Recently, during a three day seminar about horizontal leadership and organization in Beijing, China, I got a question about financial transparency, about transparency in general. Should a horizontal organization – in China they call it a warm business – be fully transparent or not? Too much information, they argued, would confuse the people in the organization. Too little information would create rumors, instability and insecurity of the employees.
My answer was, that I believe a horizontal organization needs 95% transparency. Almost all financial information available should be made fully transparent to all. But it should be put a lot of effort into making the financial information easy to read and to work with by all teams. Each of the teams should be able to access their own financial information. As described earlier, money can be seen as a mirror of reality, of real processes. People influence and build real processes and products and services. That is the main thing. A financial report should show – as a mirror of reality – where the team stands in terms of performance and in relation to the whole organization. The team should be able to see what their contribution, what their cost are, in relation to all other teams in the organization. And those financial data should be shown in real numbers, as far as possible, and in easy to understand graphs and other means, to make visible the important parts of the information.
As a result of this information the team should feel and experience that – over time – they can influence through their client-focussed actions those financial reports. That creates new challenges for those who are responsible for creating such reports. Maybe they need extra training for this. Coming back to my believe in 95% transparency. I think each business or organization should decide whether to make transparent also individual salaries. That might be too much transparency as a first step. Maybe that needs more time to discuss. And of course any private information cannot made transparent. Privacy of course is to be strictly respected.