Transparency in the workplace can be an essential part of building trust, says Vineet Nayar, the author of "Employees First, Customers Second: Turning Conventional Management Upside Down." In the latest from our series on must-read books for HR Leaders, Nayar suggests that the foundation of strong financial and employee performance begins with employee trust. However, many organizations need improvement when it comes to employee trust. Harvard Business Review (HBR) reports that less than half of employees have high levels of trust in their organizations.

HBR reports that trust is two-thirds of the criteria for Fortune's Best Companies to Work For. Here are three lessons from "Employees First, Customers Second" to increase trust and transparency.

1. Start With Radical Self-Honesty

Building trust with your employees starts with radical honesty. When a firm's leadership can't assess the state of their business or their analysis deviates from the workforce's day-to-day experience, that gap can create a loss of trust. When leadership can't see the real state of affairs, it can be hard to begin to work toward solutions.

The first step to building trust and transparency in the workplace is what Nayar calls "looking in the mirror." Take stock of how the business is performing and what weaknesses and issues need to be addressed. Then, begin to identify areas that will require change. Clarity and vision can set the foundation to rebuilding eroded trust.

2. Share Both Good and Bad Information

Embracing transparency in the workplace requires sharing information with employees. Managers can be hesitant to share difficult information in order to avoid distressing employees. However, Nayar says employees are often aware of information before management. When managers show that they understand the true state of the business and are forthcoming about that information with their teams, it can build trust by showing employees they're a top priority. It can also help establish confidence that leadership is putting solutions into play that are in touch with reality.

For example, if an organization's overall financial performance isn't strong and is tied to low levels of customer satisfaction, leaders should look at contributing factors. Managers might share that they're evaluating technology solutions, common customer complaints and training options, for example. By opening up about challenges, there's an opportunity to engage employees in viable solutions.

3. Empower Employees to Become Part of the Solution

The natural follow-through to building a culture of trust is trusting employees to become part of the solution. Once you know everyone is on the same page about your current state of affairs, Nayar suggests that leaders should engage employees in problem solving. If the CEO or management focuses on trying to address every issue themselves, it can become a missed opportunity to tap into your workforce's creativity. Empower employees to become part of the solution by doing the following:

  • Place decision-making authority with your employees, especially those working directly with customers in "the value zone" — where the true value is created for customers
  • Find the next generation of leaders and empower them to take part in solving the firm's most urgent problems on an ongoing basis through forums, hackathons and other strategies
  • Ask employees to contribute ideas that help address customer-critical issues, from product development to customer service

"Employees First, Customers Second" builds on a foundation of strong employee trust. Without this trust, it may be impossible to move your business forward and solve challenges. As Nayar suggests, the key could be as simple as being open and honest with your team when addressing your firm's most pressing challenges.

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Other articles in this series:

"Employees First, Customers Second" Unexpected Insights on Moving Your Business Forward

"Employees First, Customers Second" Unlock Employee Potential By Fostering an Entrepreneurial Mindset

"Employees First, Customers Second" Your Team as Your Most Important Stakeholder

Tags: Employee Engagement