CEOs and executive teams handle a lot of information, and some of it is pretty confidential or proprietary. There is always a question of how open to be with the staff versus how much to compartmentalize and keep secret. The level of openness is a style issue that starts at the top, and becomes deeply rooted in the culture of the company.
Small businesses are often quite transparent. However, as organizations grow, information becomes more compartmentalized and sharing drifts toward a ‘need to know’ model. As we move from a few colleagues that we know well and trust implicitly, to a staff of individuals who are in it for a paycheck, we tend to pull back on transparency. After all, you really do not know who is going to do what with your sensitive information. The dilemma is that the more you keep secrets, the less your team is likely to become engaged. By putting up barriers, you are actually driving team members to be disconnected, and you are fostering that 9 to 5 mentality.
Corporate info falls into a number of broad categories, and it can be helpful to think about how you want to treat information about each category in advance. Here are a few topics to consider:
Financial information. Specifically, ongoing financial performance, cash flow, capitalization and ownership. Many companies share basic P&L data with the team as a form of scorecard. Cash flow is a little more sensitive as it may lead people to focus on the runway instead of the lift off. Capitalization and investment are often the subject of public press announcements — ‘we just raised $X million from YYY Partners,’ but individual investors and option grants tend to be much more sensitive.
Human Resource information. This is a sensitive area fraught with personal data. The subtopics to consider are hiring and firing decisions. When and how do you want to share information about personnel changes, especially when it involves reductions in force? Every employee worries about their job, and any disturbance in the (work)force creates anxiety. This is the area where the CEO and exec team need to be at the top of their game. Past honesty in communicating HR decisions will build credibility and trust for when things get bad.
Product information. New products and features are exciting and people like to talk about them. However, in a fast-paced competitive market, leaking foreknowledge of your product plans can provide your competitor with the opportunity to counter your attack. You need a clear strategy for managing internal and external information flow about product breakthroughs. The team needs to internalize what is at stake, and you need a trust environment with clear communication of authority and consequences for violating the confidentiality rules.
Go to market information. The biggest topic here is typically sales pipeline information. Who gets to know about pending opportunities, and who gets to know about the forecast for the future? On the marketing side, metrics and lead flow may be informative about future performance, and as such may be confidential. How widely do you want to share this data?
Customer information. Often, what a customer is doing and how they are deploying your product is considered confidential by the customer. Certainly, their data is their data and it needs to be respected. Beyond the confines of a single customer, consider how broadly you want to share customer lists, and customer health data. Pending or anticipated churn is often a sensitive topic that the exec team needs to have a plan for managing.
These are all examples of categories of information the CEO needs to consider when deciding how open an organization will be. In my experience, the greater the degree of transparency, the more engaged the staff will become, and the more trust you will build. It takes a village to be successful, and creating a shared trust and understanding of the facts of the business will help to create that village. Moving the needle from employment being ‘just a job’ toward ‘we are all in this together’ will go a long way to creating a resilient organization that can withstand the stresses of a growing competitive business. The staff is probably more mature and smarter than you think, and if you engage them they may surprise you.
One last note. Never underestimate the power of the corporate grapevine and rumor mill. Employees watch their leaders like hawks, and they perceive every nuance of behavior: is the door closed more often, are there more meetings, do the execs looked stressed, are voices louder or harsher than usual? Every element of executive behavior is a tell. Employees gather and disseminate information at the speed of light. On numerous occasions in my past, the executive team agonized about keeping a secret or how to share bad news, only to discover that everyone already knew it. The problem is that nature abhors a vacuum, so in the absence of a clear message from management, the grapevine will fill the void with its own interpretation of reality, and that is rarely positive. Bad news can quickly spin out of control while management is discussing and debating how to share the facts with the team. See my earlier post about the Ladder of Inference. Crisis management is an important part of the CEO’s role, and clear communication is a critical element of getting it right.