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Small Business Digest



In Hard Times, Transparency Is Even More Important to Small Businesses

When times get tough, the tough get transparent.

That's the word from Quint Studer, author of the new book Straight A Leadership: Alignment, Action, Accountability.

"Leaders have talked about transparency for a long time, but it's never been more important than it is now,"  Studer says. "Remember, we share information with employees for a couple of reasons: one, it's the right thing to do, and two, it's good for business. And most companies can use every possible edge these days."

Studer says companies with cultures of openness and free-flowing information fare better in difficult economies. That's because (among other benefits) transparency helps employees stay connected to the financial big picture, reduces complacency, sparks creative solutions, creates organizational consistency and stability, and leads to faster, more efficient execution.

Here's how you can create a more transparent organization:

• First, make sure senior leadership is aligned. Does everyone see the external environment the same way? Does everyone understand organizational goals and plans? Does everyone agree on what success looks like? If not, it's time to remedy the situation.

"Alignment is most important at the senior level because all information cascades downward from it," Studer says. "If one senior leader is out of sync with the others, then everyone under her is going to be out of sync. In a big organization, that could be hundreds of people."

• Close the perception gap between senior leadership and middle managers. Senior leaders generally have a pretty clear grasp of the real issues facing the organization. They are steeped in these issues every day. Midlevel managers — who, after all, are busy managing — don't always see things the same way. The only solution is for senior leaders to relentlessly communicate the issues to them.

"You can address these issues in supervisory sessions," Studer suggests. "You can hold regular meetings with midlevel managers. You can send out e-mail alerts that link to news items driving high-level decisions. If you're a senior leader, it's critical to make sure the people under you understand the big-picture issues and their implications. It's one of the most important parts of your job."

• Help people understand the true financial impact of decisions. Get comfortable framing all major decisions in economic terms. If a manager wants to spend money on something — a new piece of equipment, a new employee, a salary increase — she needs to be prepared to explain in financial terms how it will pay off for the company. Employees, too, need to understand the real cost of mistakes or lapses in productivity as well as the potential positive impact of doing things in a new way.

"Many of the healthcare leaders I work with use a financial-impact grid to educate employees on how certain issues translate to dollars," Studer says. "The idea is to teach everyone to think like the CFO. Educating people in this way can be very powerful in changing their behavior."

• Put mechanisms in place for communicating vital issues to frontline employees. People aren't going to pick up on what leaders want them to know by osmosis. You need to tell them clearly, succinctly and often. That means putting in place a system, or a series of systems, to ensure that the transparency value gets translated into action, such as:

Strategic Rounding. This tactic is based on a practice from the world of medicine. (Think of a  physician making the daily rounds to check on patients.) Essentially, leaders take an hour a day or so to touch base with employees, make a personal connection, find out what is (and isn't) working well and so forth. Besides being a proven leadership tactic, Studer says, rounding is a great way to keep people up to speed on changes in the organization's "big picture" and to solicit any  questions or concerns.

Employee Forums. Hold these companywide meetings regularly. They are great opportunities to hold  financial-impact crash courses, to update people on changes in the external environment, and to  solicit their feedback and ideas.

Newsletters. These should not be "data downloads" or senior-leader photo-ops. Rather, fill them with  articles about important external changes and the company's response to them. Really connect the dots for readers. And be sure to include tips on what employees can do personally to make a difference in the company's bottom line.

Communication Boards. Studer recommends putting physical (not just virtual) bulletin boards in a  common area that convey an ever-changing "snapshot" of the company's bottom line. Include monthly and year-to-date financial reports as well as how the numbers break down by department. You can also  include info about industry changes, new hires, community impact and so forth.

Standards of Behavior Updates. If you don't know, Standards of Behavior guidelines spell out how  employees are to present themselves at work: from phone etiquette, to how to respond to gossip, to key words to use when customers ask tough questions. You may already have a Standards contract in place...but was it written five years ago? Maybe it's no longer relevant. Make sure your Standards reflect your company's reality today. If not, ask employees to rethink and revise them. It's a great way to get people deeply engaged in thinking about the new reality and how they can best respond to it.

• Prepare managers to answer tough questions. If a manager tells his employees the company is cutting back on overtime, he'll almost certainly hear questions like, "If money's so tight, how can the company afford the new construction project?" Or, "I depend on my overtime hours as part of my salary. Will everyone's salary be cut?" The manager needs to know ahead of time exactly how to answer so that he won't blurt out a we/they perpetuator like, "Sorry, that's the orders from the top."

"In a transparent company, there's no reason to hide financial realities from anyone — but that doesn't mean managers naturally know the best way to phrase their answers," Studer says. "Some are just better communicators than others. Anticipating tough questions, formulating the right key words, and sharing them with leaders at all levels allows everyone to answer them consistently."

• When you have bad news, treat employees like adults. Once a tough decision has been made, share it with everyone immediately. Don't sneak around behind closed doors and certainly don't lie.

"Knowing what's happening, and what it means, is always better than not knowing," Studer says. "And often, what people are imagining is worse than what's really happening."

• Keep people posted. When something changes,let them know. This builds trust between leaders and employees and keeps them connected to the big picture.

"Be sure to share any good news you get," Studer says. "Transparency doesn't mean 'all bad news, all the time.' When you disseminate positive developments as quickly as you do negative ones, you boost employee morale and reinforce any progress that's being made."

© 2018, Information Strategies, Inc.
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