There’s an increasing trend towards transparency in business. From roadmaps, to salary bands and sharing KPIs with investors, startups have decisions to make around how open they should be with their business’s data and operations.
We asked an expert panel for their tips on operational transparency during the latest edition of Sifted Talks. Our guests were:
- Anna Gullstrand, acting chief executive at presentation software provider Mentimeter
- Jenny Saft, cofounder and managing director of Apryl, a fertility benefits platform
- Nick Franklin, founder and CEO of the revenue analytics platform ChartMogul
1/ Embrace transparency internally, but be guarded externally
All three of our panellists were exponents of openness within the confines of an organisation. At ChartMogul, KPIs, goals and strategy are shared across the business. Mentimeter takes a similar approach, with the financial performance of the company being common knowledge across the team.
Saft explained that it's almost impossible for smaller startups — Apryl currently has 15 employees — to hide performance from staff, so embracing transparency is a no brainer. With an open mindset, the business can be frank about missed targets and identify areas to improve.
However, this transparency doesn’t need to be replicated to the wider market. Franklin cited an example of a competitor that openly shares its financial performance — something he said gave ChartMogul a competitive advantage.
Instead it’s about cherry picking the information to share — customer numbers, employee headcounts — to tell a positive, but truthful, story about the performance of the business.
[Externally], it's storytelling… we're not sharing exactly what our revenue is and how we manage everything specifically… It's part of our philosophy, and it's worked so far” — Jenny Saft, Apryl
2/ You need some red lines internally, but hiring is key for trust
There are some topics that should remain private in the workplace. Health problems, one-on-one conversations with managers and HR were all cited as no-go areas.
Franklin also discussed some concerns around sharing business critical information on digital channels such as Slack — for fear of messages being screenshotted and shared externally.
How (and how not) to run a startup.
Gullstrand said it's crucial to hire people that you can trust. This allows you to build a culture where the employer feels able to share information without fear of leaks.
If you're the lead and you don't want to share some things because you're afraid that some people will take a screen you have another problem, you have a problem in your recruitment process or in your onboarding” — Anna Gullstrand, Mentimeter
3/ Consider salary transparency carefully
Our panellists agreed that sharing individual salaries is a tricky issue, with positives and negatives in being open about pay.
ChartMogul publishes its salary bands internally, and has started including them on job advertisements. This has become easier for the company as they have an increased headcount — they now have 70 employees across the globe — which allows them to easily create ranges for this staff, based on their seniority.
While Saft acknowledged some of the benefits of salary transparency, she also noted the downsides. For example, it's not as easy for startups earlier in their lifecycle and at Apryl, there is no one dominant profile of employee, which could result in significant differences in pay.
Does it feel nice for everyone that the difference in salary is so high? In a way you’re indirectly saying your work is worth less than someone else's… I’m not sure that’s entirely motivating” — Saft
4/ Being open about mistakes reveals a strong company culture
When things go pear shaped, it's important for leadership to practise what they preach. While crises should be handled on a case-by-case basis, the response should be proactive. Saft used an example of a data breach as something leaders should be transparent about externally, while internal struggles should be kept in-house.
Sweeping problems under the rug would undo the hard work undertaken to promote a transparent culture.
If you want employees to own their mistakes and learn from them, then this is an opportunity to show good examples” — Gullstrand
5/ Being open about your future can win business
While our panellists promoted guardedness in most cases externally, they agreed that there are times when being transparent about your plans can be of real benefit.
Previously, feature roadmaps were protected from public consumption. Now, businesses are far more vocal about their plans, as it gives clients an idea of the value your product will provide in the future.
You're sort of giving away your recipe of what you're going to do over the next several years. But it also gets the market excited. It gets them thinking about your vision for your platform” — Nick Franklin, ChartMogul
6/ Be weary of oversharing with potential investors
While he accepted he might be overly cautious, Franklin warned founders against being too open with investors. In some instances, VCs with interest in your competitors might use a meeting as an opportunity to drill down into your KPIs and share confidential information.
Of course, sharing performance data will likely be integral to securing necessary funding, especially for post-seed companies. So, Franklin suggested doing background research and using secure and trackable transfer software as a means of protecting the business.
They act like they might invest, and they actually invested in one of your competitors later on. You have to be careful. Make sure that you know the reputation of the people you're talking to” — Franklin