Transparent Financial Statements *GASP*
By: Jessica Rickard | March 22, 2021
I know the title of this blog probably scared you a little bit or maybe just got you curious. What are transparent financial statements? Do I want or need those in my business? My accountant doesn’t run that statement, should they?
Transparent financial statements, or open-book management, just means that employers are opening their financial books to employees.
Now you are probably scared again. Opening your financials to your team can be scary but it can also be very rewarding.
Benefits To You
First things first, if you have read any of my other blogs, you know that I think sharing information with your team is SO important. Whether it is financial information, company goals and objectives, or just information about your dog (I like this one the best), being open with your team can have appositive impact on your company as a whole.
Allbusiness.com has a whole article on the benefits of open-book management.
Let’s take a look at them.
It improves accountability
As an employee, have you ever been given a sales goal but didn’t have access to the current sales numbers? How is the director of sales supposed to work toward a goal if they have no way to see the current numbers? If your employees are able to see the current financial numbers, it increases their accountability. No more can they say “Oh, I didn’t know where we were at.” Having the goal and current numbers in hand drives results.
It boosts sales
This goes along the same lines as the previous benefit. If employees are working toward a goal, and know where they currently stand, they will work harder to get to the goal faster. Which means: more sales. Allbusiness.com also says that a study was done by the National Center for Employee Ownership and they found that companies who revealed financial information to their employees saw a 1-2% sales bump over usual expectation.
It fosters understanding
I think it is important that your entire team is invested in the business. By giving them access to key financial data, your employees start to understand how the business works and their role in it. It builds their understanding and encourages them to learn as much as they can about the business and how it runs (which makes them a greater asset in the future).
It empowers employees
Empowering employees reduces employee turnover and increases employee morale. By giving them access to financial statements, you empower them notice inconsistencies and take action.
It makes everyone a stakeholder
Collaboration is key in any business! Along those same lines, making sure your employees are invested in the financial success of the business is also important. By opening up the financial statements, you send the message that you trust your employees with that information and they are a valued partner in the business.
It increases job satisfaction and performance
I’ve said it before and I’ll say it again: invested and empowered employees are happier and work harder than those who are not invested or empowered. As a manager or CEO, trusting your employees leads to more loyal, productive, and engaged team members. Which – leads to a more successful business.
All in all, being more transparent about your financial data leads to a more invested team and a more profitable business. With Path by Simplex, you can segment out your financial statements and give certain members of your team certain pieces. Employee salaries may not make the list of shared information but sales numbers and budgets should. This allows employees to really see what is going on in the business and how their work impacts the bottom line. Start your free trial today and empower your employees!