Real Issues. Real Answers. Sharing financial information
Should we or shouldn’t we? That is one of the questions companies wrestle with when determining what financial information—if any—to share with employees. On the one hand, the more employees know about a company’s operations, the more they’ll understand the razor thin line between profit and loss. Then again, no one wants sensitive financial info getting into the wrong hands. As is the case with most thorny issues, there is no one right answer that fits every company. That’s why this month’s survey delves into the question of sharing financial information.
This month’s real issue came from an LBM industry pro in North Carolina who wrote, “How much financial information do other LBM dealers share with their employees?” As we do each month, we built a very brief survey around that reader’s question, and emailed it to the subscribers who’ve opted in to receive our email communications. A big thank you to the nearly 150 subscribers who took a few minutes to share their experience and input. If you’d like to participate in future surveys, just drop me a note at [email protected], and I’ll make sure we get you added.
Which of the following financial information, if any, does your company share with employees?
First, we wanted to get a feel for the percentage of dealers who share financial information—along with what specific info they share.
As the chart shows, the vast majority of respondents’ companies—86.5%— share some financial information with employees. Of those, the numbers most commonly shared are Overall sales: monthly, quarterly and/or annually (81.1%), Year-over-year sales (70.3%), and Gross margins (68.9%).
How much financial information does your company share with employees, and how often? What’s the downside to sharing this info? What’s the benefit?
“We pretty much share everything with employees, other than individual salaries. Every quarter the P&L statement is presented to employees with a brief overview and a Q & A session. The benefits being, in my mind, that most employees want to know how the company is performing. As for the downside, I am sure there are some but have not come with any strong enough to hide information from employees.”
“We shared much more information during the housing crisis so that employees understood why we made some of the difficult decisions we did. Now we primarily share changes to sales and gross margins year-to-year since these are easy for everyone to understand. We try to do this monthly. We also share individual challenges on expenses—like health insurance. There is no downside to this. The benefit comes from them understanding our challenges and working to help the company overcome them.”
“We share the financial information with managers only. They are trained to understand that only a small portion of the gross profit dollars make it to the bottom line. We incent and share bottom line numbers with the location GMs. We do not share additional info with the associates, and I am happy we don’t. We know this business is cyclical. In good years, we think the associates would expect more, then in a downturn, they would not understand a decrease.”
“We share data company-wide monthly, mostly focused on sales growth and gross margin percentage. However, we also share profitability with our employees. While the downside can be some employees thinking corporate is fat and happy, the benefit is that most start to realize how the small things make a difference. They begin to realize that a truckload of material isn’t as profitable as they thought, and one mistake can make that order unprofitable.”
“We are a privately held company, so we do not share some info.”
“Annually. Let’s our team members know how the business is doing while instilling a sense of ownership in its success.”
“We share the things they can impact, which they monitor closely. Other than the general health of the company, other info is kept more private. If we were asked by a couple key folks, we would no doubt share more, but I do not think they feel they need any more.”
“Depends upon the position of the employee. Managers have full access to financial information for both their location and for their peers’ locations. Hourly employees would not see detailed financial information, but communications would take place to share how the company is performing (high level).”
“We share everything with our Associates. They do their jobs better when they understand how each and every one of them contributes to our success.”
“Since gross margin ($) is the benchmark most important to our company, we share this with many of our employees. Our yearly targets are centered around this metric. We find it helpful in getting the buy-in from our employees, and providing them a single goal on which to focus throughout the year.”
“Transparency helps greatly. We have bonuses based on net income. We give teams quarterly updates. This helps keep them connected and pulling together.”
“We share everything but salary information.”