Opening the books
Should you share your business’ financial performance with employees?
There are two schools of thought when it comes to “open book management” – the decision to increase transparency by sharing your company’s financials with your employees.
On the one hand, allowing staff to know the company’s revenue, profit, and projected sales can increase engagement, inspiring them to work harder and achieve more. On the other hand, too much information can overwhelm staff – and may even pose a serious risk for your business, given the sensitive nature of financial data.
Companies who choose financial transparency say the main benefit is the positive upswing in morale – notably, improved loyalty, trust, and dedication to overall job performance.
Your staff become stakeholders
When workers are able to make the link between the company ledger and their own salaries and job security, their perspective shifts.
Informed employees are more motivated to achieve, and more eager to work together as a team to achieve targets driven by the numbers – whether management decides the focus should be to increase sales, achieve higher conversion rates, or implement strategies to improve profit margins.
When your staff can connect what they do at the office each day to a measurable outcome their work becomes more meaningful. They know their contributions matter and that their efforts have a quantifiable impact on the company’s success. As they see the numbers improve quarter after quarter, the importance of their individual and collective input is reinforced.
Creative collaboration increases
In addition to inspiring employees to work harder, colleagues tend to work together more effectively when open discussions about the books are part of the culture.
Increased commitment and engagement can nurture a unified “hive mind”, keen to discover creative solutions to challenges that arise – and to brainstorm ways to make the most of new opportunities.
Improved financial literacy
Some business owners believe there’s little advantage to sharing financial reports with their employees because they may be complex and difficult to understand. Others see an opportunity to empower their staff with training in basic business financials – a skill that can come in useful when employees are promoted to management positions, or support them as they take on new responsibilities.
Your continued positive relationship with your employees has a lot to do with the degree to which you create a culture of trust and transparency.
When your staff can see, on paper, that there’s good reason to feel optimistic about the future, you’ll have less reasons to worry about morale – or retaining your best talent.
Want to chat about your business? Please get in touch to arrange a call.