In an age in which SEC Fair Disclosure rules are increasingly restrictive and Internet chat rooms filled with employee gossip can make or break a company’s stock performance, sometimes the best way to control sensitive financial information is to share it.
It should come, then, as no surprise that more than half of the 92 CEOs and HR managers who responded to this year’s Workplace Practices Survey said they meet with their staff at least once quarterly to review financial information, the state of the company or company policies.
A growing number of business owners and managers are opting for greater financial disclosure these days, says Helen Copeland of Copeland Communications Group. Copeland suggests being as honest and open with employees as possible, and sees such actions as good for the employee/employer relationship.
“Think of it as part of the internal public relations,” she says.
Open book management, as it is commonly known, is ingrained in the corporate culture at Euclid-based Radix Wire Co., explains president Chuck Ver Merris.
“We have a fluid exchange on all topics,” he says.
For Ver Merris, the exchange of all types of information on every level to every employee and even to union representatives is simply a part of the company.
“It’s a philosophy,” he says. “We elected to operate this way a long time before it was popular.”
At Radix, every employee is involved in the business.
“We are all business people first, then we do something else within the company,” Ver Merris says.
The reasoning is simple.
“A well-informed employee will make good decisions,” he says. “It is also a license to expect others to use information effectively.”
Another plus to liberal financial disclosure policies is not having to worry about safeguarding information within the company.
“We don’t waste energy securing information or spend time keeping it secret,” Ver Merris says. “I imagine some companies spend a lot of time and money doing that.”
And, even with Radix’s open book management, Ver Merris says he doesn’t know of one incident when company financial information has been disseminated improperly outside the company. Any risk he takes by sharing information is worth it because of the return he gets in innovation and productivity, not to mention general employee morale.
“Employees like to know they make a difference and are participating in whatever happens,” he says. “Just having information empowers and ensures that employees go off in the right direction.”
So what happens to this open air style when the economy heads south and shakes up the business? According to Copeland, sharing financial information is important when the news is bad as well as good. That’s especially true with high-exposure or publicly owned companies when a proactive approach to sharing information may keep employees from being caught by surprise.
“You don’t want it (information) to show up in the media or print and employees don’t know,” Copeland warns.
“We do celebrate when the numbers are good, but we don’t serve it up any different way when they aren’t,” Ver Merris says.
And for Radix, and manufacturing in general, the news hasn’t been all that cheery. Regardless, Ver Merris presents the information every quarter, followed by a question and answer session in which employees can ask questions and express opinions.
“We may have different opinions, but at least they know why,” he says. “There is no mystery. No one works in a vacuum.”
“Companies need to deal with the truth,” she says. “Even in the case of bad news. Explaining cutbacks is being realistic so that the employees can understand that during a bad time, there may have to be some changes.”
The result of this straightforward stance is an air of respect toward a business owner who is willing to be honest with employees.
There is, however, one exception to the rule. Copeland and Ver Merris agree that discussing compensation is verboten.
“The bottom line is tell the truth except in the case of individuals’ salaries,” says Copeland.
So, if sharing information is such a positive for business owners, why do many refuse to do it?
Copeland chalks it up to a fear factor and even a sense of ownership. That’s especially true with smaller companies, where there is a distinct feeling of ownership.
“There is the idea that this is my baby,” Copeland says. “It’s yours and you don’t go out talking about income with other people.”
Copeland offers one final piece of advice when determining how to share critical data.
“Make it an enjoyable experience,” she says, suggesting a lunch or dinner meeting. “Serve comforting food in a friendly kind of atmosphere. People will always come for food.”
How to reach: Copeland Communication Group, (216) 932-2722; Radix Wire Company, (216) 731-9191