Family businesses have a reputation for not always being forthcoming with company information. Many companies believe they have good reason, too, and that holding back information from the public can give them a competitive edge. Yet family business experts contend that secretive companies are less effective, and that sharing information improves performance.

Here are six steps family businesses can take to be more transparent with their employees, the public and within the family.

1. Share an annual report with employees: One 500-employee family business CEO shares a public-company-style annual report with employees, suppliers and customers. The CEO told The Family Business Consulting Group, “I think competitors are more distracted after reading our financial statements. They become even more focused on where we were last year than where we are headed. But more important, disclosure sharpens us, intensifies our competitiveness, makes us all feel part of a team and builds confidence and trust in the organization. Besides, our suppliers and distributors say they appreciate it. They feel stronger about us. I believe them.”
2. Build a leadership team: As an organization grows in size and revenue, it can be difficult for the leader of a family business to stay on top of every issue that comes up. Leadership developer Halley Bock explains in Seattle Business magazine that it’s important to enlist the perspectives of a few people outside of the family who can provide different vantage points on the business. “Aside from genetics, diversity of thought, position, tenure and strengths are essential components to building a team that will foster an ‘open system,’” she writes.
3. Don’t assume knowledge: Family business leaders can do harm by making assumptions about what other family members think about the business or how it should be run. Family business experts Joshua Nacht and Andrew Pitcairn explain in Family Business Magazine that to define a vision and strengthen multi-generational business-family relationships, family leaders should ask their stakeholders three important questions: why, what and how. “Assumptions degrade trust and disenfranchise family members, potentially causing them to withdraw from the family. Good questions, on the other hand, build trust, engage family members and seek diverse perspectives,” they wrote.
4. Involve younger generations: Family business leaders need to teach younger family members how to run the business. Younger generations need to immerse themselves in the business to understand the business’ inner workings so they can carry it into the future, explains consultant Bettie Johnson of the Business Development Bank of Canada. They also might have a better understanding of new technology and systems that can improve business operations. “Parents often control things and don’t want to share information,” Johnson says. “The younger generations end up lacking the knowledge they need to understand how the business is doing and what’s involved in running it.”
5. Form an advisory board: Advisory boards can serve as an objective third-party source to help guide family business decisions. Members can provide outside expertise from other areas and act as a liaison to help resolve disputes. Successful boards typically include three to seven members, depending on the needs of the business. The company’s leadership of board of directors can choose the advisory board members.
6. Conduct family meetings: Outside of the confines of board meetings, family members who are key to the business need to meet regularly to hash out any issues. Bock suggests that smaller companies hold regular family meetings where each member actively involved in the business is represented. Family business leaders often choose to do this on a monthly basis. Companies that employ many family members can also form a “Family Council” to make decisions on any issues that come up in these meetings. “As family members, you are cut from the same cloth, and the germ of brilliance that was shared by the founding member(s) will reside in the next generation as well. That rich soil must be cultivated,” she writes.