Why you should have team-wide financial literacy
It's a fairly straightforward case for the managers and owners of a company to be financially literate, especially when it comes to the key financial statements like the Profit and Loss, Balance Sheet, and Cash Flow Statement. But for a lot of companies, the financial literacy ends at the C-Suite, and that means companies are missing out on the opportunity for a more educated, better motivated employee base.
While full financial transparency may seem like a stretch for many private companies, widening the circle of those who know about, and understand, the financial health of the company can better align employee goals with those of the company.
Here are a few of the key benefits of expanding financial literacy in your organization:
1. Increased Agency: For many employees, the financial health of the organization can seem mysterious. Consequently, they can feel that their efforts are divorced from the overall financial picture. By sharing the monthly, quarterly, or annual financial reports with employees, you can show them in black and white what their efforts are producing.
2. Fostering Individual Responsibility: Similarly, including team members in some financial discussions, can help employees take more responsibility for their part in the business process. Also, by helping your employees understand how the financial sausage is made, means you'll have more minds focused on the financial health of the company. Who knows what kind of great ideas your employees could come up with if they just knew what you were going through at the top?
3. Team Building: Another benefit of sharing financial data with your employees is that it gives you a monthly excuse to get the team together to talk about the company and the direction you're heading. The meeting may start by discussing finances, but a lot of great ideas could also come from regularly scheduled meetings. These meetings can also help build a sense of teamwork, where everyone is working together to make the company prosper.
While sharing financial data with non-management employees may not be the best fit for all businesses, it could give your business an easy way to foster teamwork, and build a more educated and motivated workforce.