The Working World Cafe blog wrote about transparency last week in reference to a study by Watson Wyatt that reemphasized a finding they've reported on for many years.  Namely, that firms that place a premium on transparency in their team building and other employee engagement best practices benefit in stronger ROI both internally and externally.

One of the external forms of ROI we talk about on our website as a competitive advantage of being a winning workplace, which Watson Wyatt revealed in 2004, is the astounding difference in return to shareholders from largely this one core value, compared to companies that don't actively work to instill it.

Open communication, which can encompass everything from the much-hyped – if much more rarely practiced – open door policy to daily huddles, quarterly all-staff meetings, and annual employee surveys, is useful at all times.  However, struggling small firms should place more stock in it in tough times like these.  Our 2008 Top Small Workplaces do, so much so that this emerged as one of the 9 themes of this year's winners.

In our benchmarking and best practices report on the 2008 winners, under the subheading "Weathering the hard times," we discuss how two Top Small Workplaces, Landscape Forms in embattled Michigan and King Arthur Flour in Vermont, use transparency in their employee engagement to emerge healthier during especially difficult periods.  In keeping with this season of giving, our coverage of these two resilient small firms from this report follows below.  You can access our full report here.

Rapidly rising material prices cut into Landscape Forms’ margins in 2004, costing them about $1 million.  This designer and manufacturer of outdoor furnishings was forced to raise prices and communicate this new reality to their customers.  They worked closely with their suppliers, who also passed along their own cost increases.  In partnership they were able to develop a solution that helped them share in the short-term pain.  Sourcing certain parts in China offered an opportunity for dramatic cost savings and gave their customers great value.  Management worked diligently to demonstrate to employees that strategically sourcing some parts overseas was necessary to reducing costs without undermining job growth in the U.S.  In addition, management initiated lean initiatives to increase efficiencies in their operations – and asked employees for help.

They knew they needed more than price increases and material cost savings to restore profitability.  They explained the situation to employees and asked for their help to close the gap. Everyone was encouraged to take actions to improve their own work areas and communicate their impact to the rest of the staff.  Hundreds of actions were generated, stimulating a high level of employee engagement.  Because of all this, Landscape was able to achieve their 2005 profit goal and has continued to grow successfully.

During this past year, global wheat prices have been at an all-time high at King Arthur Flour, well over triple the cost per bushel since spring of last year.  The combination of poor wheat harvests around the world, low stocks from last year and high energy costs created a very grim situation for wheat prices, leading to much higher flour prices.

Management communicated the situation to employees and they brainstormed solutions.  In response, the firm set up teams that reached out to customers and the media to explain the situation.  Internal teams worked on wheat purchasing issues, negotiated with grocery chains and bakeries, and communicated with their home baker customers.  While the unstable market convinced other suppliers to use lower-quality wheat, King Arthur Flour employee-owners remained committed to maintaining the highest and most consistent standards for protein content and product performance.

How can small employers can become more transparent to enhance their bottom line in 2009?  I'd love to read your thoughts on this.