he question is this. We’re two partners who have been in the mortgage business for close to three decades. We currently have over 50 employees. Though we try to operate our business based on “old-school” principles we also make an effort to keep abreast of the times and current trends.
One idea we’re hearing a lot about lately is “transparency” — in other words encouraging a general openness toward the “inner workings” of the business and even greater transparency on company finances business transactions etc. with employees. “Showing your cards ” in old-school parlance.
How does this figure into the average midsized frum company? We’ve heard a lot of theoretical benefits but what are the true practical applications? Is this something we can/should attempt to implement in our business?
Share for Success
Bruce Leon is the owner and founder of Benefits Solutions Group (an insurance brokerage firm) Tandem HR (a professional employer organization — PEO) Alliance Workplace Solutions (a voluntary benefits firm) and Workplace Solutions (an Employee Assistance Program).
First I’d like to commend you on building a successful business and for always looking for ways to reinvent your operations to meet current market trends. The new millennials are night and day from the Baby Boomer generation in both their expectations and desire for a productive workplace. Transparency is probably the number-one issue facing small to midsized companies today.
We all recall a time when the advantage of being a privately-held company versus a public one was that key financial information was typically known only by a select few. The expectation was that employees would work hard and loyally and receive a fair paycheck.
About 30 years ago things began to change. Jack Stack CEO of SRC Holdings Corporation who is considered to be “the father of open-book management ” promoted the idea that transparency would increase profits if employees are knowledgeable about a company’s finances.
He cites in his book a story of a manufacturing company that saw a significant increase in productivity and sales once employees became engaged in the financial situation of the company. Worker-compensation claims decreased significantly and employees had a much greater stake in making sure the lights were turned off and office supplies were used sparingly.
While most of your employees will appreciate the openness and transparency it doesn’t always translate to increased worker engagement or positive financial results. For example even if you share with your employees that sales and profits are down in a particular year you may still get an employee demanding a 15% raise because he feels that he’s working hard or that his market skill is in great demand.
It’s also important to keep in mind that there are certain aspects of the company that can only be shared between ownership and/or their top executive team. For instance details like employees’ salaries executive bonuses or special perks.
My advice to you and your partner is that you slowly begin sharing select data. I would start out with things like gross sales profit margin market conditions and competitor information without immediately going into net income figures.
At Tandem HR we share our financial goals and progress with our employees via a bonus and profit-sharing plan. Knowing that their financial success is tied to the company’s financial success makes them ultra-motivated employees.
The practical implication here is that employees may accept a year in which there are no raises or very small ones because they have been tracking company results. A potential drawback is that several down quarters could scare employees away and create turnover. Generally speaking though if there is a strong compassionate leadership who’s built a strong team you’ll get the mentality of “all hands on deck” — be it the CFO or the person filing the paperwork.
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