I was talking with a neighbour over the weekend, as you do when the weather is perfect for pottering around in the yard and you live in a cul-de-sac. He volunteered that he had some challenging management issues coming up this week, which, when I probed a bit further turned out to be redundancy conversations. Ouch.

It arrested my attention away from carting hard rubbish onto the nature strip ready for the annual suburb junk shuffle (where people cruise the streets collecting each others’ discards to store in their garages until next year’s hard rubbish collection) to the times when I had been in his position. Unfortunately, it has been a few times.

There was one in particular that still makes me feel sick. We had been through an extensive interview process and made a mistake I have since vowed not to repeat … hiring the best candidate despite them not meeting all the criteria. We had done all the ‘right things’, documenting performance, having hard conversations etc in the first couple of months, but despite our best efforts (and his), he was not going to make it past probation. What made it emotionally even more challenging was that he had previously struggled to get a job, was a single parent and was doing it tough.

There have been other times, when, as we matured as a business, we had developed a way of operating that helped significantly in this ‘most difficult’ conversation. In a nutshell – financial transparency. Inspired by Jack Stack (A Stake in the Outcome, Great Game of Business) we adopted open book management. Open book management is an approach to business that opens the books to the staff team. It means that all the numbers are available to people who want to see them (including salaries) and there are some numbers which are intentionally bought into the open so that people understand the financial health of the business. There is a lot more to be said about this approach (maybe in later entries). For now, it is enough to say that when people have visibility of the ‘vital signs’ of the financial health of the business, they have a deeper level of appreciation of even the most challenging conversations.

I deeply admire the courage of two people said to me independently, “As difficult as this is for me, I know it is the right thing for the business.” Are you kidding? You are not supposed to say that.

The point is a simple one. Transparency builds trust. As Jack Stack suggests, the workplace is the last place in our societies where we continue to treat adults as children, withholding important information from them as a matter of custom based on the idea that only managers have the capacity to deal with certain things. This approach effectively draws lines through the workplace setting up ‘us and them’ power dynamics all through the organisation.

This is not about cheapening the value of data by scattering it indiscriminately through company communication channels. To open the books requires a great deal of thought and skillful leadership. It is essentially about recognising that when people understand the connections between their contribution and company numbers, they are able to make decisions that align their own interests and the common good. And they have a better appreciation of management decisions that affect them.

Of course transparency is risky from a manager’s perspective, but it also puts appropriate pressure on decision-makers to ensure that their decisions do make sense under the scrutiny of the staff team. Our experience is that not all, but some people rise to the challenge of engaging important financial decisions by providing valuable insight to those who are ultimately accountable.

I don’t look forward to difficult conversations. I don’t know anyone who does. I do know however, that challenging discussions have better outcomes when they are had in a context of transparency, where the relevant data has been accessible to all the stakeholders.

To my neighbour … and the employees, I’m with you in spirit.