I run a small shop—just five employees. Lately, I’ve been thinking about sharing my financials with the team, hoping they’ll see why we need to be efficient every hour of every day and minimize absenteeism. I’m also hoping that “exposing” our numbers could build teamwork and foster innovation. What’s your advice?
Surely you know the old saying: “No good deed goes unpunished.” Well, you might find yourself living it very soon.
That’s not to disparage transparency. In general, the more information you share with employees about costs and competitive challenges, the better. As you suggest, when people know what they’re up against, they feel a greater sense of ownership and urgency. And the sense that “we’re all in this together” can jumpstart teamwork and innovation, often sparking improvements in processes and productivity.
But there are real perils in opening the books, the main one being that it’s hard to open them just a little bit. To make sense of costs, you also need to expose revenues and profits. So are you sure you’re comfortable with the team knowing how much the business makes? They will, naturally, compare that number with what they make, and eventually they will be able to extrapolate how much of the pie you have—and they don’t.
That gap may very well be something you’re willing or even proud to explain. If so, then there’s probably no downside to sharing financial details. But remember that all employees, no matter what size the company, have a pay scale in their heads that estimates what they and every co-worker is worth based on performance. If you get the sense your information spree will scramble those notions, then try to find a less perilous way to get your people to care about the work as much as you do.
This question and answer originally appeared in Business Week magazine on July 10, 2006.
Back to top