?? Economic Transparency Helps Self-Governed Teams Make Informed Decisions

File this under #businessresilience

Our journey toward self-organization (see #302, #303, #304, #305, #306, #307, #309, #310, and #311) continues. We’ve established several key points, including that Economic Engagement (EE) is crucial for achieving self-governance. So far, we’ve explored two of EE’s five key factors (see #322 and #323). Now, let’s turn our attention to the third factor: Economic Transparency.

How can economic transparency help us move toward self-governance?

Let’s start by defining the term.

Economic Transparency is about giving employees insight into the company’s financial performance. It’s not an all-or-nothing proposition — sensitive data, like individual salaries, can still be kept private. The goal isn’t to share every financial detail with everyone, but rather to provide relevant performance data to the right people, at the right time, so they can make informed decisions that support the company’s success.

Application in Organizations

There are no one-size-fits-all solutions when it comes to economic transparency — context is everything. However, here are a few ideas to help you get started:

• Regular Financial Updates: Making financial statements available is one thing, but providing timely, contextual insights is far more valuable. At MAQE, we send a weekly email called FinUp (short for Financial Update), which gives everyone a clear picture of how the company is doing. Each week, FinUp delivers four sets of bullet points: (1) where we left off last time, (2) what has happened since, (3) where we are now, and (4) what we’re doing next. Short, focused, and to the point — just the right amount of information to keep everyone aligned.
• Transparent Salary Systems: Compensation is one of the most critical decisions a company makes, yet many organizations keep these processes shrouded in secrecy. MAQE takes the opposite approach. Since 2015, we have used a publicly available salary system with six levels based on two components — Expertise and Leadership. Each level corresponds to a specific salary range. While we don’t share individual salaries, we do maintain a public list showing where everyone falls on the level scale. This provides clarity and fairness without compromising personal privacy.
• Crisis Response Frameworks: Transparency is easy when things are going well. It’s a lot tougher during hard times — I know that firsthand. But you can make it more manageable by setting clear guidelines ahead of time. At MAQE, we developed a crisis response framework, initially created during COVID-19, which we’ve since adapted to focus on financial health. The framework uses a series of traffic light indicators (i.e., red, yellow, and green for profitability, cash flow, and pipeline) paired with pre-defined actions to take when certain thresholds are reached.

Our approach to financial transparency isn’t perfect. Despite these efforts, we often get asked to clarify individual bullets in FinUps, etcetera. But by conducting Q&A sessions publicly — whether through video calls or open Slack channels — we’re able to refine our process and improve transparency through ongoing feedback.

Conclusion

Economic transparency is easy to talk about but much harder to implement. If you’ve never shared performance data before, I recommend starting small — and starting now. The longer you wait, the more entrenched and opaque your organization becomes, making the shift even more challenging. By taking small, manageable steps — ideally alongside initiatives like Customer Engagement and Economic Understanding — you can ease into it. It’s a difficult but worthwhile effort. After all, transparency builds trust, and trust is the foundation of any self-governing organization.

That’s all for this week.

Until next time: Make it matter.

/Andreas

How can we build better organizations? That’s the question I’ve been trying to answer for the past 10 years. Each week, I share some of what I’ve learned in a weekly newsletter called WorkMatters. Back issues are marinated for three months before being published to Medium. This article was originally published on Friday, Sep 6, 2024. If you are reading this you’re missing out. Subscribe now and get the next issue delivered straight into your inbox. ??