Startups · Entrepreneurship

How transparent should I be with employees?

Syam Vemula Senior BI Consultant at InfoMagnus

September 16th, 2016

Especially when shit hits the fan and there is some real bad stuff that could have a significant material impact on the future of the business. I wonder if the best way is to be completely transparent or to hold up and not share too much on some of the fronts that the business is facing.

Sam McAfee Business model innovation and digital transformation

September 16th, 2016

(sorry for the cut and paste, but this is pretty relevant...)


"Transparency, if you choose to embrace it as one of your values, is a big commitment. If you say you value transparency, and you fail to deliver on it, you will severely damage your reputation as a leader. That damage is extremely difficult to repair.

If transparency is to be one of your values, you must spend extra time managing the narrative for all inter-company communication. You must be prepared to answer awkward questions with honesty and respect.

One key area of transparency in communication is the financial health of the company. Many founders struggle with this aspect. They sometimes assume that employees lack the maturity and experience to be able to handle the truth about company finance. Such an assumption really sells people short. In my experience (and I have been on both sides of this conversation more than once), it is much better to be transparent about financial health than to pretend everything is great when it’s not. They will find out eventually."

Michael Hartzell Entrepreneur, Addicted to "Yes" - When Everyone Wins

September 16th, 2016


If you have kids, you might already know this answer.

To be 100% transparent is also assuming they will
1) Understand 
2) Be able to take action regardless

Your kids don't know every detail that mom and dad. They do not yet have the experience, wisdom, discipline and mindset.  They are loved, appreciated, cherished - but we massage the truth to help them work through it.

If you believe:

1)  That fear influences imagination and people make decisions poorly.

2)  That the grief process is always a consideration - we are all human. This human condition and the grief process does whack people out to do unusual things they later regret.

The five stages, denial, anger, bargaining, depression and acceptance are a part of the framework that makes up our learning to live with the one we lost. They are tools to help us frame and identify what we may be feeling. But they are not stops on some linear timeline in grief.

3) There are many times we trust others and take action BEFORE we truly understand why.

4)  The staff does not have the mindset of "I am responsible" (Though you will have special leaders/linchpins who are critical to success)

---- Then....
You will probably not be as concerned about the difficult news - but more focused on communicating "The New Plan".  

And - then we also must be careful of those wolves, cons, and people who are ready to do harm. They are on every staff, in the minority of course.

Some news/information can be used to make it worse for the employees you are hoping to be generous with (by being transparent).  This might be the most critical issue of all.

After thousands of staff, "transparent" relative. There can be local transparency related to a person's role/responsibility - and there can be deep dive transparency that does nothing for the employee to learn of it.

It is important to remember that loose lips sink ships and everyone is now a publisher on media ready to share with the world. Which means that ensuring success of the team may require discretion.

What we share or hold in reserve to our kids, grandkids, family and loved ones - is based on love and caring.

Those who are responsible have a heavy burden - it is lonely at the top.

Disclaimer - This is not a hard and fast rule. Each team and scenario needs to be considered case by case.  .

Ron Warshawsky Founder and CEO of Enteros. Years of successful experience in startup business and database technology.

September 16th, 2016

When the situation is not good, you need to create a plan of communication with the employees. This plan needs to be presented to the board and approved by your board.

You should remember that your duty first to the company and then to the employees. As much as the situation could be bad, it still could be manageable and recoverable in the view of your board.

The worst what can happen to you is that you distribute some disturbing news (in your view), loose your key team players as a result and diminish your chances for the recovery (like getting funding, closing the deal, etc)

At the same time, if you can not make payroll, you should let people go immediately and make sure you do not promise anything that can get you into deeper trouble...

My 2c,

Steve Everhard All Things Startup

September 16th, 2016

I'm going to take a more moderate approach. To what extent would modified behaviour of your staff contribute to a better outcome to whatever issues you're facing? Focus on these changes. Just telling folks that the excrement is heading for the air extractor has little value unless there is a plan that involves change for them. The job of the CEO and management team is to see their way through such issues and make plans that support business direction change.

If this is something you can ride through, like a bad debt, with a little financial restructuring then disclosure should relate only to operational changes necessary to support short term business challenges. 

 If you're not going to make payroll you are morally obligated to communicate the fact.

It all comes down to the plan. If you're going to wind up the business then tell everyone soon so they can plan. If you are planning on a trade sale then job preservation is the order of the day so getting everyone on board with a productivity plan to attract buyers is essential. It's a great way to stop rumours that might push down your market valuation.

There may be hard choices ahead and it's tempting to simply lose costs with some selective firing. Doing so without a good plan is the accounting route to Chapter 11. Everyone starts with functions like marketing as often the effects of marketing investment take some time to hit, depending on your industry. It's a mistake if you plan to change the business and so need to reposition yourself. So plan first, communicate second. Communicating without a plan will send your business into crisis.

Myles Fuchs Sales Marketing Business Development

September 16th, 2016

Transparent like cellophane

Ken Berkun Entrepreneur

September 16th, 2016

totally. Never hide anything.  Be honest, be truthful and you will win the trust and support of your employees.  And go watch Kinky Boots to see it in action.  

Seriously, anything less leads to mistrust, the truth always comes out.  

Rod Abbamonte Co Founder at STARTREK / @startupHunter / @startupWay / @CoFounderFound / @GOcapital / @startupClub / @lastminute

September 17th, 2016


Chuck Bartok Social Media Consultant, Publisher, and Contrarian Curmudgeon

September 16th, 2016

Being a fossil in the business world I can only relate to what our success was founded on. We have never had a "structure" in the businesses.
Farming there was No boss or Worker. All was shared. Interesting talking at lunch, in the labor camp, one bad year the dire straits of my financial condition was disclosed. A simple loan was offered by one of the grape pickers, who owned a fleet of charter boats in Puerto Rico, to tide over.
being a "youngster" I was abashed.  That was mitigated by his statement he wanted to be sure he had such a great place to come back to next season.
from that point on our businesses functioned with total transparency with employees, who in realty are the Most Valued asset.
So much so all businesses were essentially "employee owned"
life was and still is very rewarding.