Do your employees know how they and their contribution impact your bottom line? Do they understand your business model – how the company is structured and how it makes money? Too many business owners fall prey to these three myths:
- Employees have little interest in how their company makes money
- Profitability can’t be taught to employees who don’t understand a financial statement
- If employees know how much money their company made, they’ll demand raises
I’m not saying you need to “open the books” (although I do believe in that concept), but business owners should at least help improve financial literacy in all their employees so they can understand their contribution toward profitability.
According to studies, less than 10% of a company’s staff understand how the enterprise actually makes and keeps money. A mere 7% of employees fully understand their company’s business strategies and what’s expected of them to help achieve company goals.
Here are five questions that will not only lead to a great discussion in a staff or team meeting, but demonstrate the kind of trust and collaboration that will help all employees feel they have a stake in the company’s success:
- What are the top five most costly items on our company’s profit and loss sheet?
- Which of our costs are down from one year ago? Why?
- Which of our costs have increased more than 10% over the past year? Why?
- What actions can we take to reduce costs over the next six months?
- What processes have been improved over the past six months?
Anything a business owner can do to increase communication on issues that impact employees is a win-win.
Need help with this topic or leadership coaching? Contact Mission Critical Teams.