I had a conversation recently what levels of transparency were appropriate for the management of an organization to release its staff (and by extension, the world at large). Of course, there are many layers of information that go into the operation of a business, but they broadly break down into financial and strategic. Depending on the nature of the business, and the temperament of the ownership, different levels of transparency will serve different purposes.
For a public company or a non-profit, of course, the financial is a matter of public record, and the organization is required to release certain statements regarding their previous operations and upcoming plans. Private companies, bound by no such rules, are thus left to determine on their own how much, and what sort of information to share with their employees and the public.
It’s important for private companies to have a publicly consumable strategy—employees and clients need to know that the management has the future of the company in hand, and that there’s a plan for moving forward. Moreover, savvy ownership will bring upper and middle management into the conversation on one level or another. This last tactic comes with a cautionary note: while allowing employees input into strategy is great, the ultimate decisions for the health and direction of the company is in the hands of ownership and management. It is important to set the expectation that input will be listened to and appreciated, but not necessarily acted upon.
This last conundrum is the crux of the transparency issue. It is the job of senior management to have an understanding of all of the factors that affect a business, a full picture that includes as much data as possible, with the useful data separated from the background noise. That full picture is difficult to achieve, changes constantly, and is necessarily imperfect and incomplete (one reason why I’ve been glad to have business partners to help triangulate issues over the years).
Because managers and staff have their own areas of concern and expertise, it isn’t possible or reasonable to expect them to have a holistic view of an organization. In fact, management counts on strong managers to have detailed views of their specific area of the organization to contribute information to the larger set of information.
Financial information is the most tricky to share. Reading and understanding a profit and loss report is not a widely-shared skill (and is an area where I prefer to triangulate with people who specialize in finance and accounting). The fun part (for me, anyway), lies in the interpretation of the P&L. Figuring out what the numbers reveal about the current state of the company, what the projected numbers portend, and how past reports, performance, and predictions affect the current and future state of the company require different measures of finance knowledge, experience, art, and gut. I’ve seen poor results when sharing P&L information outside of ownership and senior management. In the absence of experience in interpreting numbers and trends, two intelligent, effective managers can look at the same P&L for a healthy organization with good prospects and draw different conclusions: according to their temperament, one person could look at the numbers, see an operating surplus, and assume that they should be paid far more than they are. A second person could view the same surplus, find it lacking for the year to come, and begin preparing their resume. Choosing who to share this information with is not to be taken lightly.
There are different levels of strategy employed in a busy organization. High tech, service business, and startup companies tend to have the most dramatic day to day shifts, based on incoming client work or investor support (as well as market conditions in their particular industry). When the fortunes of a company are dependent on outside circumstances that may change frequently, crafting strategy for public consumption is a challenge. Easily understood, overarching goals are crucial (both internally and publicly). With a distant point in view, you’re able to make minor shifts in tactics while keeping that public goal in mind.
Finally, there is unintended transparency. I’ve touched before on the effects of social media on business operations, but I’m seeing an emerging world where nothing can be considered private any more. While different individuals have different levels of filter on business information that they share outside of the office, it only can only take one person to make things brutally public. An unhappy or indiscrete employee’s complaints used to be limited to a group of folks having beers after work—perhaps interesting stories would travel as gossip, but not far. These days, that circle of friends can include hundreds of Facebook friends or Twitter followers, and the interesting stories will travel farther, faster, and more permanently, stripped of context, for the world to see.
Some examples of areas where transparency is not in the interest of the employer or employee could include information that might destabilize the employee base (plans of a merger, sale, or significant change in company direction), information that management needs time to adapt to and plan for (changes in ownership structure or business climate) or other initiatives or changes that are being contemplated. Often, ideas need time to develop and bloom (or be discarded) in isolation and without group feedback.
Through social media, readers become privy to information about the inside workings of companies and the habits of senior management that would make the owners of those organizations cringe, and that could cost people their jobs if their employers were aware of what was being shared. However, the unhappy employee will find another job and move on, while the subjects of these ill-considered mails are stuck with that information, flawed or not, floating around the internet for a long time. Needless to say, some of this information is based on partially understood or incomplete data, but there it is, up on the web.
I’m not sure what, if any, protection can be put in place to keep inappropriate information from finding its way onto the web. It may mean that management at all levels now needs to keep an increased eye on employee behavior at all times. It may mean that companies will develop zero tolerance for retaining unhappy employees. Other fallout may include employee agreements with specific prohibitions (and legal consequences) for public discussion of company matters. All of these possibilities would have a negative effect on the work environment. The solutions will vary widely depending on the nature of the organization, and it will be interesting to see how organizations adapt in a world where everyone can broadcast, one-to-many, from their phones.