Should you share financials with your employees?

https://www.youtube.com/watch?v=ROgUTh0_Whk

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Do you share your financial information with your employees? This is Judi Otton at GrowthCast and I’m going to give you some reasons today why I think you should. First of all when employees understand how your business works as a whole, how businesses work in general, they are much more likely to help come up with ways to improve the operations. They may come up with some very innovative ideas to improve performance that you wouldn’t have thought of because you’re not on the front lines or on the factory floor. They’ll also feel more engaged and more part of the team and much more empowered. I have one client where almost all of his employees are always looking for ways to improve the bottom line. It’s a beautiful thing to see. The second reason you might want to think about it is improved accountability, both for the leadership team and for the employees. When you have a set of goals out there, specifically financial goals, you’re all going to be pulling in the same direction to achieve them. And finally, this is interesting, there have been a few studies that have shown that companies that share their financial information widely performed better. Sales are a point or two higher than they would have been otherwise. And you can see now that with all the brains working, your profits are much likely to be higher. Now, there are some reasons that you don’t want to do this, and I understand you’re worried that your employees won’t understand them. You need to educate them. You need to instill some financial literacy in your organization. You may be afraid that the employees are going to react to the results. Think that either you’re taking home all those profits instead of paying down debt or reinvesting as likely you are doing. Or if the the data isn’t good that your company is going under. You need to be able to explain how your funding the business and what the plan is to turn it around. If you’re a startup, that’s not yet profitable, you’re probably also going to want to share things like burn rate and runway. So the employees are are aware of that as well. And finally, you may be worried that they may be shared inappropriately. This one, I suggest you take head on and say ‘we’re sharing this with you because we trust you. This is confidential information. Please treat it accordingly.’ And that also empowers employees and makes them feel like they’re valuable and trusted because they are, I’m really, really interested to hear your take on this. So please let’s have a conversation. I’d love to hear your experiences, your opinions on this issue. So please add something to the comments and I’ll be back next week with your Fiscal Fitness Tip of the Week.