Essential element #2 – Instilled Transparency

Reframe: You need to go first

Like many leadership challenges, a paradox exists at the core of instilling transparency that must be acknowledged and addressed before significant progress can be achieved.

The paradox for Founders, CEOs, and MDs is that they desire greater trust and confidence from their teams, yet they often feel uneasy about being transparent enough to achieve the levels of trust and confidence they seek.

They forget that trust is not granted upon request but earned through actions. They must show a high level of trust before their team will reciprocate. The responsibility lies with them to make the first move here.

There is often a gap between the degree of transparency they are willing to show and the amount necessary, particularly from their leadership, for other leaders to contribute confidently and knowledgeably to strategic and financial decisions.

Leaders may mistakenly view this as a hesitation among others to share their opinions or contribute when these individuals haven’t received sufficient information and context to participate with confidence.

If you seek greater accountability, begin by increasing your transparency. As a rough guideline, I suggest that for most Founders, CEOs, and MDs, the appropriate level of transparency is just beyond what feels comfortable. 

Rethink: Have you educated them well enough?

The Bank of England has a Monetary Policy Committee made up of nine knowledgeable and experienced individuals to ensure the UK economy operates effectively according to the established guidelines and targets. This works most of the time due to healthy discussions and diverse perspectives presented before key decisions are made on crucial factors such as interest rates.

In contrast, many SMEs still have financial decisions made by the owner, with some input from their external accountant or fractional FD. This group is too small and lacks sufficient diversity of opinion to make optimal financial decisions, in my humble opinion.

The reason the financial decision group is not larger is partly due to historical norms, but also because they have focused on enhancing the financial understanding and knowledge of other leaders, enabling them to secure a seat at the ‘financial decision-making table’.

Most accountants and FDs that I encounter at various board meetings are more than happy and willing to educate others on financial strategy and documents but have simply not been asked to do so. Additionally, most Founders, MDs, and CEOs possess more than enough financial understanding to fully educate their teams, yet for whatever reason, they have chosen not to invest the time.

This feels short-sighted to me, as the more people who can contribute to financial decisions or decisions that have a financial impact – within reason – the better the decision will be.

The additional benefit is that the other leaders will feel more accountable as they participated in the decision-making process.

If you want your leaders to have more of an ‘owner’s mentality’ and make decisions that are in the best interest of the company, the imperative is on you to educate them enough so they can do so.

Refocus:  Ambiguity creates confusion!

When leaders lack clarity or consistency regarding transparency, it undermines the initiative. Strong, decisive leadership that exemplifies openness is essential for establishing the tone throughout the organisation.

Most Founders, CEOs, and MDs desire a company that is less dependent on them and more autonomous in its daily operations. However, to achieve this goal, they need to be clear about the level of transparency they are willing to provide to foster that autonomy. Too little transparency will just result in them being the bottleneck and remaining the constant decision-maker.

What the organisation needs is sufficient transparency to operate effectively without you at the helm when or if necessary.

Enhancing transparency may not feel comfortable in the short term, but if you want a less dependent relationship with your company in the future, it is one of the non-negotiable essential elements you need to focus on instilling.