Sharing The Numbers: The Good, The Bad And The Ugly
Some years ago an issue for discussion was brought up in an Advisory Board meeting I was facilitating.
The topic was phrased as, “How do I turn employees into having an ownership mindset?”
This same topic has been cycled through every few years as owners are in constant search to increase employee engagement.
One major U.S. bank tried to jump start the process by granting shares of stock to every employee.
What the question really boils down to is “how much financial information should I share with my employees to get them to care about my company?”
Public companies are required by law to share all their numbers. Private companies cover the spectrum from not sharing anything to sharing everything, including the salary and dividends the owner earns.
My observation is that companies that share financial information are more focused and have a higher percentage of engaged employees. This is because there are usually rewards (financial and otherwise) tied directly to company financial results.
I believe that when loyal, hardworking, dedicated and focused employees know the score and have the ability to positively influence it for their employer, many do step up for the opportunity.
Those employees that don’t, or won’t, are fairly easy to recognize and can be redeployed elsewhere.
That’s the good news.
The bad news, the scary news, is that more financial information is already being shared than you might think.
First, your employees know a lot more than you think. An intelligent employee can piece together approximate revenue figures, estimate expenses and offer up a range on profits just by doing some online research, and by asking a couple of not so innocent questions.
Second, your competition knows your numbers despite your attempts to keep financial data behind closed doors.
Consider this: one owner thought that his company’s financial information was being leaked by another owner on his Advisory Board. The owner had received a call from a business broker who provided information thought to be known only inside the company.
It just so happens that the internal company finance guy was providing regular updates to Dunn & Bradstreet.
And who regularly pulled the company credit report? Not just the competition, but a business broker looking for an angle to approach the owner to encourage getting the listing.
Third, if people jump around in the same industry, there are very few things being kept under wraps, despite the best efforts of attorneys to keep data (trade secrets) confidential.
Fourth, sales people usually have a pretty good idea as to what is happening because they are usually compensated for success in improving key metrics.
It does not take much for a salesperson to take a report, do some quick calculations, and determine how their employer is doing, or how their next employer is doing.
Fifth, accounting people know what is happening before the owner does.
Those quiet, focused clerks surrounded by stacks of paper sitting in front of a computer screen all day know what is, or is not happening; who is, and is not producing; who is paid what, how much the rent is, how much is going out for meals, and such.
So, what is the ugly?
Anyone of the “bad” items can turn ugly, perhaps fatally impacting the company.
This short list needs to be addressed to protect the financial integrity of your firm.
But I don’t believe that any owner, despite their best intentions, is ever going to get employees engaged beyond putting in time for a paycheck unless there is something bigger to share.
It’s one thing to provide incentives to sales people, but if nothing is offered for other employees, they will resent what they are not being offered. This will simply accelerate disengagement and anger.
In an age of no or low raises; rising energy and food costs and entitlement attitudes, it makes sense to engage as many employees as possible.
This will require uncovering some part of the company financials, if only in percentages. How this gets done is ultimately left the owner of the company.