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Why Having an 'Open-Door' Policy Is Imperative for a Scaling Company As a startup grows into a company, maintaining open communication will help ensure trust – a necessity for employee engagement, productivity and innovation.

By Jake Gibson

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

When you take the leap into entrepreneurship and launch a startup, something weird is going to happen right around the 20 to 30 employees mark: People are going to start looking at you as "the boss."

You'll know you've reached that crossover point when every random comment is treated as if it's written in stone. Make an offhand remark and employees will march away and dedicate days of effort toward your half-baked thought.

It was a strange moment for NerdWallet co-founder Tim Chen and I when we realized everything we said carried more weight. That's when we knew we needed consistent processes to carry the spirit of informal communications across a workforce that has doubled in size in recent months and looks to double again before the year is out. Easier said than done.

Open communication is a concept that been around since there have been companies. There isn't a company or manager on the planet today that doesn't claim to have an open-door policy, even as office doors have given way to the open, collaborative concept of most startups. That said, it's easy to descend into an "all-together-alone" treadmill of staring at computer terminals and communicating by e-mail or instant messenger to a colleague two seats away. And these habits can demoralize company culture.

Study after study shows that communications is the key toward building greater employee engagement, productivity and innovation. Yet you'll find it's a minefield trying to reach that goal in small, rapidly growing companies. The key thing is this: Open communication really is synonymous with trust — creating trust among colleagues and building confidence to share without fear of repercussions.

How to achieve that? Here are the lessons we've learned in trying to scale a company built on open communications:

Open communication isn't natural. We are selective with information we share outside close friends and family. Our instinct is to play favorites with information -- sharing more with people you like and trust and being guarded when outsiders enter the room. That predilection can't work as a manager of a booming startup. "Strangers," in the form of new hires, are coming in the door every week.

Related: Do This, Don't Do That: Why You Should Avoid Mixed Messages at Work

Fostering open communications at your startup takes work and deliberate action. It's an irony that you have to rethink how you communicate to preserve the informal "esprit de corps" of early startup days and protect the spirit of free-flowing innovation as you scale. But it's got to be done.

Uneven information distribution kills morale. If information distribution is pocketed among clusters of employees, it undercuts an atmosphere of open sharing and creates a separate social class within the office. Those "who know" vs. "those who don't" can create tension.

It doesn't matter if the information is valuable or just small talk. Not including everyone creates vulnerability where none exists. And rather than scaling your business, your uneven communications flow is scaling uncertainty among the staff.

What do people want to know? Ask them. It is important to figure out what kind of information employees want relayed to them. The easiest way to figure this out is ask.

As our business grew, people complained about not being in the know. Poor communication was high on the list of feedback we got on internal-culture surveys. So we compensated by over communicating. The result? People complained more. Turns out, people weren't begging to hear a blow-by-blow replay of everything we discussed in our management meetings. Mostly, people wanted to know who are we hiring and why, as well as what everyone is working on and why.

Beware of "radical transparency." As your pendulum swings from under communication to over communication, one idea that may be seductive is joining the radical transparency bandwagon. There's growing buzz about companies like Buffer, which is making waves by publicly sharing the salary of each employee and handing out Jawbone wristbands to track exercise and sleep patterns. I've talked to several small firms who have adopted radical transparency tenets such cc:ing all employees on email, so everyone knows what other employees are working on.

In my opinion, that's nuts. Radical transparency can't succeed for the simple reason that it can't scale. The information overload would produce a dragon eating its own tail as it attempts to grow. And let's be honest, tracking employee fitness and sleep patterns is just plain creepy.

Related: In This Smartphone-Obsessed World, He Who Communicates Best With His Customer Wins

Employees need to understand the "why' of their jobs. One thing as a company founder you can't communicate enough is the vision and mission of the compan, and how each person fits in that mission. Processes like Objectives and Key Results (OKRs) help to reinforce that, but it must be a refrain at every level, from one-on-one chats to town hall meetings.

Studies show that more than compensation or great perks, employees desire meaning and purpose in their work. It's your job to give that to them.

Proactive managers trump process. We've instituted a host of tools to distill information: We bookend our weeks with all-hands meetings on Monday and Fireside chats with founders on Friday, we have 360-degree management feedback shared with direct reports, summaries of weekly management meetings and public display of employee OKRs.

But those things become wooden unless building relationships and trust is a daily, proactive goal. For example, all managers now have set "office hours" for one-on-one talks with employees. At first, nobody showed up. Rather than throw up their hands and count it as a failed initiative, the management staff proactively pulled people aside to help create the habit of one-on-one meetings.

Be honest with what you know and don't know. Things change fast in the startup world. What's true today may not be true tomorrow.

That can be a wild ride for employees. Open communications provides a safety bar for the roller coaster. And if you've built trust, they'll stay on the ride through all the hairpin turns that come.

Related: The One Word Leaders Should Stop Using

Jake Gibson

Co-founder and Advisor of NerdWallet

Jake Gibson is the co-founder and advisor of NerdWallet, a startup focused on offering price-comparison tools for financial products. Prior to joining the company, Gibson did a long stint at JPMorgan Chase, where he traded derivatives and managed new automated trading technologies.

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