Financial transparency in business isn’t only important in the eyes of the law.
Employees, too, should share in the fortunes of a company, with the opportunity to understand the flow of cash that shapes the industry they serve.
Some business leaders fear that too much information could lead to resentment and demands for higher pay, particularly in ‘the good times’.
But, if the financial position of a company is delivered fairly, diplomatically and with clarity, the opposite effect is true.
Openness about outlay on materials and machinery makes employees aware of their value, reduce waste and take better care of the tools of their trade.
Transparency over company income makes employees aware of the value clients and customers bring to the business. This awareness should enhance customer service and retention.
Finally, transparency over profits, budgets and financial forecasts helps to make employees feel part of a team working together, with each individual playing a role in delivering success.
So how should you deliver these messages? Transparency doesn’t mean information overload. Most employees won’t want to wade through figures and financial packs, although in the interests of openness, these should be made available. Headline figures and year-on-year trends – delivered honestly and without any ‘spin’ – is the most appropriate approach.
If the business needs to plough year-end profits into next year’s capital investment, explain the reasons why. If it makes good business sense, employees won’t be left wondering why your profits didn’t reach their wage packet. But also reward shared success financially. If employees see that their efforts pay off, they will further buy in to your business success.