Opening the Books to Your Staff

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At some point, every business manager must decide how much financial information to share with the staff. To be sure, there are different schools of thought on this topic, which leads to different conclusions. My experience has been that more disclosure is better, and there are long-term benefits to working toward full disclosure.

There are several common reasons why managers rationalize not sharing financial information with their employees.

It’s none of their business.” This one barely deserves a response and is probably a symptom of deeper issues. Of course, it’s their business. Your employees depend on your company – and their jobs – for their livelihood. They likely devote half (or more) of their awake time to your business. If you don’t feel like your employees are working toward your business goals, that deserves immediate attention.

They don’t really care.” On the surface, this may have some truth to it, particularly if you haven’t shared financial information in the past. Perhaps your employees only care about what’s in their paychecks, which again, is a symptom of a deeper issue. In this case, it may be a lack of education, which leads to the next excuse…

They won’t understand it, anyway.” Your employees may not be accountants, but they should still understand the key performance indicators of your business. With a little more education, they can understand “the bottom line.” In addition to leading to more engaged employees who will share your goals, it will lead to more mature employees who will more likely develop into your future leaders.

If they know how much money we’re making, they’ll think we’re not paying them enough.” This one’s easy. Whatever profit you’re making, your employees think you’re making more than that. End of story. And chances are, they don’t think you’re paying them enough, either way. That’s human nature, but it’s easier to manage those feelings with openness and trust.

If they know how much money we’re losing, they’ll jump ship.” Employees rarely respond in this manner. Most of us tend to be eternal optimists as long as we’re getting paid biweekly. Once again, education and trust are the glue that will keep your staff intact.

Sharing your financial information with your staff is not as simple as just handing out your financial statements. It’s a culture change that requires openness, education, and the building of trust over time. And if you want to maximize your business results, your efforts will be rewarded by having everyone working toward the same goals.

 

Would you like to improve your business results by leveraging the enormous, unharnessed power of your employees? Contact Counterpart CFO for a free, no obligation consultation, and we’ll identify specific ways we can help you.

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