Transparent Communication & Financial Health
This is post is in response to Tom Szaky’s piece in the You’re the Boss section of the New York Times.
Transparency is vital for building effective communication in a company. In order for employees and managers to gain confidence in that transparency, a company also must work to sustain transparency over time. TerraCycle has found a way to do that well.
Most of us have worked in organizations that fear sharing information. When information is withheld, the unsavory alternative is that employees make-up what they don’t know – often assuming the worst. That breeds mistrust and doubt in every level of a company. In an economic climate that is full of uncertainty, clear and inclusive communication about a company’s financial information brings a welcome sense of calm.
In 2003 I started working with open-book management, a management process made popular by Jack Stack, John Case, Karen Berman and many others. This model is not only about developing transparency in communication, but also developing financial intelligence and accountability in every employee in a company – from the CEO to the cleaning crew. The basic idea is that employees need to be given a solid view of the financial workings of the company on a daily basis and then given the responsibility to help grow a solid and healthy company. It expects that employees are smart enough to understand financial information and that it is management’s job to make sure that they do.
What this approach has taught me is that understanding your company, knowing its points of vulnerability, and choosing to share financial information in an open, accountable way can shift vulnerabilities into strengths. This happens when formerly feared and hidden information is shared clearly – and when employees know that they are valued enough to be told the truth.
