Let Us Learn The Numbers
– Learning the stories behind numbers
Once employees feel challenged, invigorated and productive, their efforts will naturally translate into profit and growth for the organisation
IN A NUTSHELL
If it’s true that most people are driven by the money they earn, then why is it also true that they mentally switch-off when financial presentations begin? Shouldn’t everyone be automatically interested in understanding their organization’s performance? Isn’t it important to know if the numbers indicate fat bonuses or layoffs? Then, why is it so difficult to make employees, from non-financial roles, pay attention to a presentation on the company’s numbers?
People instantly disconnect from financial presentations not just because of how they’re presented, but also because of how much information is crammed into them. Some may almost have a phobic reaction towards math, while others might just be put-off by dry data on excel sheets. In short, presentations that are overloaded with numbers tend to leave people with glazed eyes and minds.
But there’s a lot of tangible evidence to show that once people begin engaging with the financial data of their organizations, they solve problems like owners; they act like entrepreneurs who are on the lookout for profitable opportunities; and they perform better with a deeper level of engagement.
It all comes down to simplicity: Organizations that simplify their financial presentations, weeding out jargons and numbers, find it easier to take the open-book management route. When every employee, whether it’s the cleaner or a top-level executive, understands the stories behind your numbers, you’re that much closer to creating a workforce that truly cares.
Make every employee understand the performance of your organization by educating them on the key financial numbers and indicators. Use methods and materials that are accessible to all employees, irrespective of their level of education or job roles.
Most people are either intimidated by financial data or they feel like it’s not their headache because they don’t belong to, for instance, the sales department. Or, they might feel like they don’t have the right kind of education to understand the numbers. When an organization puts in concerted efforts to make the data less intimidating; to offer just the right amount of financial literacy to all its employees; and to encourage people to challenge data presented, it boosts the sense of ownership among employees. If people understand key figures and indicators such as the profit and loss statement, the balance sheet or the various revenue streams, it helps them ascertain ways in which they can add value to the whole equation. It also helps people rationalize the decisions taken by the company leadership, because they now know what drove those decisions.
Educate in simple, creative and accessible formats: It’s important to organize formal educational sessions for all your employees, irrespective of whether they’re factory employees or corporate executives with MBA degrees. Conduct these sessions in collaboration with your worker unions and financial experts, building the educational material in a format that’s simple and accessible to all levels of employees. For instance, Semco used comic strips with simple illustrations and texts, to explain just the key financial indicators of the company’s performance. Don’t aim to educate employees on every detail of your financials. Instead, focus on the basic concepts such as profit and loss statements or the balance sheet and so on. The idea is to enable employees to gauge whether the company is headed in the right direction or not; if it’s likely to achieve all the goals set at the beginning of the year; and if difficult times and tough decisions are on the cards. In short, these educational sessions and materials should speak the language of the employees and not be anything like the boring corporate presentations that turn off people instantly.
Build financial literacy through mentoring: Apart from the formal educational sessions that teach all employees how to read and interpret the company’s financial numbers, it’s also important to build a culture of financial mentoring. At Semco, employees in corporate offices and operational roles are educated by mentors who could be either the team leader or another colleague who has mastered the financial information. These mentors were assigned to teach and help newcomers understand the key messages behind the company’s numbers. Done in either one-to-one sessions or in small groups, the financial mentoring should be offered to everyone – right from interns to top-level strategic recruits.
Share numbers in general and departmental meetings: Make it a point to allocate time for sharing the company’s financials with all employees. You can do it via two meetings – one general meeting, held every quarter, and one departmental meeting, held every month. Departmental meetings, that take place more often, offer greater opportunities for people to get a deeper understanding of the numbers. Both general and departmental meetings are meant to create a safe space for people to ask questions and challenge things. Unless it’s safe, people will not feel confident about sharing their views on matters like the key financial indicators. The first step towards creating safety is building trust and being fully transparent about the information shared. Besides focussing on financial sharing in these meetings, you must also think of them as opportunities to inform employees about your company’s state of affairs and performance. Use the interaction as a way to prepare your employees for whatever steps need to be taken going forward – whether it’s time to celebrate your successes or to take tough decisions.
Incentivize Employees To Present The Numbers: Although the company bigwigs like the CEO or the Director of Sales may begin presentations, all employees must be incentivized to question and challenge the numbers. Since turning the tables is a great way to bring up interesting perspectives, encourage employees to present the numbers on issues that they’ve questioned or challenged. But, presenting numbers is no easy task: Employees will need to get into the details of the financial data and really internalize the numbers before they can present their findings with confidence. Once they do that, people understand the realities behind numbers in a deeper way. For instance, if a line in a specific month’s statement reveals a loss and an employee questions it, the leader who presented the number should invite him/her to investigate the numbers and present their findings in the next meeting. Investigations typically involve interactions with people from other departments and they reveal what caused the loss. The employee can then connect the dots and take a big-picture view of the whole organization; and they now know what value each link in the chain adds to the company. But most importantly, they realize that the financial performance of a company isn’t the responsibility of the sales department alone – instead, it’s every employee’s responsibility to positively impact the company’s numbers. Incentivizing people to present numbers instead of being passive bystanders will go a long way in boosting engagement and ownership.
Restrict data on reports and make them actionable: Since a lot of people tend to be intimidated by numbers or have an adverse reaction to financial data, it’s crucial to keep the financial sharing and education simple and easily digestible. The presentations should appeal to the mainstream of employees – not just the financial experts – and must stick to the most important figures and indicators. Whatever the employees need to know about the company’s financials needs to be immediately apparent. Of course, if an employee is interested in understanding the numbers in greater detail, they should be given the option to zoom into the data. But, for everybody else, the report should restrict itself to a maximum of six quantitative indicators that show whether the company is going in the right direction or not. It shouldn’t be crowded with multiple key performance indicators. Qualitative analyses that complement the quantitative data can be presented as well to further explain the situation to employees. The end goal should be to offer actionable insights with which employees can figure out where they can add value and how they can positively impact the organization’s overall performance. When (NOT) to use it?
Why is not about results, but about a purpose, a cause or a belief of which results are the by-product. Why provides clarity and inspiration. Moreover, synchronizing on why creates trust (remember: trust is not a checklist!). If you need to go fast ask “How?”, if you want to go far ask “Why?”. In some circumstances asking “How?” is very relevant and therefore adequate, but most of the time asking “Why?” delivers a more sustainable foundation to build on.
Level to implement
Give a bird’s-eye view of company financials
Insist that every employee learn how to read numbers
Use creative ways to build interest and meet regularly to sustain it
Get into the nitty-gritty details of financials
Include too many key performance indicators in reports
Make people feel unsafe about questioning or challenging financial data
Boosts ownership and autonomy among employees
Shows people where and how they can positively impact the company’s financials
Promotes deeper connection and engagement at the workplace
Transparency about numbers might lead to information being leaked to competitors
Meetings may be less efficient when numbers are presented by people who aren’t financial experts
In the year 2014, Davi was a new recruit who’d just joined the Project Management department at Semco. All through his onboarding process, he was encouraged to question everything and really understand the why behind the company’s numbers. At his very first departmental meeting, where a lot of the department’s financial data was being shared by the team leader, Davi raised several questions and challenged the numbers that were presented. After answering his questions, the team leader invited Davi to take the lead and present the numbers in the next departmental meeting and he agreed.
Over the next three weeks, Davi spent several hours trying to get to the bottom of the department’s financial numbers. He studied every line on the statements and began connecting with a number of people who helped him understand the source of each line on the reports. His quest to really understand the numbers allowed him to interact with a variety of people and helped him understand the dynamics of different departments. He became aware of the problems being faced at that moment, the various links between the financial data, and the reasons why the numbers were the way they were.
Although he was a newcomer, he was given the time, space and encouragement to really dig deep and do his homework before he made his presentation in the next meeting. Nobody told him to stop looking into the numbers and get on with his job. His own diligence, coupled with Semco’s culture of mentoring, enabled him to make a confident presentation.
The exercise offered him an unmatched integration because he was given the freedom and the resources to master the financials and get a deeper understanding of the messages behind the numbers. The whole experience boosted Davi’s confidence levels, as well as his sense of ownership. He automatically felt like he was an integral part of not just his team or department, but of the entire organization. And that feeling is at the bottom of all the great contributions he continues to make at work.