Employers are increasingly seeing the benefits of transparency.
A new study by global staffing firm Robert Half Management Resources found that 82% of workers would be interested in updates on company financial performance. The study, which surveyed over 1,000 American workers online, also found that publicly traded companies were more likely to keep their books open than privately held ones.
While more than half of the companies surveyed do provide financial information to employees, another 32% share that information with some employees, and 12% keep its financial records off-limits.
According to Vicki Salemi, a career expert for Monster, workers are looking for greater transparency overall, which includes other types of financial information. “When companies become more transparent, it can be indicative of other modes of transparency like sharing data points regarding salaries within the company and more,” Salemi said.
The call for transparency is extending beyond company employees. Salemi says job candidates also need financial information to know if they’re making the right call. “It's not only the information they're accessing, it's a reflection of the company's values and culture,” she said.
[Read: 6 Things Every Boss Should Do to Build an Amazing Company Culture]
If you think transparency is right for your business, here are some tips on disclosing financial information with as little confusion as possible.
Make sure your employees are financially literate
When disclosing financial figures to employees, the first thing to do is make sure they understand the numbers. Hold training sessions so that employees know exactly what terms like revenue, gross margin and operating margin mean. Depending on your business, high revenue or cash flow may not be an accurate measure of success. If employees know what to look for, they won’t misinterpret the figures.
With increased transparency, you may find a sudden lack of boundaries in the office. “For companies with open office plans and C-suite executives without offices, executives may have a never-ending stream of employees wanting to talk to them and, in turn, won't have bandwidth for their own work,” Salemi said.
Once employees become financially literate, they may come up with new ways to streamline processes and make your business more profitable. Giving employees the chance to offer ideas could lead to greater productivity and profitability.
When you decide to open up your books, remember that they’ll have to stay open to employees, during both good and bad periods.
Share financial updates, both good and bad
When you decide to open up your books, remember that they’ll have to stay open to employees, during both good and bad periods. Otherwise, workers will feel a sudden lack of trust if they’re no longer allowed access to the information.
“If the company isn't doing well financially, it may tempt employees to look for a new job if they feel like they're currently aboard a sinking ship,” Salemi said. On the other hand, they may not jump ship too quickly if they’ve seen the company’s numbers dip then bounce back in the past.
[Read: 5 Smart Strategies for Communicating With Your Employees]
Know your employees’ values
If revenue isn’t a key goal for your company (as opposed to serving a community or creating an excellent product), remind employees that disclosing financial information doesn’t mean a shift in your company’s values. Instead, frame it as an increase in transparency without an added emphasis on profit.
If your business prides itself on being open to employees, giving access to financial data could be a step in the right direction. Employees will also have the opportunity to become financially literate, and workshops centered around understanding detailed concepts can make effective professional development sessions.
“Ultimately, small business owners need to decide what's best for them,” Salemi said.
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