Transparency is a major buzzword in the workplace. We're seeing more and more companies, especially startups, adopt a doctrine of radical openness. Mobile payments company Square requires notes from a meeting with more than two people be emailed to everyone in the company. Buffer, a social media management company, not only publicizes employee salaries, but each employee is given a Jawbone fitness band, and their personal health data (whether it's sleeping, walking, current heart rate) is accessible to everyone within the company.
This openness and inclusivity is proven to encourage employee engagement (which is alarmingly low), expedite problem solving, and increase employee performance overall. But is there a line? What about when a company is going through something major, something hard? Do the rules of transparency change?
Entrepreneur Jeevan Kalanithi believes that when a company is going through something huge--like an acquisition--the rules absolutely do change. Jeevan is the co-founder of Sifteo, which was acquired by 3D Robotics last year. He wrote an honest blog post after the acquisition, warning that, "Even if you really really believe in transparency (I do), be careful with sharing the news."
To dig deeper into the issue, I caught up with Jesse Miller, the co-founder and former CEO of email file-sharing company Attachments.me, and the current director of product design at Yesware. I talked to Jesse about the challenges and downsides of maintaining transparency while going through anacquisition--something he experienced first-hand when Attachments.me was acquired by Yesware in 2013. A recap of our discussion is below.
MB: What is your general philosophy regarding transparency in the workplace?
JM: Generally, I believe businesses should be as transparent as possible with employees. Secrets reduce productivity--leaders waste energy maintaining secrets, and employees waste energy wondering what's really going on.
MB: Take me back to the time at Attachments.me when you started thinking about the possibility of an acquisition. How much information on the state of the company did you share with employees?
JM: I shared everything. I talked about how much money was left. I talked about conversations I had with our investors. I was honest about our options. I told everyone I would be talking to a bunch of companies, and I promised that I'd be honest about where each one stood along the way. I had always been completely transparent, so in the beginning of the acquisition process, I didn't think twice about whether I should share this information with employees. Those who know me well know that I tend to wear my heart on my sleeve. It's just how I operate naturally.
MB: How did employees react to the transparency during that time period?
JM: Not well. One thing that I didn't account for was how scary this turn of events would be for everyone. I had assumed that startup employees would have a high tolerance for risk and uncertainty. Instead, suddenly everyone was paralyzed. There was obvious tension in the office. People wondered if they'd have jobs next week.
I realized pretty quickly that I had been too transparent, but by the time I realized this, the damage was already done. Employees wanted answers. They were asking me for updates every day. I felt they deserved to know the answers to their questions. So, if I knew the answer, I would tell them. If I didn't, I'd tell them once I did know. Employees experienced the daily ups and downs of the acquisition roller coaster with me.
My approach was well-intentioned; I meant to avoid uncertainty by being transparent. But the strategy backfired. My transparency brought on unnecessary uncertainty and stress. It was really a failure, from a leadership perspective.
MB: Looking back on the experience, were there any benefits to this level of transparency?
JM: I didn't waste energy being secretive or hiding things. When I needed to leave the office to meet with business development people, or when I had potential acquirers dropping by to meet the team, everyone knew why. I could be honest.
MB: Going back to your general philosophy on transparency--how has it changed based on your personal experiences?
JM: I've learned that telling people all the information you have, as soon as you have it, is not the right approach. Now I make sure that I only share confirmed information. If I'm uncertain or unclear on particular points, I'll refrain from sharing until things becomes more certain. And when it comes to the especially tough stuff, I make sure that I have the answers to employees' questions before I open my mouth.
MB: What would your top three pieces of advice be regarding transparency to other leaders dealing with similar situations?
JM: 1) Be transparent, even if it's hard to say. 2) Balance that with protecting people from being pulled into daily ups and downs. which may be irrelevant to them. It's your job to handle those. 3) Be careful with your words. People are influenced by what you say more than you realize.
This article is the first of a three part series exploring the benefits and potential drawbacks of transparency during periods of unusual company activity. Is transparency always necessary? Is there a "right" way to be transparent? Is there a time for not sharing information that impacts employees? Check out the next two posts: transparency during layoffs, and during fast growth.