BUILD A CULTURE OF TRUST: SHARING FINANCIALS WITH YOUR TEAM
The open sharing of company financials can still be a touchy subject for many leaders. For years, it was generally accepted that a company should have closed books. No one questioned a company’s success if they were able to please investors, and employees certainly did not need to have access to closed door financial forecasting and investor reports.
Today, we are beginning to think about these things differently. With companies like Buffer leading the way to total financial transparency, it’s becoming clear that corporate success is measured differently today than it was 10 years ago. Organizations are not only expected to please their investors, but their other stakeholders as well.
Things like transparency, openness, and active engagement are not only highly valued, but expected. We now question the motives behind the levels of secrecy that were once widely accepted as the way it’s always been done.
Still, many privately held companies today do not, and have no intention of, sharing their financials or other closely held information in any form with their staff.
My question to the leaders of these organizations is: why?
THREE ARGUMENTS AGAINST FINANCIAL TRANSPARENCY (AND WHY THEY’RE WRONG)
Over the years, I’ve heard many leaders try and explain why they are not opening up their books to their employees. Here are a few:
“Our People Wouldn’t Understand.”
This may be true, at least at first. Many employees out there (and some business leaders too!) are not adept at understanding simple company performance metrics, mostly because they’ve never been afforded the opportunity to see them and learn. Sharing financial information gives your employees the opportunity to develop their business acumen.
By learning how to read and interpret financial information related to the company, they will develop their professional repertoire while developing a deeper understanding and appreciation of how their day-to-day actions impact the bigger picture. By cascading financial discussions throughout the organization, you give your people the information they need to take ownership in activities such as budgeting and expenditure control.
“I have also seen that it makes conversations about difficult company decisions easier. Without a financial presentation to show a significant change in revenues, for example, and how the company decision helps adapt to those changes across the organization, employees may find it difficult to embrace those kinds of actions.”
“Our People Wouldn’t Care.”
Let me ask you this: Do your employees care how much they’re getting paid? Do your employees care whether or not they’ll have a job in six months? Showing them how every dollar is allocated helps employees understand the real context in which the organization is operating and how they can individually contribute to the organization’s success.
Without knowing how much money the company is making and how it’s being managed, the only thing they know is how much they are making in relation to your last big sale, or the last public revenue announcement. In this context, it’s easy for your employees to feel undervalued.
The best way to combat this is to make your financial information openly available to them.
“Sharing Information Means We Lose Power.”
While it may seem counterintuitive at first, sharing financial information openly and honestly with your employees actually helps you gain power. An open and honest dialogue around financials creates increased transparency and helps build trust.
Rather than viewing this sharing of information as losing power, I’ve found that employees who understand the financial performance of their companies tend to begin to take much more ownership of their day-to-day behaviors and decisions. Rather than losing power, these organizations become more powerful.
The fact is, your employees will likely find out about the information anyway. Whether through gossip, social media, or through sites like Glassdoor, who recently found that 98% of job seekers say it’s important to work for a company that embraces transparency. You may as well openly share it with them first, before they hear it secondhand.
BUILDING A CULTURE OF TRUST
Whether your organization shares financial information with all staff or not, and to what level of detail you share information, is your decision. Know, however, that what you do sends clear messages to the people in your company about what you think of them.
If your end goal is increased engagement, better customer service, and higher performance, you have to start by empowering your people with the information and tools they need to succeed. If you want your employees to trust you, show them that you can be trusted. And when it comes to financials, the messages you send by hiding information are likely not doing you any favors.