I have a number of pet peeves under this heading.
- Goofy labels for routine, basic things
- So many metrics that no one pays attention.
- Objectives or priorities that are supposed to be measurable but aren’t.
- Goals that are actually steps in an project plan.
- Metrics without financial transparency.
To give credit where it is due, I love The Great Game of Business by Jack Stack. His approach is logical, inclusive, transparent and focused on building teams made up of good business people. And they know how to have fun in their work. Jack Stack and his book didn’t teach me these lessons but he confirmed and wrote succinctly about what I learned from strong managers and leaders in my early career.
Let’s start with #5. Senior managers often hesitate to share the core financials with their teams. Initially, they are concerned about whether the average worker will understand what the financials mean. They are sometimes concerned that confidential information will be shared inappropriately in the community. Other times they are concerned that the information will be a distraction: the average worker doesn’t need to know the financial health of the company. When an organization is struggling, the managers may be concerned about worrying their teams. I have heard all of these reasons from clients. Let’s look at each one.
They are right that the average worker may need some guidance to understand the financials. The “average” worker quickly learns basic accounting concepts. As Jack Stack has pointed out, if the average avid sports fans can understand complicated stats, they can understand an income statement, cash flow and balance sheet. You aren’t teaching them to be accountants; you are teaching them to understand the stats of the game that is your business and industry.
As for confidentiality, your team already has access to confidential information that makes a big difference to your organization’s success. If they aren’t disclosing that information willy-nilly around the community, what makes you think they will share the financial information? Besides, don’t you trust the people who work for you?
The “need to know” argument implies that an organization hires people who cannot understand and apply information to the decisions they make. Decisions that the average employee makes every day can make a difference in the success of the company, if they are given the chance to learn and see how their work contributes to the success of their organization. Knowing the financial status of the company heightens the average worker’s awareness that what they do matters; when they know their work matters and how it matters, they become more engaged in their work and they make better decisions about their work.
Some executives may think that delineating their colleagues into “need to know” vs. “just do your job” groups is simply arrogant and disrespectful to the individual who work with them. Consider the role of janitor. Why would they need to know how their company is doing? What impact can they have the work of the business? You never know. Jack Stack tells the story of a janitor at the plant stopping him as he walked through the factory to ask whether he noticed that 75% of their business came from one customer and whether he thought that might be a risk to the company. Heads down, focused on the work, the executives hadn’t noticed…yet. That one comment by the janitor raised a flag for the company and they intentionally began working on increasing the diversity of their customer base. Only a short time later, their largest customer cut back, which hurt but not as much as if they hadn’t brought in new clients. Don’t make assumptions about what individuals in the company can contribute. If you invest your trust in your team, they will invest themselves back into the organization.
“I don’t want to worry my team” is paternalistic and lacking awareness. If the organization is struggling, the team already knows. In fact, they may be creating a story in their heads that the organization is in worse shape than it really is. The stress of most managers whose organizations are struggling is visible and obvious to most of their colleagues. When times are tough is the worst time to avoid sharing financial information; in other words, when are times are tough is the right time to share financial information. You need every ounce of awareness, creativity and improved decision-making of every individual to help you turn around a struggling organization.
Basically, you aren’t hiring stupid people. You are hiring smart people who have the capacity to learn and understand basic financial information. As they learn the basic financial information, they are also learning how their work helps grow the revenue and limits the expenses…or not.
Jack Stack recommends giving people a stake in the outcome, that is the success of the business. The financial knowledge is the first step to creating an incentive plan that gives folks a stake in the success of the organization. Pet peeves #1-4 get can derail a well-intentioned incentive plan, even one based on the company’s financials. Those pet peeves are explored in Part 2.
