TOO MUCH INFORMATION

I started out in 1975 as a framing contractor employing up to 15 people. From the start, the biggest problem (other than being late) was that everyone was always counting one another's money. That seems to be human nature.

Opening up your books would worsen this issue and could create personnel problems and owner/employee resentment. There is nothing wrong with open communication, (i.e., job costs and related dollars) but company inner financials may be too much to talk about. I don't want to expose the line items of expenses since that might lead to questions among employees about my (and others') compensation, vehicle costs, and meals and entertainment.

Also, giving too much information can backfire, allowing a disgruntled employee to take information on to a competitor, undermining your trust.

Employees don't need to know the financials to be compensated well. They should be rewarded for their hard work based on performance — achieving the goals set out for them by the owner/supervisor and themselves. They should also be rewarded for their loyalty to the company.

The workings of your business should be the owner's business since all the risks are on the owner's shoulders. Unless you're willing to explain every aspect of your company's workings to employees — teaching them the ups and downs of business ownership, about what it means to put it on the line every day — having employees view your company's financial information will only confuse them.

Kevin Frasco, Craig Custom Builders
Wayne, N.J.
Big50 2006

TEAM SPIRIT

About five years ago we began sharing job costs, actual revenue goal, our cost of goods goal, our gross profit goal, our expense goal, and our net profit goal with our five-person field and office staff.

It's important for employees to have a road map for their company and bonus goals. If we as a company hit our goals, for example, on net profit, they get a certain amount of that. If we exceed our goal they get above and beyond the original bonus.

This has created synergy and teamwork. People are more conscientious about their responsibilities, which in turn keeps them accountable: They don't want to let the team down.

They're also more aware of job costs. They know that if they keep down individual project costs they can decrease the costs of goods sold or if they decrease an expense it will increase the net.

It wasn't easy getting them to this point. I kept it simple by going through the five major categories on the P&L. I showed them actuals and cost of goods sold, and I taught them how much each of those things were and how easy the dollars came and went by using Monopoly money.

Keeping staff in the dark about finances can lead to distrust and isn't good for company culture. Employees used to think I was taking home all the gross profit. Now they're educated about expenses and they know that even the owner has a salary.

Jason Asmar, The Burke Co.
Dallas
Big50 2002