Whilst researching my next book, I was discussing with a Chief Executive how he communicated the culture his organisation.
He explained that they published the revenue, margin and profit from every deal on the wall. Everyone knew what the overheads were so that they knew how many deals covered their expenses for the month. Everyone could see the cash position so they knew the the implications of giving any credit terms to a major customer. Every month they all say down and discussed the organisation’s finances and cash position.
In essence, he deliberately created financial literacy and awareness in the business. He made everyone aware and so responsible for the finances.
This is not the first example of owners exposing the organisation’s finances to their staff, that I have come across in my interviews.
Contrast this with most organisations: You join the company and the finances are never mentioned. You probably do not even know the costs of the department you are in, let alone the margin or contribution. You might get an annual profit figure or turnover figure. Unless you are in sales, you are probably not looking at turnover (and in some cases not looking at margin or contribution).
It is as if it is all a secret.
What is going on here?
In these businesses, you are being treated as an employee. In this Chief Executive’s Business, you are being treated as a part of the business, a member of the business, responsible for the business.
This is a dramatic mind shift in how you treat people.
- As a manager or executive, just try the difference: “I employ people” vs “I have people in my business”
- As someone employed in a business, try “I am a part of this business” vs “I am an employee”
Notice the difference.
What would happen if we asked people to behave as if it were their business? What would happen if we exposed the finances to people and explained what things costed and where the costs went.
What would happen of the public sector thought of themselves as “in the business of public sector service provision”? Would it change the way the cuts are explained? Would it change how people felt about the cuts that are being made at the moment?
And why does this not happen in larger businesses? Just because you are in a large organisation, or a department that supports other departments, does that mean you should not be aware of what it costs and the value you should be providing?
How would it change how you communicate strategy, improvements and change?
Are you employing employees, or bringing people into your business to be a part of your business? I will let you decide.
(You can find out more about my research here)
