The 2 Most Overlooked Reasons Why Your Team Needs Transparency

Take a survey of your employees consisting of one question:

“What do you think our net profit is as a percentage of gross revenue?”

Chances are that your employees, even members of your management team, will guess in a range that is double to five times the actual number.

The question is whether or not you care – and there are two reasons I submit that you should:

Reason #1: Without transparency, you risk of losing good people.

My first reason comes from a friend (we’ll call him Eric) who was contemplating leaving his job.

He’s pretty high up, having worked at the same company for 10+ years. As a member of the management team, he felt entitled to see the financials so he could get a sense of how the company was doing.

The president of the company was reluctant to discuss financials. He did, however, share some details with Eric about the financial operation.

Specifically, he told Eric that the per-employee overhead was roughly 100% of the employee’s salary.

Eric called me furious that the CEO would tell him so brazen a lie. To his face, no less. “How stupid does he think I am?” Eric asked me.

The fact is, as I told Eric, that given the company’s industry, the CEO’s estimate was probably pretty close to spot on.

Eric simply had no idea, and the result was that the company almost lost a valuable employee.

Reason #2: Without transparency, employees don’t know what goal they need to surpass.

The second argument in favor of transparency is performance.

If your people do not understand your key metrics, how can they aim to meet or exceed them?

Absent some sort of financial discussion, you run the risk that your people will be active, but not profitable.

Now, I’m not saying that the financial statements should just be turned over. In fact, reports can be generated which pull out the key performance indicators and even break them down to units other than dollars – showing points above and points below sea level.

But what I am saying is that some sort of transparency will most likely serve your company well.

Oh, and before I forget, yes, I know, if employees see you’re doing well (so the argument goes) they’ll expect a raise.

But here’s the thing – and there’s just no getting around this: Your employees already feel entitled to a raise and expect you to give them one.

You’re saving nothing by keeping them in the dark.

Key Takeaway: Allow your employees to see the big picture and you may just get an even higher level of commitment from them.

This entry was posted on Wednesday, July 23rd, 2014 at 4:07 pm. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.