Private companies don’t have to share financial information, but they are increasingly finding value in giving employees a view of the balance sheet.
In 2012, less than one-quarter of companies shared financial information with employees. Today, 56% of CFOs say their company shares information with at least some staff members, according to data collected by staffing firm Robert Half.
Being more open gives companies a reputation boost, which can help them retain and recruit workers. It also provides workers with a better understanding of how their role can boost financial performance, which can lead to greater productivity.
“Sharing financial results is just one element of aligning employees with the vision and business goals of the company,” said Elizabeth Cogswell Baskin, CEO of Tribe, an internal communications agency in Atlanta. “Many large employers recognise the power of this kind of alignment. When everyone’s pulling in the same direction, the company can move more efficiently towards long-term goals.
“Another element of creating that sort of alignment is helping employees understand how their jobs and their individual actions support the overall goals of the company.”
Two strategies Robert Half recommends for companies about sharing information: Stick to a schedule, and don’t skip discussions about financial information. Suddenly deciding not to talk about company performance could lead to workers drawing their own – perhaps incorrect – conclusions.
Danielle McLarnon, CPA, CGMA, the CFO at New Belgium Brewing Co. in Fort Collins, Colorado, said that transparency about finances doesn’t stop employees from asking questions. Even before New Belgium became employee-owned, it shared financial information with employees.
“If we weren’t open-book-managed, co-workers would still ask the questions, but they wouldn’t ask them outwardly,” McLarnon said in a 2014 interview with the Journal of Accountancy. “They would maybe talk amongst themselves and not really know the answers. Now, if they have a question, they can come ask one of us. If someone doesn’t know the answer, we’ll find someone who does.”
Robert Half’s data show that 69% of CFOs believe employees are at least somewhat interested in hearing about a company’s financial performance. Twenty-one per cent said employees were “not too interested,” and 9% said employees were “not at all interested.”
The results came from the responses of 2,100 CFOs of US-based private companies.
—Neil Amato (firstname.lastname@example.org) is a CGMA Magazine senior editor.