Share Your P+L With Employees?
OCTOBER 04,2017 | MANAGEMENT | By SARA KELLY
More and more businesses realise the benefits of sharing business financial results such as a monthly P+L with employees. This new phenomenon is called "Open Book Management".
It can sound crazy for a business owner to share "Confidential" information with their employees, but the research shows this can improve the bottom line!
Whilst some information, such as employee salaries, may not be wise to share amongst all employees (unless you want a revolt!), sharing and explaining top-line results regularly can yield excellent outcomes.
So why are only around 7% of private businesses practising Open Book Management"?
The main reason is fear. Fear that employees will share information or fear they may all ask for a pay rise. If the information provided is carefully selected, most of these fears can prove unfounded.
So what are the key benefits of this style of management?
For most businesses, profit is the end goal. However, unless your employees can see the REAL end target, it's hard for them to be held accountable for achieving it. Try setting a profit goal with your management team and watch their focus shift to not only sales but cost minimisation.
Not a typo! The National Center for Employee Ownership found that companies that revealed financial information to their employees saw a 1-2% sales bump over what usually would have been expected. So share info, and your employees will be even more motivated.
Unless you plan on living in your business 24/7, open-book management is an excellent way of developing your employees to take more responsibility. They will understand the core metrics of the business and as a result, will learn to be able to make decisions that protect the bottom line.
Gen Y employees love responsibility and performance best in an environment that fosters open communication. Open-book management is one of the most powerful ways to create this empowered workplace. No secrets, a clear goal which everyone can contribute towards.
Opening the books allows everyone to celebrate successes and fix problems collectively. Moreover, by entrusting employees with vital information about the organisation's financial and operational health, you send a powerful message that the business considers every worker a valued partner and stakeholder in the company.
Sharing financial details with employees can build trust, leading to a happier, more productive workforce. Research shows employees who believe their bosses trust them can better see the big picture and tend to be more loyal, productive and engaged. So it's a big step for most companies to move from the traditional closed booked approach to "Open Book Management". However, most experts agree the trend of this style of management is likely to increase quickly over the coming years as business owners have to adapt to Gen Y and later style of employees who thrive in such a workplace environment.
Just a thought,
CEO/Founder @ RosterElf
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