Transparency is a popular buzz word on Wall Street these days, and many investors are demanding it. However, transparency doesn’t only serve outsiders trying to understand the strengths and weaknesses of your company; transparency can play a valuable role inside the company walls, as well. By sharing numbers with employees, not just executives, you can increase employees’ sense of ownership. Especially when compensation depends on the numbers reported, employees will want to see the numbers move in the right direction.
However, being open is not enough. You need to be sure your employees are trained to understand financial statements and have enough insight into their own jobs to know how to affect the numbers you care about.
Adapted from “Transparency: The Buzz Word in Finance” by Karen Berman and Joe Knight.