Don’t Try to Hide the Obvious

Nothing destroys trust and respect faster than denying the obvious.  More often than not new ventures run out of small, open offices or shared spaces where privacy is sacrificed in the name of low overhead.  Information automatically makes its way around far more easily than is the case with dedicated conference rooms or executive offices.  That unpleasant phone call you have with a client with a large outstanding balance or a human resources dispute with an employee is right out in the open.

Manage Unpleasant Conversations

If you can foresee a conversation taking an ugly turn, do what you can to contain these exchanges by having the meeting or phone conference at an alternate location.  There is no reason to directly expose your employees to a conversation with an upset client.  One of your jobs is to serve as the buffer so your staff can focus on the tasks at hand.

At the same time, serving as the buffer doesn’t mean keeping everything to yourself.  If a client is legitimately upset with the quality of work, organize a meeting with your employees to address the problems.  Not only can this help your staff understand the expectations of the client and better cater to those expectations, but you may even get creative input on how to manage the issues.

The Touchy Subject of Money

It is generally best to avoid the topic of company finances with anyone except those with a real need to know.  We have been through some very good and very bad times in the history of our company.  While you want to think you are doing employees or partners a favor by giving them fair warning regarding financial conditions, we have come to learn this will generally only hurt everyone in the end.  Here’s why:

• Impact on Client Relationships. Clients are inclined to select vendors in good financial health.  The reasoning behind this is primarily a concern that vendors in poor financial health won’t have adequate resources to complete a project on time or, worse yet, that they will close up shop mid-project.  Unfortunately this turns into a vicious negative cycle as being rejected by a prospective client on the basis of financial health only worsens your financial condition, making it all that more difficult to attract new clients.
• Impact on Vendor Relationships. Unless you deal with all vendors on a cash (or credit card) basis, the last thing your new venture needs is a hint of financial instability making its way to vendors.  This can disrupt supply flow, making it difficult to deliver, hurting clients and ultimately harming your reputation.
• Impact on Employee Relationships. With the exception of employees with stock options or an existing stake in the company, your staff is there for the paycheck.  Knowing that paycheck is in jeopardy is likely to do one of two things: cause employees to prematurely seek new jobs or severely harm morale and general motivation.  Your employees aren’t there to share in the stress of being an entrepreneur or they would be running their own ventures.  Unless you are absolutely at the end of the line, try not to burden employees with negative financial news.

Know Your Company

In the end, there is no one-size-fits-all answer to the question of how open is too open.  You should constantly re-evaluate your policy regarding information flow and transparency based upon your venture’s staff, size and other less tangible factors.  The dynamics of the company can change almost overnight based upon a new hire, new client or new vendor.

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