To Share Or Not To Share? - What business financials do you share with your team?

[SVLFever]

Hello Fellow Sellers,

I have owned and operated my small business for about 15 years now.  I have always had an open door policy with my 60ish staff (20 FT and 40 PT) and am always willing to work side by side with them on the line as needed.

I have always shared some business performance with my management team regarding the income/expenses and other business performance metrics, but not with the overall general team.  Recently I held our annual employee meeting and decided to share some basic oversight about our labor and profit percentages, by both department and overall business performance and had multiple PT staff members (several of which work another FT job at a different business) and say that it was the most informative employee meeting that they had ever been to.

Now I don't necessarily want to share what my net profit number is with everyone, as I'm sure most might not understand EBITDA, Taxes and CapEx type of things that might not be reflected in the actual amount that they here, but I'm wondering what detail level you may or may not give your team members to help them understand that there is a LOT more to owning a business than all this money coming in the cash register.

Does anyone have any best practices that they use when sharing financial business performance with their team members???

[Donnie-M]

@SVLFever With my managers, they can see sales, and costs on ordering, and recipes if they take the time to look.  Those numbers aren't hidden, but with AI, it won't be long till they can see them easier.  As far as payroll, I let them see gross dollars on the day, but not individual.  I keep that close to the vest as compensation creates all kinds of problems.

I recently had an employee, good employee, but she wanted a raise.  I had to break it down to her, that in order to give her a raise, I would be paying her more than a couple other employees who worked more, were available more hours, and able to do more positions, and both had been with me longer.  This is where I am firm, NO, I wasn't going to give her a raise (she had progressed quickly to a higher rate).  But She couldn't get it through her head till I broke it down like that.  I didn't want to have to do it that way, but she kept asking and asking, and finally I was like, OK you asked for the truth..and it isn't always fun.

Now outside my business, I don't share squat.  No one needs to know :-), They always just think we are rich.

[SVLFever]

Yeah, absolutely great points on the wage thing Donnie.  I agree with you 100% and follow the same exact path.   I think that's good advice all around.   I even instruct employees not to discuss their wages with others for the very issue you mention.

[TheRealChipA]

Since my employees are mostly in high school and college, their curiosity about how the business is doing is minimal.  But it is still there.  All of my employees have access to most Square POS reports where they can see what they want to see.  They know that they can ask questions whenever they want and that I'll do my best to answer them in terms they will grasp.  

As they are not making careers out of the ice cream business, I don't worry about them knowing who makes what.  Mostly this is because I currently only have two base hourly pay rates -- one for shift leaders and one for the rest of the team.  Everyone at each level makes the same hourly rate and they all participate in the weekly tip pool.  That's even a matter of public knowledge.  I have it easy in that regard compared to others.

As for the other financials, they can see our gross sales for any given period.  Honestly, I find that ready access to this and other information motivates them.  They love seeing, for example, how good those last kick-a&* hours ended up.  And, if they ask me to share things like how sales yesterday ranked in our top 10, etc, they know that I can fire up Square AI and tell them that.

Otherwise, when I start focusing on labor costs, or cost of goods, etc, I've found it helpful for them to know more than "we need to focus on these things and do better."  I give them numbers, goals that I have and so forth and then explain why we need to control those costs.  I find that really helpful when one of them starts asking why I don't have more hours to give them.  If I am armed with specifics about our labor pool and how it impacts everyone, I find they are more satisfied with my answers.  I try to give base hourly rate bumps before every busy season starts.  But everyone knows that in order to do that, all of the other costs have to fall into line, first.  When they know that x% of sales are eaten up by one cost, y% by another cost, etc, resulting in the bottom line profit that must be shared by my draws and more, they better understand that it is never as simple as just giving them a raise.

Anyway, the type of information I put on the table depends on the situation.  My goal is never to hide information about the business from them and to try to help them understand the big picture that I see every hour of every day.  Sure, they don't need to know how much I'm drawing out of the profits.  But they do know that I do and that I'm usually satisfied with that number.  I think they also realize that keeping me happy with that number ensures they can come back next summer if they want.

Oh, and to your last question about best practices?  Mine is this.  If it is a number that I would be required to share were I a publicly traded company, then I believe I should be willing to share it with my employees.  To me, it's that simple.

[SVLFever]

Thanks for your thoughts and insight Chip.   Greatly appreciated!

Our businesses are a bit different, as I have a wider variety of pay scales;

• Tipped staff wage range
• Attractoin staff wage range
• Grill staff wage range
• Reception desk wage range
• Tech Team wage range
• Managerial wage range

I do actually have some staff that started here in high school and after being here for 10+, 20+, 30+ years, are still here, but I too don't expect them to make a career path starting here.   Fortunately, my company culture is pretty decent, so if they start here in high school, they tend to stay through college.   That helps immensely for training and the guest experience.

During my meeting I did share this graph with the team;

Payroll trend

The change is both an effect of decreasing revenues now that our "honeymoon" period of expanding to an FEC has expired, as well as a tighter economy for discretionary spending.   Adding in that our minimum wage has gone up by 66% over the last 4 years and now I have to start paying sick leave to all staff, the payroll number is going through the roof (it's an all in percent, including benefits and payroll taxes). 

I explained that there are only really two options; increase revenue or decrease expenses, which everyone seems to understand.  I think it was an eye opener and helped explain why I was going to try to avoid OT for the staff, and asked them to help with that as well.    So far, there seems to be some impact, as my OT has been pretty low since the meeting.

I'm going to try and do more updates with this kind of information to help them see things how they really are.

[Lovewell]

We are happy to share most things with our team! It honestly gives them so much more respect for what we do and take a ton more

ownership. 

[SVLFever]

I instinctively agree with you!   As Chip has mentioned, sharing some stats can be very helpful in having the staff have a little bit more "owners mentality".

[VanKalkerFarms]

I am probably to open with employees, at least the ones that use Square.  All the reports are right there.  They will be competitive and be like we did 52k last year, this comparable day, we gotta work harder to get that higher and sell more addons.
I do explain that they are only seeing the one side of the business, none of the over a million dollars in expenses.  They all are cool with it, though. I even find that they will ask questions, trying to learn about how it works, and it feels like they are more involved.  

[CareyJo]

We don't have employees yet and when we do, it will likely only be two of our adult children for a while, who already know a ton about our finances and our business and would literally be the two to clean out our house and sell off our assets.  So, I'm not worried there.  When we get outside people, however, I may be more careful.  We don't intend to ever be so big that we need more than two employees full time.  I'm of the mindset that there are things they just don't need to know - how much each person makes, how much we make, etc.  But there are also advantages to giving them a little insight into how costs affect the ability to pay you to work and what creates that revenue.  I worked inside Macy's for a third party for 7 years.  Every morning, they have a team meeting for the day, with all employees on deck.  They go through the stats, the expectations and the issues.  They are transparent about how they need to make money and where the problems are, so that they can address them right away.  The hallway is lined with papers posted of what the stats are for each department so that the employees know how they are contributing.  This gives them a buy-in.  They want to do better and see their department succeed.  They also know that sometimes bonuses are involved.  I believe in motivation and when it's done well, you get that buy-in and the long term employee who wants to see you succeed because they are getting a pat on the back in the process.