In my last post in the open-book management series, I discussed the importance of understanding your financial statements. In this post, I share with you how to teach your financial statements to your employees.
When I started coaching in 2007ish, the greatest small business pain that I witnessed was the generation gap between Baby Boomers, Generation X and their kids: Generation Why. This is the generation born between 1980 and 1995. As Generation Why entered the workplace, they were thought to be unprepared and perceived to have a sense of entitlement. They were actually considered to be stupid and lazy. (Sorry guys and all my Gen Why friends…)
It amazed me that Baby Boomers in particular, who had raised these kids, found them insufferable. I found them interesting. As the first digital natives, I found a generation that was not willing to let their lives be business as usual. If there wasn’t a good reason to do something, they weren’t willing to accept it. They needed to know WHY. I found this to be elegant.
I saw in them the ability to question authority in a way that their older family members had forgotten. And I saw in them the willingness to embrace anything that touched their hearts.
That said there was some truth to the rumor that they weren’t prepared for the workplace even though they brought a sense of wonder. At that time it became clear to me that what had to happen was that employers, in order to harness the great qualities of their new workers, had to take on the role of a teacher or mentor. They had to understand that their students would help them bring their business into the current century but only if they could teach them what they knew about business and their financial statements. This is a key aspect of open-book management.
This behavior change became critical during that time. In thinking about open-book management, transparency in a business, and the Business 2.0 Revolution , it is still true that we can create magic as bosses and managers when we stop thinking about ourselves in that way and learn to embrace our inner teacher.
In my last video in the open-book management series I talked about knowing your numbers . In this video I talk about teaching the numbers and some very specific ways that you can help others understand your financial statements and how you make profits in your business so that employees can help increase profits and decrease expenses. Here is where you help others be smart by teaching what you understand about your business and sharing your financial statements.
Lesson #1 What are profits?
Lesson #2 What are margins?
Lesson #3 What are expenses and cost of goods?
Lesson #4 What is your impact?
A few words about payroll: If you need to protect payroll numbers, lump them together. But don’t fail to teach the importance of payroll. Employees in general have no idea how critical the payroll number is. They start to see themselves and their demands differently when you teach this to them. This cannot be stressed enough and is an important aspect of open-book management.
In my next video, I will discuss how to drill down to key numbers in your business after your team understands the basics. My request is that you don’t hesitate to ask any questions or make comments below. You can also contact me directly.
Best wishes, Ruth
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