Financial Transparency in a Teal Organization: Threat or Opportunity to Grow?

In a teal organization, financial transparency is key. It is one of the pillars of the teal paradigm, and it is crucial for creating a healthy company culture. It’s not just about making numbers available to all employees; it’s about creating an environment where everyone understands and trusts the company’s financial health. This article will explore why transparent company finances are so essential in a teal organization and how nexocode approaches financial transparency to build trust and strengthen our culture.

What Is Financial Transparency?

Financial transparency is the practice of making financial information available to all employees. This includes things like financial statements, budgets, and investment plans. It also extends to sharing information about how money is being spent within the company.

In a company with a transparent financial policy, employees know precisely how much money the company earns and spends and what the cash flow looks like. This type of financial transparency builds trust between employees and management or company owners because it gives everyone a clear understanding of the company’s financial situation.

Why Is Financial Transparency Essential in a Teal Organization?

Teal organizations are built on trust, self-management, and decentralization. Financial transparency is essential in these types of organizations because it allows everyone to understand the company’s financial health clearly. When people feel like they know how the company is doing financially, they are more likely to trust the leadership team and feel invested in its success.

Transparency Is the Core of the Teal Paradigm

Teal organizations invest in transparency when it comes to communication, feedback, strategic decisions, and, of course, financial information. The teal paradigm is built on the idea that everyone in the company should have a voice and be able to contribute to decision-making. This includes financial decisions. The teal paradigm is based on the idea that everyone in the organization should have access to the same information so that they can make informed decisions.

Sharing company finances with employees involves trust, yet another pillar of a teal company culture. When financial information is open and accessible to all, it builds trust and creates a sense of ownership among employees.

How Does nexocode Approach Financial Transparency in Our Day-To-Day Operations

nexocode is a teal organization, and for us, financial transparency is a top priority. We believe that it’s essential to create a healthy company culture and build trust within our team. We have an open book policy when it comes to finances, and we approach it in a few different ways:

Transparent Financial Reporting

Every month, we share a financial report with the entire team. This report includes things like our monthly revenue, expenses, and profit/loss. We also share information about how we’re investing our money and our plans for the future.

In the meantime, every employee has access to project budgets, their current burndown rates, and the hourly rates we have with each client. This way, everyone can see how we’re doing financially in each project and what the future incomes would look like.

Open Salaries Program

To provide fully transparent financial reports, you need to highlight all the financial figures of your organization, including salaries and incentives. This is where our Open Salaries Program comes in.

At nexocode, we have open salaries. Each employee can see how much their teammates are being paid. We believe that this creates a sense of fairness and equality within the team. It also allows people to have honest conversations about money and compensation.

Sales and New Business

We believe that financial transparency also extends to the sales process. That’s why we share information about our sales pipeline and new business opportunities with the entire team. We want everyone to be aware of the incoming leads and the contracts under negotiation and feel like they’re a part of our success.

Purchasing Decisions and Large Investments

Every member can make a binding decision in a teal organization, including purchasing and investments.

At nexocode, we have a slightly different approach. We do not believe in spending budgets (that some teams feel they just need to spend before the end of the year) or limits per employee. Instead, we believe that our employees know best how to spend our money, giving them full authority to make purchasing decisions. Of course, this approach requires a lot of trust, which is why financial transparency is so important.

We also believe that our collective intelligence is more significant than any individual’s, and we always value communication, so we encourage our team to make decisions together. This is why at nexocode, we have introduced a peer advice process for streamlined decision-making. You don’t need to go to higher management to approve your spending decision, as we don’t even have managers above.

Instead, you need to find at least two colleagues who either have the know-how to support (or critique) your idea or will be impacted by your decision. Offline or online, you gather with your advisors to discuss and evaluate the spending proposal. After that, as the owner of the original idea, you make an informed purchasing decision based on the collective intelligence gathered through the advice process on how to proceed with your proposal. Once a decision is made, it is essential to share it openly with the whole company. This makes the purchasing process transparent so that everyone understands the rationale for each spending decision and is based on self-management for ownership.

Of course, for large investments or spending decisions that will significantly impact the company’s financial health, we promote discussion with the entire team. The consulting process is definitely longer in these cases, but we believe it’s worth it to ensure that everyone is on board with the decision.

Budgeting and Controlling Company Finances

In a teal organization, financial transparency also extends to the budgeting process. We believe that everyone should be aware of the company’s financial situation and feel like they’re a part of the budgeting process.

Instead of predicting and controlling, our teal organization tries as much as possible to sense and respond to the current environment. We often pivot our budgeting decisions which are our response to what is happening around us. There is no hierarchy, so there is no top-down approach to our targets. We typically work with simplified budgets (e.g., for marketing spending). Establishing a budget aims to ensure that resources are coordinated, that cash flow is healthy, and that financial obligations and liabilities are met.

What Are the Benefits of Financial Transparency in a Teal Organization?

Financial transparency is a key pillar of the teal paradigm, and it has several benefits, including:

Supporting Self Management

In a teal organization, financial transparency is key to supporting self-management. It allows everyone in the organization to access information that was previously only available to senior management. By sharing financial statements openly, everyone has a clear understanding of the company’s financial situation and can make informed decisions about how to best use company resources.

Employee Engagement and Ownership

Financial transparency also promotes employee engagement and ownership. When everyone has access to financial reporting and a say in how company resources are used, they are more likely to feel invested in the company’s success.

Utilizing Collective Intelligence and Building Wholeness

Financial transparency also encourages collective intelligence by promoting discussion and decision-making within teams. This ensures that everyone is on board with budgeting and purchasing decisions and that these decisions are based on input from the entire team.

Fostering Trust

Communicating frankly about company finances is also essential for fostering trust within the organization. By sharing financial reports openly, employees feel like they can trust their colleagues and that they are working towards collective goals.

Income From Company Profits

At nexocode, our employees also have another benefit of having access to company financial figures, an additional income from company profits. Every employee has a share in the company profits, which are calculated and distributed quarterly. This allows everyone to benefit financially from the company’s success and promotes a culture of appreciation for each position and work each employee is doing for the benefit of the whole company.

Looking Beyond the Money - the Evolutionary Purpose

Understanding that our business is doing good and making significant profits can help team members make the shift from thinking about money as the primary motivator to something more evolutionary. In a teal organization, everyone is focused on the company’s evolutionary purpose and how they can contribute to its success. This creates a powerful deeper sense of meaning and purpose that goes beyond financial gain.

How Can Financial Transparency Help Your Company Grow?

There are many benefits of an open financial policy, but one of the most important is that it can help your company grow. When everyone in the organization understands the company’s financial situation and feels like they’re a part of the budgeting process, they’re more likely to be engaged and invested in the company’s success. Transparent financials can also encourage human consciousness by promoting discussion and decision-making within teams. This ensures that everyone is on board with budgeting and purchasing decisions and that these decisions are based on input from the entire team. Lastly, financial transparency fosters trust and peer relationships within the organization by communicating frankly about company finances. When employees feel like they can trust their colleagues, they’re more likely to work together towards collective goals.

Final Thoughts

When financial transparency is combined with other teal practices, such as self-management and peer advice, it can help create a strong foundation for a thriving organization. Becoming a teal organization is a long way that not every company is ready to take. It’s a significant shift in structure and daily company practices that requires a lot of trust, transparency, and self-management. But the benefits are worth it. Teal organizations are more engaged, have a stronger sense of purpose, and can encourage peers to make better decisions.

If you’re thinking about switching to a teal organization, financial transparency should be at the top of your list. And if you’re looking to create a more transparent workplace, consider implementing some or all of these financial transparency practices in your organization.

If you’re looking for a company that values transparency and encourages personal development, nexocode might be the perfect place for you. We are always looking for talented individuals to join our self-managed teams, so head over to our careers page to see open positions. We would love to hear from you if you have any questions about our approach to financial transparency or teal organizations. Thanks for reading!