Financial transparency boosts sense of security in employees

You are less likely to experience job distress and feel more secure at your workplace, if your company is open and transparent about the firm’s finances, including budgets and profits, a new study suggests.

The study indicates that at companies with more financial transparency, workers felt more secure in their jobs, more committed to their employers and – most significantly – said they had better relationships with their managers.

“Transparency in disclosing financial information may substantially reduce job distress, particularly by smoothing relationships between workers and managers,” said lead researcher Hui Zheng, Professor at The

Ohio State University in the US. For the study, published in the journal Social Science Research, the research team included 15,747 workers.

Job-related distress was measured by asking workers how often in the past few weeks that their job had made them feel tense, depressed, worried, gloomy, uneasy and miserable. They rated this on a five-point scale from “all of the time” to “never.”

Workers rated how well managers at their workplace did at keeping employees informed about financial matters, including budget or profits. Workers rated this on a five-point scale from “very good” to “very poor.” Workers reported feeling more commitment to their company and feeling more secure in their jobs when they worked at firms that revealed more about their finances. But those effects were relatively small compared to how transparency was linked to improved relationships with managers, the researcher said.

“Even though financial transparency is about disclosing budgets, profits or other financial matters, the way it reduces job distress is not mainly about the money. It is about the relationships, especially with managers,” said researcher Vincent Roscigno from the varsity.