An Honest Culture Could Make Your Startup More Productive

January 22, 2013

2:00 pm

We all agree that honesty is a good thing, but our actions often suggest otherwise. And the same goes for company culture.

Few people would try to defend cooking the books or stealing other companies’ ideas. But day after day, we might conceal our own mistakes, avoid critiquing a coworker, or pretend things are going well when they aren’t. These little dishonesties add up and weigh down on our company’s productivity.

Honest critique is like a compass. If you’re about to make the wrong decision, it can keep you on track. If you’ve already made one, it can point you back in the right direction. And even if the critique is ultimately dismissed, everyone learns to think broadly and consider alternatives.

On the other hand, a culture where feedback and criticism aren’t valued lets a startup stray further and further off its path. One consultant saw a Bay Area startup employee misusing resources and continually missing deadlines. But because the project manager and technical director didn’t want to speak up, the waste continued.

“Red tape, process, and CYA [cover your ass] behavior will build and slow the entire company to a halt,” says Emil Sayegh, president and CEO of Codero Hosting.

Not only that, but holding your tongue and not offering feedback is darn frustrating. You know the feeling when someone does something annoying over and over again, but you never point it out? Startups can’t afford to have employees carrying that feeling around all the time.

“We feel like the less honesty you express to others, the more buildup of frustration that ultimately becomes toxic,” says Chris Byers, CEO of Formstack. “We ask our team to push through the last 10 percent of communication and respectfully address areas where the ‘white lies’ might often get used instead of the hard truth.”

For cofounders, creating an honest culture includes being honest with the team about how things are going and what the future plans are. Everyone can stay motivated and focused, not wondering what’s going on or worrying when the money will run out.

That kind of honesty also shows your team that you respect them and have a collaborative relationship – which is part of the appeal of startups. If employees wanted a hierarchy where subordinates are kept in the dark, they would have stayed at their corporate jobs.

“When people trust each other and feel an ownership stake of the company, they behave like owners and do their jobs with more pride, more efficiently, and are committed to constant improvement,” says Oscia Wilson, CEO of Boiled Architecture.

Finally, honesty allows cofounders to make realistic plans for the future. That isn’t possible when team members are concealing delays or difficulties.

“If employees conceal bad news or fail to speak up when they see things that aren’t up to par, their coworkers and managers alike will be unable to plan for the realities that the company is facing,” says Jonathan Ambrose, COO at Rosie Applications Inc.

These consequences of dishonesty are all very real – more mistakes, frustrated employees, and badly laid plans. In a startup where every advantage counts, a dishonest culture is a handicap that can lose you the game.

Stay tuned next week for how to cultivate a culture of honesty.

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Kira M. Newman is a Tech Cocktail writer interested in the harsh reality of entrepreneurship, work-life balance, and psychology. She is the founder of The Year of Happy and has been traveling around the world interviewing entrepreneurs in Asia, Europe, and North America since 2011. Follow her @kiramnewman or contact kira@tech.co.

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