Do I share financial information?
Dear Ken Keller,
I was recently was able to provide raises for employees. I heard grumbling that the raises weren’t enough. Sometimes I have to hold my paycheck so my employees are able to cash theirs. Just how much financial information should I share with my employees? I’m feeling a bit resentful.
You are not obligated to share any financial information, but when you don’t say anything about how your company is doing, the rumor mill will run wild and be accepted as the truth because you haven’t done anything to counter the impression employees have created, good or bad.
Go to your bank and get rolls of pennies for every manager. Privately, remove two or three pennies from several rolls and re-seal them. Gather the team and give everyone a roll; have each one dump the pennies out in front of them. Tell them, this money represents one dollar of revenue.
Then, as you share and explain the percentages of actual business expenses, have them count out the pennies them from their pile. Start with salaries, followed by taxes, rent, utilities, benefits (including vacation, holidays and insurance) and include technology and office supplies.
Don’t rush through this. Use a white board or flip chart to keep track; let it sink in how large a percentage each item is.
At this point, tell them to count out how much has been spent so far, and then explain to them that this is the amount of money that the company spends before opening for business.
You should emphasize that a large percentage of the revenue dollars are being spent to have people on the payroll and yet, not one penny of revenue has actually been generated.
Proceed through the remaining expenses. Make this a teaching moment so that the management team gets the feel of what it is like to have to make a decision to pay this bill and not another and what the impact of not paying a bill on time might have on the company.
What your team will discover is that there are very few, if any, pennies little left over after paying for all the expenses. Whatever is left over has to be reinvested when a job has to be redone due to poor quality, replace worn out equipment or to give people raises.
This exercise should lead into a conversation about how everyone can help by reducing unnecessary expenses; taking care of equipment to last longer and by being more efficient.
Through the senses of seeing, touching and hearing, you are explaining the financial realities of your business.
Everyone will likely end up with less than five cents in their stack. Those who came up short at the end of the exercise will say something like “I’m short some pennies.”
You explain it by saying “That is what happens when a customer doesn’t pay our bill. We have to eat the loss. Now what will YOU do?”
Dear Ken Keller:
I want to know you thoughts on having weekly staff meetings.
I’ve never been a big fan of staff meetings only because the purpose of having them is never clearly established.
Is to educate people? Inform people? Make a decision? Announce a decision? Address a challenge of opportunity? Or, a combination of all three?
Is there a published agenda? Does someone keep the conversation focused to avoid sidebars?
Is there a time-keeper to keep the meeting from extending for hours?
Does someone issue the follow-up action items with clearly assigned owners with deadlines?
If you can address these issues before you decide to have a meeting you’ll know if having it is necessary.