Jason Lorimer of Publicitr decided to use his Journal space to talk about about startups and transparency.

It is a well established and commonly acknowledged fact in the business circles that transparency and accountability are two of the most important pillars upon which a successful and reliable economy can be built. Of course this is not only true for the business world but for the non-commercial world as well including governments and so forth. Since we know that the cyber world is an extension of the material world, it would not be surprising to note that transparency plays and equally important role in the online world as well. Nevertheless this simple statement does need to be backed up by facts and logic in order to convince the reader that it is indeed actually so.

Transparency: The Feared Ghost

We all know that ghosts are transparent which means that they are not visible since light passes through them (forgive me if you don’t like this absurd theory of mine), but jokes apart there is a strong similarity between such a ghost and transparency. Ghosts are feared by most people and so is transparency although it involves nothing more than see-through mechanism which makes it possible for other to see and scrutinize the actions of the insiders.

Another closely related concept with transparency is accountability which refers to the liability of the company in perspective of its commitments and goals to various stakeholders and customers alike. These two are considered very important for the smooth and un-corrupted functioning of any enterprise. Any company or organization for that matter tends to become lethargic, unresponsive and stagnant, in the absence of appropriate checks and balances which are held in place by the concepts of transparency and accountability.

Is it a Necessary Evil?

We have seen that transparency is a ghost which is feared by most companies yet like friction, it tends to be a necessary evil. Of course it might not be fully fair to brand it as an evil from the outsiders’ point of view, though the insiders might think so from a selfish viewpoint so to speak. The problem is that investors usually steer clear of companies with do not follow much transparent policies and tend to be within closed walls as this creates an atmosphere of distrust in general.

History has shown several times that whenever the management of a company tries to hide bad news inside a cover of complicated business language and statements, the results are very unpleasant in the long run similar to Enron and Tyco, the stories which do not need much introduction in the negative sense of the word. It may not be always the case that companies which follow opaque policies are cooking something behind the doors, but it does give a negative psychological impression on the stakeholders and people from whom the information is being withheld or supplied inadequately.

The Web Perspective

The above mentioned description about transparency, its fears and possible outcomes have been stated in a generic manner. In today’s world the cyber space is playing an increasingly important role in all aspects of individual, organizational and governmental matters, and a corollary of this also holds true about the commercial activities carried out by these companies on the web. The online world is hardly different from the offline commercial and business environment, in fact it is much more susceptible (if that’s the right word) to errors being getting caught and flashed across the cyber world in the blink of an eyelid. It is very easy for stakeholders and the general public to gather as much information as possible about any company from its websites, reviews, government information in public domain such as financial statements, tax matters etc with the use of the internet. Also people can get together by sharing their views and experiences in a matter of seconds even if they are located poles apart in the geographical sense.

What can go wrong?

This vulnerability or over-sensitivity of the web makes the companies even more prone to negative publicity if they try to hide any information but it gets out in the public domain through one or the other way and is shared with the world. Moreover the increased awareness amongst the general public with the rise of education and the spread of the internet also makes companies more alert towards their social responsibilities. Take a simple example where an imaginary company has outsourced its work from say a developed region like US into a developing region like say China, but it is not catering or caring for the genuine needs of its workers like proper health standards, safety standards or wage standards. The company might produce a very healthy balance sheet or financial statements at the end of the year by being opaque about its worker conditions, yet the moment this news gets leaked out in the public domain, there would be lots of public noises, NGO voices and probable litigations which would make the company to suffer lot more economic losses than it would have by spending on the basic needs of the workers. Of course this is but a minor example of what all can go wrong if companies try to hide information and not be transparent about their policies and procedures.

What can be done?

It is very easy to criticize or analyze a situation and make noise about the shortcomings and faults in a scenario, but it is only worth its salt if constructive criticism is done with efforts to improve the situation further. This is fully applicable to this situation also and one could only get away with pointing out the deficiencies of lack of transparency if some concrete and practical ways to tackle this problem are also suggested. Here is a list of few possible steps which might be taken in general to improve the online transparency of companies in order to avoid pitfalls which await a company that does not stick to a well defined transparency policy.

The methods which should be employed to increase online company transparency could fall within two categories of self governed actions and policies and external policies imposed upon by appropriate authorities such as local governments and/or other governing agencies. Given below is a brief description of a mixture of such methods.

Disclosure Regulations

Governments and other governing agencies should ensure by making appropriate guidelines that all information related to the general public, society and environment should be disclosed and it should be mandatory for the companies to complete this process within a stipulated time frame such as financial year end or something similar.

Incentives & Penalties

There should a carrot and stick policy which sets out strict penalties to be imposed on the defaulting companies, whilst at the same time allowing to adequate and hearty appreciation of those companies which adhere to these regulations and cooperate whole heartedly in making them a success.

Increase in Awareness

Ignorance might be bliss in certain circumstances but certainly in such issues, ignorance is fraught with dangers. Hence the general public should be made aware of their rights to information and knowledge especially with the activities of the companies which affect them in a direct or indirect manner. For example of a company has set up a manufacturing/processing unit in a remote village where the by-products are dangerous effluents, the company surely will be forced to share such information via their website if the public is aware of the dangers to their lives and the succeeding generations.

Self Motivation

The best way out would be if the companies follow a policy of transparency just for the sake of it without even having to get bogged down by public pressure, government regulations and so forth. The companies should consider that they are a part and parcel of the human society where they exist and carry out their business activities, hence any lack of disclosure on their part would breach the trust which society puts on them, leading to problems in the long run. There are several ways of doing this in the online world.

• Discuss such issues in company website blogs.
• Give information about such matters on appropriate website sections.
• Accept responsibility/mistakes and try not to repeat them consciously in future.
• Give adequate compensation to affected parties in case of any mishap instead of trying to hide it.

Conclusion

The report can be concluded by saying that transparency is very important for an organization to survive and grow in the cyber world which is highly competitive, sensitive and loaded with information and information collection/spreading tools. Hence it would be in the best interest of companies to be transparent about their policies, procedures and activities to gain public confidence and grow in the future.

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