Is it necessary for startup founders to make the employees privy to information such as company revenue generation models, client collaboration deals, and other traditionally confidential matter? To the older generation, this would sound nothing less than controversial, but to the modern entrepreneurs, sharing information means taking their team along to make them feel part of the startup.
Confidentiality Vs. Transparency
There are pros and cons for both confidentiality and transparency. Let us see what they are:
#1 Sense of Ownership
An advantage of sharing information with the employees is that it imparts a sense of ownership of the startup to them, thus encouraging them to give their best to ensure business success.
On the flip side, the employees are not business owners and may not understand the bigger picture. The founder’s perception regarding, say, the startup’s financial situation will be entirely different than that of the employees. If employees are made privy to it, they may start thinking only about increments and bonuses, and fail to realize the founder’s future investments for the success of the startup.
Over-information may also act as a distraction for employees, who may waste time in over analyzing and may even start the rumour mill.
Sharing detailed information with employees also has its plus side. It can help the founder weed out those who are not enthusiastic about the startup’s success, as they are less likely to live up to the challenge and quit, instead.
Contrarily, showing the big picture to the employees by laying bare all information may work wonders in egging them on to give their best.
#3 Salary Allocation
It is a common fact globally that female employees get lesser pay than their male counterparts for the same job. This discrimination remains concealed till the time the salary information is under lock and key.
Once this is out in the open due to transparency, it will only beget resentment. No employee can be happy to know that his or her colleague is getting a better salary for doing the same job! The situation may not only cause resentment but also push employees to work against each other, rather than with each other.
On the other hand, transparency in salary allocation to all employees can help root out discrimination against pay parity, promoting gender equality in the workplace.
#4 Level Playing Field
Transparency creates equal conditions in which all employees know the expectations across the board and work for the collective good of the startup, rather than indulge in one-upmanship, bickering, and office politics, that not sharing all information with everyone may engender.
Lack of transparency in a startup that has fewer people, may make them feel less valued and leave them with the feeling of being kept in the dark.
If the need-to-know basis is implemented too stringently in a startup, it may alienate people working for the startup. They may feel like automatons, who are only expected to work in their designated appointments. This situation may lead to frustration and encourage some to even put in their papers for better options outside.
On the contrary, sharing too much information can lead to data overload and relevancy issues that spoil the healthy working environment.
#5 Maintaining Confidentiality
If transparency is the new byword for sharing the startup’s financial and other details with employees and is a logical follow-up of the changing working ecosystem, then the startup is certain to flounder.
Too much transparency may put the founder on the defensive, as his or her decisions are likely to get questioned by employees at every step.
Giving the big picture to all may not be all hunky-dory is not warranted. For example, it is entirely irrelevant to let the employees in on fundraising efforts for the startup. It will not only prove distracting and may even depress the employees not used to economic difficulties.
Too much transparency may also reveal the startup’s future direction and may trigger employee’s’ decision to quit the startup, which is certainly not healthy.
So, what’s the way out?
As far as employees are concerned, the founder needs to be open to a limited extent. Openness has its virtues. Sharing information with employees helps the founder in getting a sounding board to sound ideas off them, solve problems, get advice and moral support in times of distress.
It becomes necessary if employees are founder’s buddies from the previous organization.
The bottom line is that it is difficult for an employer to reveal the key information associated with the startup that is his or her brainchild and no one else’s.
Therefore, it is safe to say that a startup founder should be open and warm with his or her employees, but should always deliberate minutely what needs to be revealed to them and what, concealed.