I’ve seen many entrepreneurs and company CEOs talking about ‘transparency’. They say that they want a transparent culture, where people know what is happening with the company. They say that direct, honest communication is part of their values. They even say they want every employee to feel like they are part owners of the company or startup.
But where do they fail? In actually showing the numbers.
Look at SeoMOZ for example, that posted their metrics and funding deck. Or Balsamiq, that did an interesting public post about the company’s growth when it hit $100,000 in revenue.
It takes courage to post stuff like that internally, much more courage to actually make it public outside the company. But it shows not only where the company is, financially, but also gives you a glimpse at the corporate culture in general.
Which Numbers Are Important
To really be transparent, however, means showing all the numbers. The good, the bad, and the ugly. Unless you show how much money the company is making, how much money the company is losing, and what is happening that is driving such growth/no growth you can’t say you are transparent.
I’m not advocating opening the kimono to the public, but rather to your employees. Case in point is Axcient, a high-growth company in Mountain View (full disclosure, I currently work for Axcient) that holds monthly “all hands” meetings. During these meetings all employees get a peak inside the company’s business metrics. The VP of Sales talks about sales numbers, quotas, and whether the sales team is reaching their targets. The VP Marketing talks about the lead generation programs and key metrics as well. But when the CFO takes the stage is when true transparency really shines.
You see, when you are attending an all-hands meeting at Axcient you are sure to get not only a good look at the financial metrics of the company, you also get schooled.The CFO shows you the total costs that month and for the previous year, shows you revenue numbers and discusses all the details that go into each bucket. You also learn about what constitutes cost and what are expenses, why some numbers are increasing while others are decreasing, and most importantly, what it means for the business.
At the end of that session you don’t just come out knowing the financial state of the company, you also know what it means and whether is good or bad. For employees this is gold. No more guessing if the fact that the VP of Sales bought a new car means the company is doing well or whether the CEO shouting during an executive meeting is cause for concern. You actually know where things are and you can be certain that next month, at the next all-hands meeting, you will be able to see exactly where the company stands financially.
Why Hide The Numbers
But what if all this confidential information leaks? People, after all, are typically the weakest link in any confidential or secret matter (just look at the notoriously bad rep that HP employees and even their board have when it comes to keeping secrets). Well, there are two ways to look at it.
First, you could argue that if those extremely confidential numbers got out the company would be in a bad situation and competitors will eat it live. That the reason for hiding such numbers is to protect employees and the company’s future.
On the other hand, if you are worried that you will be in competitive disadvantage simply by telling others how much revenue you have or what is the exact ratio of certain cost metrics, then you have a bigger problem at hand. If you are worried that employees are not capable of safeguarding confidential information, then you are hiring the wrong people.