We spoke to SumAll CEO Dane Atkinson about what it's like running that kind of company, and why one of the best ways to motivate employees is by making sure there are no secrets.
"It's very, very different than anything else. I have to spend a lot more time selling things to people," Atkinson said. "I have to explain things because it's not just me making the decisions. So sometimes it takes a bit longer for me to get things off the ground. That's especially true for things like cap tables, accretion and dilution, the sort of venture capital stuff I usually would have handled on my own."
Employees more invested in decisions they're a part of. Also, because choices they're open and discussed with everybody, when a hire or investment doesn't work out, it doesn't end up with resentment focused at the top. According to Atkinson, that's one of the big problems at less transparent companies.
An executive will just go out and hire somebody at a higher wage, and when people find out about it or it doesn't work out, energy gets focused on that instead of on work.
It takes the right sort of person to thrive in such an environment. Everybody at the company gives 10 percent of their ownership to a non-profit dedicated to doing social good. "The reaction to that is usually a good indication if someone will fit," Atkinson explained.
It's a lot more work, especially for somebody who had been the head of more traditionally run organizations, but Atkinson feels it's worth it. So how can other organizations move in that direction?
"Well of course the easiest thing to do is just start out that way," Atkinson said, "But the first thing to do is get the ticking time bombs out of your closet. Every company has a few."
"Ticking time bombs" refer to the unfortunate secrets about hiring decisions, salaries, and investments — all those the minor to major secrets that every company has. Sometimes it's something worse, like an accounting issue, which can create a dysfunctional management climate. Atkinson explains, "When the CFO discovers something like that, he suddenly becomes the most powerful man at the company." Everyone's hesitant to challenge anyone, worrying that the whole thing might fall apart.
One of the main reasons companies don't become more transparent is due to those various skeletons and the investor and employee reactions that might result. "They're terrified," Atkinson said.
However, they'll come out sooner or later. And if companies wait, it's more likely to come out in the most negative context possible, before an IPO or when somebody's bitter and angry at the company.
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