Transparency is one of the most important factors for any brand. In fact, 85% of US consumers say they’re more likely to stick with a transparent brand during a crisis or give it a second chance after a bad experience.
While transparency is clearly important to consumers, it is also an increasingly valued trait in business partnerships. This doesn’t mean that suppliers should have access to proprietary information, but by creating a transparent relationship, organizations can build trust, which ultimately gives them a much higher chance of success.
Transparency sets clear expectations
A relationship based on transparency establishes the strong level of communication necessary from the start. Both partners involved should clearly communicate what their goals of the partnership are, as well as what they can and cannot provide to help achieve their partners’ goals.
It’s actually quite similar to how a manager would set expectations with their employees. A clear outline of what is expected eliminates confusion and misunderstandings, and helps ensure that employees have what they need to successfully achieve their goals.
The same applies when establishing a relationship with a new business partner. This means that those involved in negotiations must do their due diligence not only to accurately describe their own company’s capabilities and goals, but also to understand those of their potential partner.
It is essential to prepare relevant questions to assess a partner’s skills and to agree on the basic terms on which both parties agree, including provisions on what to do if either other party is not satisfied with the partnership.
It is far better to over-communicate than to under-communicate. Not providing enough information could prevent a potential partner from being able to provide useful answers that help with decision making. The more information provided, the easier it is for both parties to accurately determine whether a potential partnership will be mutually beneficial.
Transparency fills information gaps
When people say information is power, what they often mean is unequal access to information creates a power imbalance. Information is so powerful because people accumulate information with a desire to present that information to support their own agenda.
People often want to change another person’s point of view. Too often, people succumb to the temptation to only share information that strengthens their position or undermines their counterpart’s position, while hiding information that reveals weakness. According to Nobel Laureate Douglass North, a lack of transparency leads to inefficiencies and higher transaction costs for everyone involved.
The new mantra should be if information is power, then information shared is exponentially powerful! More often than not, the cheapest and best way for parties to eliminate any information asymmetry is simply to share information. The benefit of increased transparency and openness is trust and better decision-making, which reduces risk and transaction costs.
A study in the harvard business review highlights the cost benefits, noting that when trading partners trust each other, they spend much less energy trying to avoid exploitation during negotiations. This ultimately creates better outcomes for the parties involved in the negotiations.
Live up to your end of the bargain
Successful business partnerships are largely based on the expectation that each party involved will fulfill their responsibilities. But there are far too many examples of disastrous business partnerships for anyone to just take their partners at their word.
Proactive and transparent communications will help a business partner know that you are fulfilling your part of the bargain and encourage them to make a similar effort to be transparent about their own actions.
Niko Polvinen, co-founder and CEO of Logmore, explains, “Transparency is how you prove you can deliver on the initial promises you make. In the logistics industry, providing transparency through condition tracking is how we can show where sensitive or fragile items are damaged. For carriers, this kind of transparency can be vital in proving that they are doing their due diligence to prevent such damage from occurring. Transparency efforts can actually provide legal protection for your brand.
With tangible, quantifiable evidence that “shows your work,” organizations can even identify steps to make their operations more efficient, which further benefits the relationship. After all, long-term partners also aim to help their partners achieve their main goals. To this end, transparency efforts can improve operations for all parties involved.
Trust but verify
The same harvard business review A study noted that in the United States and Europe, managers frequently take a “trust but verify” approach, evaluating the behaviors of potential partners during negotiations to determine whether they are open and honest. As one study manager advised, “see if [the] the person is personable; ask a question to which you know the answer.
Needless to say, a negotiation partner who fails this simple test in an effort to make their business look better than it is will (naturally) lose a potential partnership. It becomes very clear that they only have their own interests in mind and have nothing of real value to offer in return.
In other cultures, competence and respect have been emphasized as key attributes for gaining trust. But these traits can also come down to honesty. A competent company is honest about its abilities; a respectful partner is truthful so as not to waste anyone’s time.
It’s all about trust
Transparency in business relationships comes down to trust. By embracing transparency and honesty in your business dealings, organizations create a foundation of trust that helps everyone achieve desired results.
You do not know where to start ? When in doubt, companies should consider the following litmus test. If the business partner requests certain information, assume that the request is motivated by good intentions and ask them why they want this information and how they will use it. If there are still concerns about the risks associated with transparency, this can be managed through non-disclosure agreements.