisfaction. Proponents of radical transparency say employees are more likely to be engaged and committed at work if they are privy to information that’s normally kept behind closed doors. Laufer says engagement at Qualtrics is high due in part to this.
But some experts believe radical transparency should be viewed with caution.
“There is a real rhetoric associated with this approach,” says associate professor Angela Knox from the University of Sydney. “Radical transparency is put forward as the panacea for organisations – something that’s going to solve all of our problems. In reality, it could very easily breed a culture of fear and intimidation,” says Knox.
Professor Julia Richardson, from Curtin University’s School of Management and Marketing, agrees.
“I think it’s a little bit naive to assume that radical transparency is going to be a cure-all,” she says. “I think the most important thing to ask is: ‘Why do we need transparency? Is it because our employees don’t trust us?’
If you’ve got a high level of trust within your organisation – if people actually trust each other to do the right thing – then there’s less need for radical transparency.
“Trust is absolutely the foundation of a positive organisational culture.”
“Radical transparency is put forward as the best thing ever – something that’s going to solve all of our problems. In reality, it could very easily breed a culture of fear and intimidation.” – Angela Knox, associate professor, University of Sydney.
Bridgewater is perhaps the company best known for adopting radical transparency, and its recent history shows us how the concept can both help and hinder.
The firm currently manages more than US$150 billion in assets and its founder, Ray Dalio, is one of the richest men in America.
In 2017, when Dalio announced his intention to share the secrets of his company’s success via a book called Principles and a TED talk, the business community was all ears.
Dalio went on to detail Bridgewater’s version of radical transparency: encouraging employees to provide totally honest feedback to their colleagues, regardless of seniority. That meant entry-level staff were free to email Dalio directly to tell him what he could be doing better – and, he told Grant on the podcast, several employees had done just that.
“Ray, you deserve a ‘D minus’ for your performance today in the meeting,” one email from an employee read. “You did not prepare at all … there is no way you could have and been that disorganised. It was really bad and we can’t let this happen again.”
Dalio said he responded well to this feedback and promised the employee he’d better prepare in the future. Of course, all we can do is take his word for it.
Dalio argues that his transparent culture helps employees make better business decisions and work more effectively with each other. The proof, he writes in his book, is in the company’s financials: Bridgewater famously made money for its investors during the 2008 global financial crisis and was the world’s most profitable hedge fund as recently as 2019.
However, troubling news stories in the months leading up to the release of Dalio’s book cast doubt on his claim that radical transparency had created a utopian work environment.
In 2016, The New York Times reported that Bridgewater employee Christopher Tarui had filed a sexual harassment lawsuit against a colleague, in which he described the company’s office culture as “a cauldron of fear and intimidation”.
Tarui detailed an environment that not only encouraged bad behaviour, but also stifled genuine openness and honesty. Surveillance, ever-present security guards and a training video in which a woman was berated until she cried were all part of the picture, he told the NYT.
Also in 2016, Reuters reported that employee turnover at Bridgewater was unusually high, with 25 per cent of new employees leaving during the first 18 months of employment.
Some commentators would go on to suggest that Dalio’s version of radical transparency was to blame for both the employee retention problem and the Tarui lawsuit.
Dalio concedes that radical transparency won’t not work for every company. It takes new Bridgewater employees about 18 months to adjust to the culture, he says. He also stressed that radical transparency should not give staff free rein to criticise each other’s personal foibles.
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Would it work in Australia?
While radical transparency has attracted widespread attention around the world, most of the organisations that have publicly adopted the term have, until now, been US-based.
According to Tim O’Shannassy, senior lecturer at RMIT University’s College of Business and Law, America’s pre-existing business culture helps explain why radical transparency seems to have been greeted more enthusiastically over there.
“American business culture really promotes good news,” he says. “Often, lower-level managers and workers are reluctant to provide authentic feedback on how things are going, and instead provide a good news story and present things as being positive and sunny.”
That means employees might simply choose to stay silent about workplace problems, even if their employer claims to have a culture of transparency.
O’Shannassy suggests some American companies adopt radical transparency because they know their employees are unlikely to actually participate in it.
For example, Bridgewater allegedly records all meetings and stores them where any employee can access them. That might be anything from a performance management conversation between a junior employee and their manager, to a strategic meeting between Dalio and his executives. But who is going to spend a portion of their busy day sifting through a bunch of videos?
O’Shannassy says Australian companies are, in general, less fixated on ‘good news’ and could therefore benefit more from radically transparent policies than American firms. But he also thinks there is less of a need for Australian organisations to formally adopt such policies.
“[Australian culture] is about being open, democratic, authentic and respecting your mate.
Transparency and authenticity come a bit more naturally to Australians. We might not be as brutally honest as Dalio wants us to be. But I think Australians do have a natural authenticity about them.”
Finding the middle ground
Several researchers have suggested the real problem with radical transparency is not that the idea itself is flawed, but that its implementation is often too severe.
For example, research by professor Ethan Bernstein at Harvard Business School found that extreme-transparency policies can leave employees feeling vulnerable and exposed, which makes them less confident and, consequently, less productive.
Bernstein says organisations should find a balance between transparency and privacy in order to get the most out of their employees.
In Australia, Knox advocates for formal systems of worker representation within organisations that allow employees to provide candid feedback without feeling vulnerable.
“Research demonstrates that these initiatives yield increases in productivity and job satisfaction, and reduce turnover.”
Each of these experts believes that radical transparency has its merits. But in order to benefit from the ideas propagated by Rubrik, Dalio and others, it could well be advisable to approach the phenomenon with a healthy degree of scepticism.
A longer version of this article appeared in the May 2021 edition of HRM magazine.