Do you share your private financial business information with your employees?

Many business owners keep their financial performance information close to their chest. They somehow believe that gross revenues, profitability, etc. are deep secrets not to be shared with anyone, especially not employees.

I am not certain why this is, as I cannot fathom the issues or the problems with sharing this information and I can only see benefits with sharing it with their employees if done in a meaningful way and for specific reasons.

For example, if we want to increase sales revenue don’t we have to know were we are now and thus figure out what we have to do to beat the high water mark?

If we are measuring  costs and expenses and attempting to control thee factors, don’t we have to share these numbers to measure success?

In production areas don’t we have to have historical production numbers to know how we are performing? Same with sales.

Some say that these examples are different and are ok because they are isolated aspects of the business and do not show the entire story so no employee will know how we are performing overall  with just a small sliver of information.

Apparently its the whole picture that business owners do not want to reveal, and really they are afraid to reveal to their employees how much profit they are making or how much money the owner is taking home. Fearing that envy and greed will upset them and create unhappy employees,  employees who want more and envy the owner who is making  too much.

In the end most employees know all there is to know including the owners take home pay because it is near impossible to keep information secret in a small business. But what is the real issue here?

Public companies disclose everything to the entire world to see and read and analyse and judge and make comment on, its public information for all to see.

Government agencies and employees which is a huge percentage of the market place reveal all and make public every financial aspect of the business of running the government, so in the end its only small business owners that for some reason believes it is not in their best interests to reveal this highly confidential secret information.

Somehow small business owners believe that such information if revealed is detrimental to their well being..somehow. If you asked  small business owners why this is so, I am not certain they would be able to answer this question as I am not certain there is a good answer that makes sense, other then its none of anyones business…which may be an acceptable answer. After all, it is private business.

Some believe that such information in the hands of their competitors will be detrimental to their competitive position. Again I hear the words but fail to see the reasons.

How can such knowledge hurt the business in the market place?

On the other hand, I believe that if a company is well run and making profits the employees should be taken care of appropriately and all will be proud and satisfied with the groups accomplishments and will feel secure and will follow the leader as he must know what he is doing in order to be as successful as the numbers may say.

Frankly its a report card and if the business does well its a higher grade. Additionally, aside from a sense of accomplishment and pride, the overall profitability is a benchmark of success that the employee group is entitled to know as they contribute to it and this sort of knowledge is beneficial as it includes them in the well being of the entire community.

Its a group success and even though the individual employees may not personally benefit any more then their receiving their paycheck they are still proud to be part of a successful organization.

On the other hand it is entirely possible that the owner has created various benchmarks for incentive based rewards and not only are the individual department numbers relevant but the final score is the ultimate benchmark, the gross revenue and profitability numbers, and may be an excellent measuring stick for some aspect of the  performance of some key managerial individuals and thus is an important number to share for that purpose.

In the end however I believe all the negativity regarding revealing personal revenue numbers of closely held small business is way overblown and does nothing other then to create mistrust between the owner and his team, while sharing these numbers demonstrates trust and respect as everyone on board played a role in producing this success and aught to know the results of their effort and take pride in the success.

As well a quality employee who played an important role in this success aught to be appropriately rewarded and thus sharing this information is a benefit not a detriment.

I say share your information with pride and include your employees in a demonstration of trust, respect and appreciation, as they contributed meaningfully and aught to know how it all worked out in the end. After all isn’t that the overall goal…to develop the most gross revenue you can at the highest profitability? Call me if you need some help 413-549-2966.