We are all in the business of making money.
Ask your staff how you make money with your business and you might be surprised to learn that very few, in fact recent studies have shown that less that 5% of employees actually know how their employer makes money.
I suggested to a coaching client that she share some financial figures with her team. She swiftly said “but its none of their business how I manage my money”.
I knew exactly what she was thinking as I went through it myself a couple of years ago. We went through a strange trading cycle with one of our businesses.
Initially, things in the business were going great – the sales were growing month on month, we were in a position to carry a little extra labour and say yes to most reasonable requests.
Then we got hit by a down turn in sales due to a competitor opening on our door step. We moved from a making money footing to finding all the ways to cut costs and stay afloat.
As fortune would have it, the competitor went out of business and our sales bounced back up.
There was no way we were going to operate with the same largesse that we did in the early days. I needed my team to get more connected to the impact their performance was having on the profit. This meant being willing to sit with key staff and giving them an insight into how we actually made money in the business.
I was struck by my initial resistance to sharing this financial information even with my highly trusted management team. Everyone I spoke to advised against it saying things like “you don’t want your staff to know how much money you are making” “they’ll get angry and say they’re not being paid enough” ”what if they tell other people” and “they’ll panic and leave”
Then I asked myself the obvious question – even if all of these negative things happened what is the worst thing that would happen? And, the answer was nothing that I couldn’t handle.
On the positive side, I believed that by sharing this information the managerial staff would align the employees with our business goals and empower the managers to make more knowledgeable spending decisions. I also had been working on creating a workplace culture that encouraged the buy in of staff and I believed this was one way to walk that talk.
So out came the financials and we started a regular conversation about the areas the staff could really influence financial performance. We drew up various scenarios, set budgets and trialed new sales strategies.
For our staff it was the first time they had seen the back of house workings of a business and I was surprised at how quickly they integrated this new knowledge into their roles. For example, the ordering became more thoughtful and planned, as did the use of differently waged staff.
We’ve been doing this for 18 months now and none of the fear scenarios came to pass. In fact, I’ve seen managers step up to a level above their pay grade as they learn to understand the complexity of running a business.
They know that although sales figures are important, the underlying financial performance is much more significant. They participate in finding solutions and they feel empowered to act.
There are a few things to consider before you share your financials:
· Decide how much you want to share
· Decide how frequently you want to share it
· Make sure it’s in a format that can be easily read and understood
· Decide how you want to share your information
· Use other measurements instead of dollars e.g. percentages
· Decide what you need to tell in order to get the result you want
· Enforce confidentiality arrangements