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The virtuous cycle of transparency

I just read this quote from Jeff Weiner, CEO of LinkedIn:

I’ve come to learn there is a virtuous cycle to transparency and a very vicious cycle of obfuscation. People have an insatiable curiosity, and if they’re officially denied access to information, they’re going to dig for it on their own. And if they find it, they’ll become resentful and want to leak it. That’s when executive management says, well, clearly we can’t trust our employees with this information. So, we’re going to have to buckle down and release even less information.

I couldn’t agree more. Seeking to control people by withholding information was probably never a good idea and these days it is downright dangerous. Good corporate cultures encourage respect between employees and transparency breeds respect. Obfuscation breeds suspicion and sometimes contempt.

At startups I advise sharing as much information as possible, partly for the reason given above, but also because it helps people to do their jobs better.

There is, of course, some information that it isn’t appropriate to share. Most companies choose not to share it widely when they are in acquisition talks because it is destabilising for employees who will start worrying about whether they will keep their jobs and what it might mean for their careers. All that for a deal that probably won’t happen anyway (most companies that exit successfully have multiple discussions with different suitors before a deal is consummated). Similarly most companies choose to keep their balance sheet information within a small group as it is easy for people to see a low cash figure and over-estimate the chances of the company running into problems. Most successful businesses run low on cash at some point and they wouldn’t have been successful if staff had panicked and looked for jobs elsewhere. Sharing revenue information is helpful though because it helps explain why decisions are being taken in both upside and downside scenarios, moreover, most people have a reasonable feel for how the business is doing anyway.

  • andy twigg

    Fully agree. What about sharing salary and stock options? I’ve had advice both for and against sharing it. Somewhat indifferent myself, except I believe you should always be able to justify them if they were public.

  • http://twitter.com/raitens Rait Ojasaar

    Good observation Nic! Without transparency the companies are run like governments where the people are mainly treated as objects of manipulation, limiting their freedom and ability to contribute. In startups, the management / founders should take extra care to ensure that all the team members are treated as subjects who are free and motivated to actively contribute and take responsibility for achieving the common & transparent goals.

  • http://www.theequitykicker.com brisbourne

    Sharing salary and stock options can work, but only if the culture is strong enough to absorb and diffuse the inevitable questions over why different people are at different levels.