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Spreading Democracy: Transparency and Opening Your Books

Quick Left is one of WorldBlu's most democratic workplaces of 2012. In light of this, I'll be doing a blog series called "Spreading Democracy" based on the ten principals or organizational democracy. Today I'll be talking about Transparency, and specifically, our move to an "open book" organization.

Most of the companies on the World Blu list have some form of open book policies. Having an open book policy is a pretty good indicator of the overall level of transparency of a company, because it challenges you to have the tough conversations in your head about the implications, as well as the organization to present the data properly. It's the final frontier, so to speak, of creating a culture of transparency and accountability. I'm really proud that we've faced our initial fears and have opened our books to all employees this year.

There are different levels of open. What we share is high level and big picture. We aren't getting into privacy issues by divulging individual salaries, but instead focus on departmental spending and per-project income. We show everyone where all the money goes, as well as the long term financial stability plan for Quick Left. For a company that is not venture-backed, cash is king. This openness empowers individuals to think conscientiously about their contribution to the overall health of the company, as well as insight to the reasons behind financial decisions.

At the end of each quarter, we do a company-wide presentation where we put together a slide deck with all of the numbers and goals from the previous 3 months, as well as the year to date overview. Here's a little summary of what we talk about, hopefully it can help inspire you to put together your own deck and share with your team!

  1. Purpose Statement and Core Values–We always start the presentation off with a little reminder of our Purpose statement and our Core Values. This contextualizes the meeting and reminds us of our core focus as a business.

  2. Chart of Accounts Definitions and Percent Distributions–This slide defines the different departments and our target allocation percentages for each of those. For folks in the company who don't have the pleasure of looking at QuickBooks every day, this is just a reminder slide of how the accounting is organized.

  3. Income vs. Expenses–This is the first slide where we dive into actual numbers. We start with an overall view of the year to date income vs. expenses graph report straight out of QuickBooks. Even if you aren't as profitable as you want, the slide communicates how well we're living within our means and being fiscally responsible. It shows that the ship is running efficiently (or not!).

  4. Quarter by Quarter Actuals vs. Projections, YTD Actuals vs. Projections–We look at all the numbers quarterly, side by side with the quarterly projections, as well as the year to date comparisons. This section is actually comprised of a few slides. This gives the big picture of where we're at vs where we thought we'd be. We also look at other liabilities that we need to save up for, such as 401k match, profit share and commission checks. These are items that we'll need to write large checks for at the end of the year, and don't want to be caught off guard. We also look at our savings goal and progress.

  5. Project Profitability–We examine the total income for each project, as well as any losses incurred. It's a good chance to open up conversations with the team about process, accountability and efficiency. Some of the most productive changes in our internal process have come from these discussions, and even better, the solutions have come from within the company, rather than from mandates from the leadership team.

  6. Opportunity Cost–We look at some of the costs of having billable engineers contribute to other areas of the business. If they are not pulling in income, there is an opportunity cost to the task they are instead doing. In a small company where people have a lot of freedom, it's easy to get too involved with little internal projects without realizing just how much that can cost. Rather than micromanage the team on what they can and can't do, this information allows them to make their own decisions about the best use of their time.

  7. Upcoming Sales and Revenue Goals–Here we outline the goals for the sales team as well as the target revenue we hope to capture in the future. This, in turn, can help dictate future hires.

Overall, opening our books was one of the best decisions we've made here at Quick Left. If you've done some of these things, I'd love to hear your experiences with open books, both good or bad.