I have examined and analyzed the financial reporting and organizational structures of more than 100 companies, ranging from startups to well-established corporations.  And in many – far too many – financial and operational clarity and transparency were lacking.

Transparency creates trust between the management team and its investors and also within an organization among its employees. Trust and transparency have become popular workplace demands as employees seek to know what is real and true about their company. And great things can happen when transparency is present:

• Problems are solved faster.
• Teams are built more easily and relationships grow more authentically.
• An environment is created where higher levels of performance can emerge.
• A company's ability to gain access to outside capital is improved.
• It can also reduce the cost of capital because it reduces risk to investors wary of unreliable information.

But creating a transparent organization requires openness and a willingness to be comfortable with the uncomfortable. It requires dedication, perseverance and commitment to a culture and behaviors that inspire clarity at all levels of the organization. 

Let's define, then, what we mean by "financial transparency."  According to the Securities and Exchange Commission, it means "timely, meaningful and reliable disclosures about a company's financial performance. It is a crucial requirement for informed investment in companies."  Financial transparency means that anyone should be able to easily ready and understand the financial statements of the company.

More broadly defined, transparency is the degree to which company information flows freely, to internal managers and employees and outward to, individual and third-party stakeholders.

Here are some steps in creating a more transparent organization:

1. Ensure that your senior leadership is aligned.

• Does everyone understand the organizational culture, behavior, expectations, goals, and plans?
• Does everyone see the environment the same way?

Alignment is key at the senior level because all information cascades downward. If one senior member is out of sync, then everyone under her or him is going to be out of sync.

2. Close the gap between senior leadership and the rest of the organization.

• Help all others in the organization understand the expectations through clear and regular communications.  When something changes, let them know. This builds trust between leaders and employees and keeps all levels connected and accountable.

3. Ensure free flow of information.

• This doesn't mean that everyone needs to know everything. But it does mean that critical information gets to the right people at the right time and for the right reason.

For a company to succeed at achieving transparency, everyone in the organization has to be aligned and held accountable. From the C-level to the most junior of employees, and including investors and suppliers – everyone is a stakeholder. All must know and respect the value of transparency.