On Sharing Reality with your Employees

Mario Laudi has a post up on Red Canary about ‘Hard Realities for Soft(ware) Companies‘:

Next, make sure your team knows that the markets are tightening. Believe it or not, some people (those who live with their parents or enjoy a trust fund) may not have a clue.

Its important that everyone understand the realities of your business. Help them understand ratios like Revenue per Employee.

Be frank. Let them know what the future holds and the role they can play.

Depending on how transparent you are, some of them may seek greener pastures. This could be a good thing. Others will batten down hatches and intensify their efforts.

I’ve seen companies screw this up time and again.  Most of the companies I’ve worked for not only do a bad job of helping their employees understand the fundamentals of the business, they often go out of their way to either hide or abstract them.  I’ve never truly understood why.

Is it that they’d like to be very profitable, and not share the wealth with the employees, so they’re setting up for that occasion?  Or are they afraid the fundamentals are pretty bleak and they don’t want to scare employees?

In the latter case, trust me, your employees know when things aren’t looking good.  They may not know your revenue or have accurate tallies of your expenses, but they know when a company has everybody working on productive work and when it’s just trying to figure out how to keep the doors open.  The grapevine is far more rapid and effective than regular corporate communication channels.  The only advantage you have is hard facts, which are rarely as scary are what your employees can imagine for themselves.  If you’re direct about the situation you’re in and how you’re planning on getting out of it, and that plan is a decent one, you’ll find your employees responsive to that.

On the other hand, if your plan to rescue the company is to “make more sales” and “integrate with facebook” in a vague and abstract way that doesn’t translate in the minds of your employees to new revenue, then they’re likely to respond to that too.  They may not know every detail of the business fundamentals, but they know the difference between a plan and a dream.

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