Large majorities of Americans, across demographic groups and the political spectrum, want improved transparency and disclosure from America’s largest public companies.1 One survey found that 85% of Americans agree that companies should disclose more about their business practices, including their environmental (94%) and societal (86%) impact.
In another survey, 93% of Americans favored large companies publicly releasing the wage ranges for various types of jobs at their company, and this finding held across the political spectrum, favored by 95% of Democrats, 91% of Independents, and 94% of Republicans. Similar bipartisan consensus was found among the 89% of respondents who favored the release of minimum wage rates for frontline and entry-level workers (94% Democrats, 87% Independents, 87% Republicans).
Our company conducts yearly focus groups in the US. Participants are recruited to ensure representation by key stakeholders, such as workers at large companies, and across demographic groups and political affiliations. It is important to keep in mind that workers are also consumers and shareholders, and they often bring that lens to discussions.
Last year, we conducted six focus groups, each containing seven participants and a moderator, to discuss topics related to just business behavior by the largest public corporations in America. Inductive thematic analysis revealed four main themes around transparent disclosure: (1) accessibility of information, (2) disclosure of missteps, (3) trust and follow-through, and (4) responsibility to society.
Participants said that honest, transparent disclosures affect how positively or negatively consumers and shareholders value the company and that they expect large public corporations to follow through on commitments and statements. Studies have shown that greater corporate transparency results in higher levels of customer trust and brand loyalty.
Accessible, Honest Disclosures
Five out of six focus groups explicitly stated that companies should disclose honestly, in good faith, and in more detail than required by regulatory mandates. Participants consistently noted that some disclosure was better than none, and more was better than less.
Disclosures written in accessible language and formats are considered the most transparent. As one participant said, disclosure should be written in a way that “the average Joe can look at it in bullet points and say, ‘These are the main points.’” Similarly, clear disclosure should include comparable standards. One person said, “Telling us how many gallons doesn’t put into perspective what other companies use and what the standard is. There’s got to be some level metric to delineate whether or not it’s good or bad. I think more transparency with all that would be better.”
Participants said accurate and contextual information should be provided to avoid the appearance of being misleading. As one participant put it, “So just saying we want to require them to report, this doesn’t necessarily mean that the information that they’re required to report is good. It just means that they reported it. I think proper plain context should be required, rather than just a reportability requirement.”
Disclose When You Mess Up
All six focus groups agreed that companies should disclose the bad with the good and not try to hide missteps. As one participant put it: “If you’re doing something evil, at least you told us, so we know.” Interestingly, there was also a perceived upside in disclosing such incidents: disclosing the bad with the good made a company’s good statements more believable.
When risk incidents occur, participants said companies should act quickly and disclose remedial plans clearly in an effort to “be transparent with what’s happened, to what’s going on. So as things occur, say, ‘Yeah, hey, we [messed] this up. That’s on us. And this is what we’re doing to recover from this, to repair the damage we caused.’” Failure to disclose missteps was perceived as “shady” by participants.
Most focus groups were understanding of mishaps and thought companies should be allowed to recover from mistakes. One woman said: “You can do bad things; just like humans, we make mistakes, so we can’t just keep them at fault.” However, participants wanted to see willingness to do better and learn from mistakes, with one noting that if companies were “not willing to fix themselves, then that’s an issue.” Disclosure of a clear plan can foster public trust and is seen as less risky than attempting to keep mistakes under wraps.
Note
[1] These findings are based on quantitative surveys conducted by our company of representative samples of the American public.
[For more from the authors on this topic, see: “The Case for Increased Corporate Disclosure: An Examination of Transparency, Trust & Taxonomy.”]
