We make all sorts of assumptions about how much employees understand about our business and they make all sorts of assumptions about where the money is going that aren’t based on reality. I’d say it is time for some real conversations. Pull back the curtain.
For example, how much do your team members think you earn?
Many employee surveys have been done of the incomes of company owners. Guess what? Most employees think you take home over 50% of the revenue of the company. Wow! Why would they think that?
What do you tell your employees about how the company makes money? When you use words like profits, cost of goods, billing rates, admin costs, etc. does anyone know what you mean?
In my experience coaching owners and Presidents, I have found some who often don’t even scan their monthly profit and loss statements, much less carefully analyze where their money is going. If that is true of the people at the top, what must it be like for the employees?
When management actually shows the team what happens to a dollar of income-how much goes to purchases and salaries and rent and computers, etc.-employees are SHOCKED at how little goes to profit. When you explain how much profit is needed to grow the business, do Research & Development, pay bonuses, and that without profit those things aren’t happening, people begin to get the picture.
If employees knew the effect of a 5% discount, they might not push to lower the price just a little more to close that deal. If people were aware of the actual cost of electricity they might turn the machine off, or computers, or the lights.
When you don’t share financial information, your employees don’t believe that they have a stake in the outcome. Management sets the culture on this. It makes sense to me that if I can see how what I do makes a difference, I will try to move the curve towards a more successful outcome -even if you don’t directly reward me for my efforts. I want to have a good and a secure job. And, mostly, I like the people who I work with.
So, if you want to get buy-in from your team, you may want to discuss how the company makes and spends money. Your CFO/Controller could make a chart for you to use of where each dollar goes, OR you could have the CFO/Controller explain it to the staff. You would get to sit in the back and watch. And, figure out the next conversation you need to have that engages the people who make your success happen.