As I look back over my almost 20 years of corporate IT employment in multiple MidWestern companies, I’m starting to detect a pattern. And for those that know me or read my bio know, I’ve working in multiple industries supporting multiple business groups in both public and privately held companies large and small. Those groups span retail, commodities trading, natural resource exploration, mining and refining, banking and financial services, legal services and manufacturing. The pattern or trend I am referring to is:
“The degree of success a company or business unit experiences seems to be proportional to the degree of financial transparency reported to employees.”
The more transparent the company or group was with profits or losses, costs and expenditures, revenues and margin, the more successful the company or business unit was growth-wise. The more secretive and obfuscated the financials the more downward trending the company or business unit as a whole. I can even recall the same business unit switching from transparent to obfuscated coinciding with a positive to negative growth switch.
The transparency I’ve referring to is not only the quarterly and yearly reports filed with the SEC and available to the investor community. It is taking some time out of the daily work schedule to bring employees together and explain the business decisions, strategy, budget and market conditions that are behind and driving those numbers.
In recalling my MBA coursework, I had an excellent course on family owned businesses by Ernesto J. Poza, author of “Family Business”. Ernesto J. Poza is now the Professor of Global Family Enterprise at the Thunderbird School of Global Management. I believe he also made this link in his course I took at the Weatherhead School of Management at Case Western Reserve University. His focus was family owned rather than publicly owned businesses, but I believe the theme can be extended to both. I recently took a continuing education course through Weatherhead and met a CFO of a small, nearby Internet creative design firm who mentioned his company was experiencing measured growth even through the great recession. He also spoke of the owners having a monthly financial update where a straight review of the prior month’s numbers gives all employees a direct sense of the health of the company.
The straight reporting of the financial health of a company or business unit gives everyone a clear picture of where the company is headed. If repeated quarters of downward trending financial indicators are given, then no one should be surprised that costs, including employee overhead, needs to be seriously considered for adjustments. Managing technical teams is more straight forward when everyone on the team knows the health of the overall company or unit.
Can anyone confirm the link between company and/or business unit growth and financial transparent reporting to employees? Any disagree?