Educating your employees on your financials will not make accountants out of them but it will definitely help them to become more engaged and effective in their roles.
Many organisations do a very good job in developing and communicating their vision, mission and values. They spend lots of time and resources cascading strategic goals into individual performance objectives. I’m amazed at how few do the same in relation to their financials.
My experience suggests that that those organisations that educate their employees on the financials have a more engaged and high performance culture. Here’s why:
1. Most employees receive a quarterly email with a copy of the CEO’s investor conference call slide deck. The majority haven’t a clue what it’s about and delete it or at best file it away. This is a pity because these slide decks often contain valuable information about the future strategy of the organisation. Employees that receive basic financial training are more comfortable with the big picture context and feel part of the story the CEO is telling.
2. Part of the problem with financials is language. We expect our employees to produce a budget or to make a business case on a capital investment even though they have no idea of the financial language used by those that make decisions on these issues. Surely a sales person has a better chance of succeeding if they know what financial buttons to push with their customers. Arming your procurement people, your budget holders and your sales people with the right financial language will help them perform more effectively.
3. Most employees take benefits packages for granted. Many employees receive share options as part of their remuneration package. Understanding the basics of finance will allow them to make informed judgments about their personal financial wellbeing and appreciate the benefits that they receive from their employers.
4. The more we share with one another the more trusting of one another we become. Educating and sharing financial information with employees engenders trust. Keeping them in the dark about your financials engenders mistrust.
The bottom line is that training your employees on your financials generates a good return on investment!