Discretion or Open-Book: Is There a Better Approach to Culture?

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The culture of a business emanates directly from its primary leader(s)—the business owner, CEO, or leadership team.

In my work with a variety of companies, I help provide an atmosphere for high performance primarily through improving financial and operating plans, performance driver tracking and accountability. Even though I bring in my own system for making these improvements, my framework needs to fit into the overall culture of the company. I also personally choose to not work for businesses that don’t have a positive, trustworthy and “desire-to-improve” culture.  Beyond those core principles though, I find that companies have cultures that vary.

Two distinct cultures I have noticed are what I call “Trustworthy Open Book” cultures and “Trustworthy Discretion” cultures.

The Trustworthy Discretion Culture

One of my longest-running clients sold her business last year (which turned out to be perfect timing.) She’d been very successful running it, and enjoyed the satisfaction of selling it at a premium.  Her approach to culture was “trustworthy discretion.”

She was very protective of the company’s numbers, even with the top leaders.  The company was primarily blue-collar with a strong family culture.  Everyone trusted her as owner to do what was best for everyone.  When she pulled me in to help (which provided the discretion of a third-party non-employee working with the numbers) we were able to double the size of the company.  It grew to roughtly $80mm with strong EBITDA, thus commanding a premium selling price.

The Trustworthy Open-Book Culture

I have another client who has gone to an open-book format. All numbers are discussed with the teams and we hold a monthly all-hands meeting to discuss monthly results whether they be good, bad, or ugly.  Everyone is seeing everything and all oars are in the water rowing the same direction. Sales and profits are at an all-time high.

Does that mean either culture can work? Yes, provided three things are in play:

  1. The top leader/leaders set the bar of being completely trustworthy.  In both examples above, the leaders were trusted. One for how she ran the company, the other for how open he has been about the state of the company.  Both built trusting relationships with the people who work for them.
  2. The culture remains consistent.  Inconsistencies lead to lack of trust, even if they aren’t intentional. If you have an open-book culture, then shift slowly OR suddenly to hiding more and more information, you are going to break trust with your team. Alternatively, if you suddenly open up, your team may take a while to feel comfortable with the approach or even feel unsettled that there are going to be other major changes to navigate.  Whatever you choose, be consistent.
  3.  The approach is relevant to the type of business.  Some industries lend themselves to open-book more easily than others. If you are manufacturing a proprietary product, your discretion with bookkeeping may be crucial, too.  If you are non-profit needing donations, being transparent about what the money goes for—a more open-book approach— may be appropriate.

Culture is dependent on the CEO and the leadership team. Trust, no matter which type of culture you choose, is the KEY.