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Over the past year, many business leaders have had to make big decisions in uncharted waters. As a business owner and leader of a team myself, I’ve certainly had to make some difficult decisions and change course — several times — over the ups-and-downs of the past year while always considering what’s best for our employees and the future of the business overall.
Something I’ve learned in my 10 years of leading the team at Yeti LLC, and from reading probably 100 management books, is the value in being transparent with my team, especially when it comes to the financial health of the company.
Often, people in new positions think they need to shoulder all the burden of the business struggles which leads them to refrain from discussing profit health and financial KPIs. I believe this is a mistake.
It’s important to be real with your team, and that means you have to talk about money. But how you talk about the company’s financial health with your team is extremely important.
Talking about company finances with your team is an art and takes a very strong level of awareness. Below are some tips for successfully discussing company finances with your team:
Make sure to facilitate understanding
It’s incredibly important to put yourself in your employees’ shoes before discussing company finances. Remember they, most likely, haven’t been running a business like you have for as long as you have, which means they aren’t going to look at a spreadsheet of business numbers the same way you are.
Dumping a big spreadsheet of numbers in front of your employees is not helpful and will most likely overwhelm them. Not to mention it leaves a lot of room for misinterpretation. Often, employees don’t understand the true costs of running a business and may focus on the wrong things.
Your responsibility with your team is to distill the numbers in your financial reports and surface only the most important ones to your team with context. What do the numbers mean? What story do they tell? That’s what you need to focus on conveying.
Once you are clear on the financial story you are going to tell, you can hold a meeting where you break your company finances down, at a high level, and explain how these numbers work and what is important and why.
Remember, and I can’t stress this enough, the more clear you can make the narrative, the better. It leaves less room for misinterpretation.
Related: As a Manager, This Is What I Need To Know From My Working-Parent Employees
Show people how their work ties into the numbers
Once you’ve given your employees the lay of the land when it comes to your overall business finances, you can then take it a step further and start citing very specific examples of how the various activities your employees take contribute to that story.
That being said, it’s crucial during this process not to single individual people out and point to their specific effort (or lack thereof.) Talking in broad strokes in a way that is easy to understand is best. The idea of showing financial numbers is to essentially show your team the scoreboard, make it focused on how the team is doing.
For example, when referencing your timeline, you can say when a project takes two weeks longer than we scoped, here is the effect. That way you’re not placing blame or pointing to a single individual on why the project went long, if it was due to their actions, but instead focusing on keeping it at a high level.
It’s also always good, especially during difficult conversations about projects that have cost the company money, to encourage employees by discussing a positive story about a successful project and its positive impact as well.
Know when to talk about money
As a leader, you absolutely do not want to come across as someone who is strictly concerned with profits. But, like I mentioned, it is important to be transparent, honest and constructive with your team.
You should have a time set aside where you talk about finances with your broader team. We touch on this for five minutes in our monthly team meeting and then do a deeper dive quarterly. You can mention money outside of these times but setting aside this time to make a presentation of it and answer questions from your employees is important.
Through good times and bad, it’s important to be sharing what you know about your finances with the team. In bad times, especially, this will give your team a better insight into your plans and more confidence and understanding of your decision making.
In these meetings, do not put the onus on your team to fix your finances. As the leader of your company, you need to own the financial picture and lead your team, letting them know how to help you improve it.
Another good way to introduce finances is getting in the habit of sharing project profitability reports, if you have them, during project retrospectives for every project you complete. When everyone knows there will be a project retrospective, it is expected that profit health will come up in that meeting as a part of fully understanding all angles of how successful a project was.
We’ve made this part of our company culture here at Yeti so no one is surprised when we discuss the success, or lack thereof, of the overall profit health of a project for the company. Again, though, how you handle the conversation around a project gone wrong is important. When this happens, it is rarely ever one person’s fault. Focus on what underlying business issues created the situation for a project to go so sideways.
Related: How Successful Leaders Communicate With Their Teams
Create a structure of cascading communication
Before setting up a team meeting to discuss financials, you should align your leadership team around the narrative and be clear on how you are going to tie your numbers into that story.
As the CEO or leader of the business, you should be delivering the high-level narrative to your company, but it’s also very important that your leadership team helps you with the details as it pertains to individuals and smaller teams.
While it’s not beneficial to overwhelm the individual contributors on your team with intricate company finances, your leadership team should be fairly well-versed and thoroughly understand the company finances and how their individual teams contribute to the overall financial story. In one-on-ones and team meetings, employees can be asked questions after a financial presentation. It’s important to make sure they know how to answer them.
So, before having that high-level meeting with your team where you showcase a few key metrics or percentages to the whole team, you should meet with your leadership team to take a much deeper dive. That way, when the leadership team has these meetings, they will be able to answer more specific questions.
From there, it’s wise to meet with your leadership team again to receive feedback from what they are hearing so you can adjust your financial communications appropriately moving forward, focusing on whether you need to give more detail or less.
Leadership is very much about balancing the communication you give. You want to be direct and not beat around the bush. Finances are an important part of that and dancing around them can give your employees an unrealistic expectation of what is happening at your company. Distilling and communicating your company’s finances to your team can be scary, but done appropriately, it’s a very effective way to get alignment and lead your company through good times and bad.