Our journey to the center of the value of transparency.

---

Most companies perceive themselves as transparent. But it is rare for companies to reflect and take the uncomfortable steps toward being more transparent. People brag about their translucency while their teams live in hazy opaqueness.

Companies rarely reflect on the implication of their values because it is not profitable to do so. As I see it, the value of true transparency is beyond usefulness, at least in the short term. It is an unfair cultural advantage because the modern knowledge worker craves an understanding of the business.

Transparency is a good thing. 94% of customers use transparency to decide which brands to support ¹. There is also a strong correlation between employee happiness and management transparency².

At our company, we cannonballed onto the deep end of transparency. We did more than most dared to do. We did the impractical. And most of what we got is remarkable. But not everything.

Read below to know more about the wins and struggles of becoming a more transparent company.

Before we start.. Do not share your email

In the beginning, everything was hazy

Both co-founders, myself and João Caxaria, are pretty transparent individuals. We overshare. We share inner workings, processes, states of mind, amongst other things.

Our team has given us doses of positive reinforcement. We learned that the team relishes knowing more about the process behind decisions. It is easy when you are a small company; if you are in an office, you need to go out of your way to be opaque.

When you build a transparent company, not everyone will care. Most people will not pay attention. However:

1. Some people will want to look at the inner workings of the organization. If that is visible, it is incredibly empowering and
2. transparency creates trust and trust breeds retention and action.

There have been cases when sharing too much was not ideal. But typically, it is the right approach. There were more times when oversharing was useful instead of detrimental. Over the years, we have learned to spot the boundaries of information sharing while keeping true to our openness DNA.

Funny enough, the cases I regret the most are the ones where we hid information. For example, in the early days, we had no salary brackets defined and would negotiate each salary as we hired people. As we grew, raised new funds and hired increasingly experienced people, this environment created unfairness: new joiners would get better compensation than the current team. This unfairness created resentment. Cases like these pushed us to be ever more open to the reflection on transparency.

And so, as we grew, we kept a thread of transparency inquiry going: “is this how a transparent company is supposed to operate?”.

Often it was uncomfortable.

For example: would a company truthful to its transparency have hidden calendar events? Ostensibly: no. However, for all calendar events to be open, everyone, including leadership and myself, would need to be part of it. Initially, I did not feel comfortable with it. I feared what others might think seeing my calendar: my meetings and priorities. It felt weird. It is uncomfortable to lose the blanket of secrecy. And most people do not ask for open calendars because they would have to also open up their lives.

We took the plunge and we made our calendars open in 2016. At first, there was some resistance as few saw this measure as a control mechanism. But it became natural. Today all of our calendars are public to each other, and we do not think about it. People can now use their judgment when scheduling events. And I think everyone seeing my calendar is also powerful. ³.

Just like open calendars, there were more improvements after the same sort of reflection. We opened our documents to the organization for people to consult. We opened our meetings and shared even more information about the company at all-hands. We opened our roadmap internally and for our customers.

Our farthest jump was opening our salaries. After our team dedicated so much time standardizing career and compensation paths in our company, we opened our internal salary calculator.
We decided that our salaries were not nuclear launch codes, to be kept secret at all times and opened with the permission of the highest-ranking officers. We decided that our salaries were not IP. We should treat our people like adults and enable them to understand the different paths they could take in the company. We decided to open our salary brackets and create a calculator where people, hired or not, could plan their lives. It is not an obviously good idea, and it has downsides. But it stands as one of the decisions I am most proud of. I know of many cases of students, professionals and companies that have made better, informed decisions because of our calculator. It is by no means an easy thing to do. You reduce your operating margin as you cannot offer different salaries for the same position and seniority⁴.

But there are so many positive second-order effects. This year, we decided to globally increase our salary brackets. This increase was unavoidable due to inflation eroding the purchasing power of our team. We also needed to become more competitive while hiring. Typically companies create another version of the salary bracket, hidden from their current team, and offer better salaries to new people. But since our salary grid is open, this principle pushed us to first adjust the salaries of our current team so that everyone welcomes the new joiners well.

The team pushing us made us unlock hidden components of the organization. Reflecting is important: it forces us to open our eyes to potential improvements.

But I think we took it too far.

Finding the boundary

Inebriated by the benefits of a translucid organization, we pushed to continue challenging ourselves to be even more open. As we made most of our meetings open for people to join, we asked ourselves: would a truly transparent company have closed leadership meetings? Another reflection occurred.

In these meetings, a management team (composed of people leading departments) discusses the business at the highest level. Open leadership sessions allowed anyone at any time to join by zoom and witness our discussion. We would close the meetings for sensitive subjects, such as employee performance discussions or compensation adjustments. But the meeting was to become open. The intention was simple: to give everyone at the company an observer seat on the management team’s most important meeting.

It started fine. People were quite happy to watch the teamwork.

Every company is easy to work for and most mistakes are permissible when the business is strong, healthy and growing. But when things are challenging, which typically they become in startups, every small cut festers with projections of other problems.

Our leadership meetings sucked. We had a typical structure where we discussed OKRs and went through problems or challenges that people would bring. Before we called it quits, people asked me to stop attending these gatherings. Here is why they do not work.

Artificiality, conflated incentives, and ineffectiveness

Think about any governmental forum, like a parliament, of any democratic (or even autocratic) country. How many times have you seen vulnerable, honest conversations? Very rarely. Invisible incentives pollute public discourse. At the very least, people increase the number of variables and actors when speaking. The conversation stops being about finding the correct answer, and it can become about something else, unbeknownst to the rest of the group.

Groups do not immediately jump to the correct conclusion. Many times they oscillate before making decisions. Take vacations, for example. If we need to have an objective discussion about the value of unlimited time off, then we should address the fear of abuse and lack of productivity. You need a proper, unbiased, reserved space for making decisions.

When the business was going well, having open leadership meetings was great. When we found a challenge, this model cracked as we were concerned about how it would be seen/perceived by the entire company instead of just focusing on solving the problems.

On the other hand, we found ourselves discussing topics that were not crucial to our stage of development. This may be due to our own immaturity or to the ineffective nature of our sessions. Over time, this had an impact on the business.

Having open meetings conflated purpose. And it made our sessions artificial, frustrating the group.

Eroding trust

“There will, even should be, conflict in a group with a task that has even a minimum of complexity,” ⁵

If you are pushing boundaries, conflicts will arise. Public conflict is more complex to manage and can decrease trust. Sure, there are ways to argue constructively in public. It is much harder to tackle fundamental business challenges in public while keeping a cohesive group. It is harder to have tough conversations.

Inevitably, there was less vulnerability. Over time, this attrition and lack of candor eroded trust within and outside the leadership group. A group cannot function without trust. It is the currency of everyday work, particularly for teams pushing boundaries.

I think this is why board meetings are closed. You cannot display radical candor if everyone is watching. And if you cannot give honest, constructive feedback, there is no growth. Hence, you give praise in public and constructive feedback in private.

The fallout

The group fell apart. We concocted a dangerous cocktail: demanding business challenges and a group that did not operate well.

Some who pushed the company to be more open were firm believers in the value of open meetings. For the satisfaction of those, I refused to kill the gathering that was pushing us apart.

This also reflects on me as CEO. In my gut, I knew these meetings were toxic, yet it took me too long to change.

The inevitable revert was also painful. When we finally decided to change the setting and close our leadership meetings, some viewed it as a deterioration of our transparent culture. There was some loss aversion to the visibility of the utmost inner workings of the company.

We did change it. And the amount of honest conversations we have been able to have since is incredible.

Concluding thoughts

Most companies calling themselves transparent are lying. It is hard to be open. The crucial part of transparency is sharing as much as you can about the inner machinery of the company. We should treat everyone as an able mechanic engineer, knowing that only a few are interested in tinkering.

Pivotal moments in the evolution of transparency do not happen by design. These moments emerge. We learned that inquiring about transparency does not happen without context. It anchors to moments where you get asked: “what would a transparent company do?“. Answering this question truthfully provided wonderful improvements.

The value of transparency is beyond usefulness. You explore it and implement it because it pays dividends in the future. There are only two reasons why you should limit your transparency:

1. If it hurts the candid, business focus that a startup so requires
2. If it hurts the group by reducing vulnerability or eroding trust

That’s it

If you liked this content, consider subscribing to my twitter DMs.

If you share with me your Twitter handle and I’ll dm you every time I release a new post.

No email, no registration. And you get on Twitter what you already are looking for: great content.

Thanks to Inês Barros, João Caxaria and Pedro Ribeiro Santos for reading drafts of this.