At GL group we practice open book management. We share our financials and long and short-term planning with all of our employees. When everyone has all of the information, it allows us to make the best decisions for the business, together.
This policy has produced great results for our company. Our employees think critically about every decision they make and we find that this helps our business grow, both when times are good and when they’re not so good.
One challenging aspect of this policy is that it often leads to employees asking tough questions of our leadership. This is particularly true when times are tough. Employees can worry about their – and the company’s – future. To be an open book company, the organization must have nothing to hide. When leadership is willing to discuss the company’s financial decisions – even if not all employees will agree with every decision – you develop a culture of honesty.
Here are some best practices for handling tough financial questions from employees that will ensure employees feel included and are confident in leadership decisions.
Teach employees how to read/understand the financials. Before a company can share its financial statements, educating employees is the key. A lack of understanding can lead to frustration and unfortunately a lack of questions because employees just don’t understand what they are looking at. The goal of this education is not to make all employees CPA’s, but to give them the basic understanding of financial statements and key metrics so they can interpret the results, ask intelligent questions, and make informed decisions.
Avoid overly technical answers. As CFO, my goal is not to impress non-accountants with technical terminology. Using that language makes employees feel like I’m speaking over their heads and avoiding the questions with a jargon-laden smoke screen. Give the employees an answer or an example using language the group understands. Our administrative teams’ (IT, Accounting, HR, Facilities) mission is to support all of our divisions by providing them with assistance, expertise, and education for them to improve their results.
Honesty is still the best policy. Over time, we all make mistakes or missteps. Sweeping them under the rug because leadership doesn’t want to admit it made a bad decision only hurts employees’ trust and confidence in our ability to lead. In fact, our CEO teaches a class entitled “Looking Under the Rug” which is designed to teach employees how to dig into issues. Sweeping things under the rug is very counter-intuitive to our culture! However, we don’t want to shine a light on a particular person’s poor performance or embarrass someone by answering a tough question publicly. Since we operate as a team and executives hold themselves accountable, there is no reason to call an individual out when answering tough questions about an error or mistake.
Communicate boundaries. There are certain areas that are off limits to questions and would only cause problems if we shared with everyone. Individuals’ salaries, HIPPA information, and other legally binding non-disclosure situations fall under this category. Letting employees know what areas are off limits and why they are off limits helps mitigate employee frustrations. I personally tell employees, “I will tell you the answer to your question or explain why I can’t answer your question.” So either way, they get an honest answer.
Involve employees in financial processes. Our managers participate in forecasting monthly numbers by having accountability for financial numbers they directly affect. We encourage them to involve their teams and hold them accountable for understanding both the financial results for their area and the corporate financial statements.
We embrace the belief that the purpose of a question is to advance one’s understanding and knowledge and this applies to employees understanding the business’ financials. I believe focusing on the points above helps us generate thought-provoking questions from employees that result in more engaged employees and better financial results.
Author: Mark Rygelski