Some years ago, I hired an attorney to represent me on a small matter. He was young and very successful, expanding quickly and running TV commercials promoting his exploding law practice.
After we agreed to work together, it came time to pay him his fee. At that point, his elderly father came in to his office to collect my payment. I was a little perplexed, since there were dozens of employees just outside his door. The attorney looked at me and said, “What? You don’t think I’m stupid enough to actually trust these people?” Needless to say, his success was short-lived.
Many small-business owners are anxious when it comes to sharing their company's financial information with their employees. But failing to share the right amount of information with them can kill your business—it sends the message that you don’t trust them. Without trust, you can’t have loyalty; without loyalty, every person is out for himself or herself, which poisons the culture of a company and can lead to business failure.
This doesn’t mean your janitor needs to know how much you and your spouse like to spend on date night. Rather, it’s about sharing the right amount of information at the right time with the right people. Tell your employees too little, and it breeds mistrust. Tell them too much, and you could have bigger problems: During prosperous times, they'll feel underpaid, and during a slump in the market, they'll think its time to jump ship.
The following three tips can help you share the right amount of information with your staff.
1. Find Balance Within Your Comfort Zone
Unlike other areas of business accounting and finance, there isn’t a specific set of rules that work for all companies when it comes to financial openness. Each situation is unique, so you have to find the proper balance that works best for your business.
The first thing to do is identify your comfort zone. Putting aside any business benefits, ask yourself how much you're willing to share. Are you a private person who would feel uncomfortable if your employees knew your salary and the company’s profits? Or would you be OK if they knew how much you made and what your sales were last quarter? Whatever you do, don’t pressure yourself to go beyond your personal limits. If you do, then the accompanying apprehension will send mixed messages to your employees about your commitment to being open.
2. Fine Tune Your Company’s Culture
Once you establish your personal boundaries, start getting your employees ready by creating a culture of openness. Not all company cultures are healthy or based on open communications. Evaluate your company’s existing culture, and establish a plan over the next three to six months where you start engaging and gradually sharing more information. Encourage employees to be more open with each other, too. Add a component to compensation that rewards openness.
3. Tell Them the “Why”
Finally, share with them your vision for openness and the specific goals you hope to achieve. Sharing for sharing’s sake is a kind way to live, but it only works in business if you tie it to specific goals. The types of goals you and your employees can strive to achieve together include increasing revenue, lowering production costs, setting higher margins, creating faster turnaround times on projects and expanding your customer base. By sharing essential financial information, your employees are now better prepared to help you achieve these goals.
By providing more information and tying this to specific business goals, you're aligning everyone’s interests and setting your business on the path to long-term success. Why wait? Start today.
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