Does Your Company Culture Encourage Employees to Boost the Bottom Line?

Sharing company financial information with your team is a divisive topic. Some leaders feel it helps motivate employees while others fear data can be misinterpreted or misused. Yet research shows that employees are more engaged and help drive improved financial results when trusted with the information. Your company culture can help your employees connect with their ability to contribute to the bottom line.

Does Anybody Really Care?

Many leaders struggle with transparency around their organization’s financial results. Managers often feel employees aren’t interested. Unless they have a team of accountants, they think people’s eyes will roll when presented with the numbers.

However, a 2020 Robert Half Management Resources survey showed that 82 percent of workers were indeed interested. Eighty-eight percent of surveyed CFOs said financial performance is regularly shared with at least some employees (usually manager level and up). This percentage increased from 56 percent as recently as 2016.

The survey also revealed:

• Among privately held companies, 55 percent provide all employees with financial updates.
• Companies with 1,000 or more employees are the most financially transparent (65 percent).

Robert Half executive director Jason Flanders explained,

"Staff feel more invested and engaged when leadership provides updates on company performance. Professionals are also often happier and more productive if they understand how their work contributes to the firm's bottom line."

It’s helpful to present summary-level information. Full profit and loss statements may be too much for employees to absorb. Focus on the information that is most relevant to the audience. Be sure to explain any acronyms or terms so that everyone understands. Charts and graphs can be valuable in illustrating trends and comparisons. Add cash flow information if it helps present the company’s story more completely.

Present company performance in context. Leadership should explain how the results compare to budget and prior years. If the company is struggling, management should share plans to improve the situation. Employees will see that they can be part of the solution.

What Are You Afraid Of?

Many managers are apprehensive about sharing the company’s financial information. They fear their power will be diminished. They may worry about not being able to answer their staff’s questions. They may be concerned that someone will leak sensitive information outside the organization.

If the company’s financial position is not strong, they fear employees will quit. If the company’s performance is robust, they think employees will demand higher raises and increased resources.

In most cases, these concerns are unfounded. Employees are more engaged when they are trusted. They feel included and respected when informed about the company’s performance. There is always the chance of a rogue employee posting something inappropriate on social media. However, if you limit your presentation to key metrics and figures, a leak of such information will likely not be harmful.

In fact, without a good feel for how the company is doing, employees may make bad decisions. Karen Berman and Joe Knight wrote in the Wall Street Journal,

“Sales reps may be tempted to offer hefty discounts just when the company needs to boost gross margin. Engineers may keep proposing additional bells and whistles for the company’s latest products even though cash is tight. Plant managers, kept in the dark about warranty expense, may cut corners on quality in hopes of meeting production cost targets.”

Informed employees perform better and make smarter decisions.

Share What’s Most Useful

Being trusted with the company’s numbers encourages employee engagement. When employees believe management cares about them, they care more about the company. And this can spark them to think about contributing to profitability. Bill Fotsch and John Case wrote in the Harvard Business Review,

“It’s surprisingly easy to generate engagement among employees when you make the economics of the business come alive by sharing some key financial numbers. It’s an open-book approach: people begin to watch these indicators. Then they figure out how to move them in the right direction.”

Consider what financial metrics may be most impactful for your team. Berman and Knight suggest:

• For plant workers: cost of goods sold by plant or product
• For marketers – selling expense as a percentage of revenue
• For IT workers – computer expense as a percentage of revenue
• For customer service representatives – cost per service appointment or warranty costs
  
  

Link employee objectives to the relevant metrics. Connect their work to the financial results and explain how they can help improve the numbers. Smaller companies may benefit since employees can influence results more directly. Where appropriate, tie employee compensation to the financial results.

But How Can I Affect the Numbers?

It may be challenging to show some employees how they affect financial performance. However, almost all employees can impact customer service improvement and cost reduction.

There are several ways to drive customer service and satisfaction:

1. Maximize every customer interaction. Every phone call, email, meeting, or text is an opportunity to engage the customer. Team members should make every effort to be helpful and delight the customer.
   
   
2. Don’t assume the customer is satisfied. A customer who loyally repurchases from you is great. However, they may have further requirements the company can meet. Encourage team members to know their customers and their business needs. Educate customers about your product and service lines. The more customers understand your products and services, the more they will want to employ them. There may be further opportunities to help customers than you are currently tapping.
   
   
3. Be a brand ambassador. Make your company stand out in your field. Encourage employees’ awareness of your company’s reputation and how they can promote it. Customers like to work with companies known for their quality and service.
   
   
4. Increase your team’s expertise. Customers prefer dealing with people who are experts in their field. Encourage team members to pursue appropriate certifications and advanced training.
   
   
5. Do quality work. Continually providing quality goods and services will retain customers and attract potential clients.

Consistently improving customer satisfaction will help drive more sales. By understanding the relationship between sales and profit, employees can also drive improved margins.

Employees can also contribute to profit improvement by lowering costs.

Each can examine their work processes to look for opportunities to do things better, faster, and more effectively. Encourage employees to find ways to reengineer processes and workflows for more efficiency.

Some employees may work with outside product or service suppliers. Have them regularly review expenses and get quotes from vendors. While it doesn’t always pay to go with the lowest-cost provider, employees must remember that purchase costs directly impact the bottom line.

Employees who don’t work in sales or purchasing can still have an impact by being open to potential new customers or vendors. They can also contribute ideas, including new product suggestions or opportunities to eliminate waste.

Embed it in Your Culture

Meetings to share company information are an important first step. So is helping employees see the connection between their work and the company’s profits. Build upon that and establish a culture of contributing to profit.

A culture in which employees are always looking for ways to grow the bottom line includes:

• Relentlessness about improvement. Employees regularly evaluate their work to look for opportunities to improve. They won’t accept complacency. They understand that the efficiencies they generate will help control costs and improve quality.
  
  
• A passion for excellence. Team members take pride in the quality of their work and inspire coworkers to do the same. “Good” is never good enough for them. They see the correlation between a quality product or service and strong revenues.
  
  
• Thinking and acting like owners of the business. Employees seek to understand the company’s operations and are serious about improving profit. They are good stewards of the company’s resources.
  
  
• Embracing diverse perspectives. Coworkers and managers are open to others’ suggestions. They respect the opinions of teammates with less experience in the company or industry. They understand that we can all learn from each other. They make better decisions by incorporating other’s input.
  
  
• Listening to understand. Coworkers take a genuine interest in what others say. Managers are open to listening to employees’ concerns and suggestions. Employees know they will be respected for sharing their opinions when it is offered in the desire to move the company forward.

Sharing company financial information may be outside the leadership’s comfort zone. However, regularly updating the team on financial performance will encourage employees to own the results and strive to improve them. Company culture will evolve into one where employees routinely seek ways to contribute to profit.