Today, more and more organizations are opening their books to share their financial information with their employees. For some, this can be a frightening concept. If we share in good times, will our employees demand higher pay? If we share during tough times will our employees get nervous and jump ship? What should we share and how often? But don’t let these questions stand in the way of sharing with your staff. You will find that the benefits far outweigh any costs.
Finances have always been somewhat of a mystery to many. This can be compounded by organizations holding this information too closely. Let’s discuss some of the benefits of educating your staff on financial statements.
- Sharing your financials builds trust. Employees that feel their leaders trust them are generally more loyal and productive.
- Consistently sharing the financials promotes understanding. If there is space for employees to ask questions and learn more about how the organization operates month after month, employees will have a much easier time seeing and understanding the big picture.
- When employees can see the results of their hard work reflected in the financials, they feel empowered.
- It improves accountability. Often an organization’s goals surround financial achievements. Sharing financial information is the only way employees can see progress to goal. They can also see where there is room for improvement and make changes as needed.
- It creates strong employee engagement and job satisfaction. When employees feel trusted, valued, and empowered, they will feel fulfilled by their work.
Now that we can see the benefits, where do we start? What information do we share and how often? It is important to share information in a way that is useful and understandable. If you present the financials without any kind of education around how to use or interpret them, your efforts will be ineffective. This should be a gradual familiarization and increased as time goes on.
An organization should begin with a summary view of their Income Statement. Again, this should be accompanied by some initial education about how the organization calculates its revenue and what expenses are included in its broad categories. Next, these numbers don’t mean anything unless they are compared to something. There are many ways to do that, but a great way to start is to compare to budget. The organization’s budget is essentially its financial operating plan for the year. This is a great way for employees to be able to see how they are progressing toward those goals. Also, showing a month over month trend can show employees how their hard work can result in positive change. As time moves on, your organization should listen to employee’s questions and interests and incorporate those into the information provided month after month.
In summary, there are infinite benefits to educating staff on finance and sharing that information more widely. There is an opportunity to change the mindset that financial statements are mysterious or intimidating. Your financial statements can be an incredible tool loaded with valuable information about your organization. Why not use it to motivate and empower your staff?
Shannon Adams, CPA, VP of Finance
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An organizational model that allows not-for-profit hospices (Members) to leverage best practices, achieve economies of scale and collaborate in ways that better prepare each agency to participate in emerging alternative payment models and advance their charitable missions.