Two of the most important, yet challenging, aspects of building a business into a growing, professionally managed organization are implementing a culture of transparency and accountability.
A lot of people would suggest that this happens by default in small businesses because there is nowhere for an underperformer to hide. While this may be, transparency and accountability are more than just about finding out who is accomplishing goals or not; they are about ensuring that goals and action items are assigned to the right people, and employees are empowered with information to make decisions.
Many small business owners resist being transparent with the entire organization because they think concerned employees may deduce that if the owner is making too much money, the employees will seek more wages. Just the opposite is true — if employees believe the owner is not making enough money, they will assume the company is in trouble, and they should start looking for another job.
This thinking will continue to stunt the growth of the company because you cannot scale with this mindset, and the best employees will leave because they have no tools to make independent decisions (an important factor in job satisfaction).
Transparency and scaling
Evolution Capital Partners believes that being transparent — sharing information with employees to help them make good decisions and understand how those decisions impact the overall company performance — is the underrated requirement to scale a business.
It’s also one of our Five Pillars of Business Freedom. Not all decisions have to come from the owner, there really are only 24 hours in a day no matter how hard you try to create more.
A second factor in the Five Pillars of Business Freedom is accountability. Evolution believes that accountability is the necessary result of making everyone a decision-maker and that decision-makers need to be confident in their judgment.
Through implementation of Entrepreneurial Operating System, Evolution works with its partner company leadership teams to create an “accountability chart,” which is similar to an organizational chart, but with the added features of specific job descriptions and reporting lines of communication.
Launch a strategic plan
Once that is complete and management identifies and begins to report against key operating data metrics, a strategic plan can then be developed. With the plan in place, the process of developing measurable goals begins. This is very difficult. You need to make them specific, measurable, attainable, realistic and timely (S.M.A.R.T.).
Developing measurable goals is the foundation for transparency and accountability. For Evolution and our partner companies, we live in a 90-day world. We measure daily, weekly and monthly metrics as we progress toward our quarterly goals. Employees and owners are expected to report their progress toward their goal and understand that they are being held accountable to it.
Transparency and accountability are not “check the box” items. They represent a spirit and culture that needs to be embraced. If everyone is transparent and held accountable, not only will your company gain momentum and grow, it will retain its best and brightest employees.
Jeffrey Kadlic is co-founder and managing partner of Evolution Capital Partners LLC, a private equity fund investing growth equity nationwide in Second Stage Companies. Jeffrey is an alumnus of Crain’s Forty under 40 and an EY Entrepreneur Of The Year™ finalist.