If you’re an entrepreneur, business owner or manager, you know that “transparency” is one of the big buzzwords in business right now. Most businesspeople get a little squeamish at the mention of such a bold word. There are a few pretty terrifying myths about what might happen if you become transparent with company information. Here are a few of the best myths along with reasons why you should stop believing them:
Competitors will get a hold of my secrets. Guess what? You have no secrets. This lesson was made clear to me by marketing guru and speaker Marcus Sheridan. He reminded a group of conference attendees that with today’s technology, a person who wants information can find information. He illustrated this case-in-point by delving into one of the great mysteries of our time: the contents of McDonald’s™ “special sauce”. What kind of catastrophe would arise if the actual recipe were available? Would people stop buying the Big Mac®? Would competitors swoop in and steal business with their own version? To spoil the fun, no; McDonald’s™ even released a video where their Executive Chef explains the recipe. Ever hear of the “W®” or the “Big King®”? No? Those were Wendy’s™ and Burger King’s™ attempts to challenge the Big Mac®; neither gained popularity. Let’s discuss why they didn’t succeed.
McDonald’s™ has an edge that none of its competitors can touch. In the case of the Big Mac®, they were the first to reach market (the catchy jingle probably didn’t hurt, either). Your company, too, has a competitive edge that far exceeds any “company secrets” you think you have. So what if a competitor figures out something about your company; unless they have the same knowledge, tools and expertise as you, there is nothing to fear.
Competitors will find a way to access our financials. That’s true, they could, but it’s rather unlikely. We plaster our financials all over the walls at SRC. We openly invite folks to come tour our facilities and we’ve never had a competitor take advantage of the offer. Plus, we strongly recommend that the financials you share with your employees are simplified financials. Consolidated financials are just a snapshot and are relatively useless to competitors.
Employees won’t understand what I’m showing them. You’re right, they won’t; not without a little help and education. Great companies who practice transparency actually educate their employees on what the metrics in the company mean. The true power of business transparency, better known as open-book management is when your employees understand the numbers and know how they can drive those numbers. Having educated employees will give you an edge on your competition that should help to eliminate most of your other fears.
Employees will use information against management. The truth is; sharing financial information with your employees is more likely to empower them than to enrage them. Most employees have a drastic misconception about the actual profit your company makes. In most of their minds, you have a secret vault where you swim around in gold coins like Scrooge McDuck. If they had access to your income and cash flow information, they’d be shocked by the results. Once your employees see and understand this information, they’ll be more likely to understand why you’re not giving out bonuses or shelling out for new equipment. Furthermore, they will have the knowledge they need to offer you suggestions on how to improve processes that can drastically impact your financials.
The bottom line when it comes to myths about sharing financials is this: if your competitors aren’t strengthening their companies the same way you are; you’ve got nothing to worry about. Are there any other myths about business transparency on your mind? Share them in the comments and we’ll tell you if you should be afraid or not.