Tip Sheet
Teaching your employees to interpret financial information can boost their engagement—and your bottom line
Teaching your employees to interpret financial information can boost their engagement—and your bottom line
IN 2011, SALES WERE as flat as rolled-out dough at Achatz Handmade Pie Co. So co-founder Wendy Achatz called her six store managers into the Chesterfield, Michigan, main office to figure out why. But her team was flummoxed by the lack of growth—and, worse, surprised. “We’re working hard,” one manager said. “What do our sales mean, anyway?”
That sparked a realization for Achatz: Instead of understanding how their work could boost the bottom line, her employees saw the income statement as a black box. So Achatz set out to change that, sharing details and offering $100 to whoever could increase sales the most each month.
It’s one of the best investments she’s made in her company. When the group reconvened, one store’s sales had jumped 25 percent; another’s had grown 23 percent. Achatz’s managers tried everything: walking along the road with signs, talking up preorders, and running promos in stores. “It was like watching magic happen,” she says.
While teaching employees how to interpret financial info is nothing new, there’s been a recent surge in entrepreneurs and executives tackling financial literacy. University of Michigan professor Wayne Baker, who includes open-book finance in his curriculum, says he’s seen increased interest in the past few years. “Company leaders are looking for tools to increase worker engagement, and thus productivity and profits,” he says. “Helping employees understand the financials really works.” Consider adding these steps to your employee training program:
PAINT THE BIG PICTURE
Some startup founders have created classes to boost their employees’ financial literacy. Take Tracy Young, co-founder and CEO of San Francisco startup PlanGrid, which makes construction software. Early last year, during an all-hands meeting, she looked out at the crowd of 230 employees and realized many had tuned out her updates on financial stats. So she and her CFO launched a 45-minute Finance 101 crash course—breaking down a dozen metrics and explaining what each means conceptually, how it’s calculated, where the company stands, and what growth could look like. They launched a second course for managers who want to wade even deeper into the numbers. Since then, Young’s noticed more heightened interest—and pointed questions—during company-wide meetings. “Who cares if our support team knows the gross margin number if they don’t understand why it’s important,” she says.
MAKE THE FINANCIAL MORE PERSONAL
At WP Engine, a web hosting service in Austin, CEO Heather Brunner ends
each financial workshop for new hires with the same question: Do you see how your role can affect these numbers? “We teach the KPIs”—key performance indicators—“but also the context of how each department and each role impacts the KPI,” she says. This came in handy during a prolonged service disruption starting in 2014: While the engineering team worked to untangle the technical issues, other departments rushed to help, pitching in with customer support calls and rescheduling other projects. Their shared understanding of the company’s financials generated “this pervasive sense of having one another’s backs,” says Brunner. Meanwhile, Achatz Handmade Pie Co. has implemented monthly finance workshops for managers of its pie shops—which saw a 5 percent sales bump in 2015 and an 18 percent jump in profits. That’s a sweet ending by any measure.