Would You Share Your Security Company’s Financials?

I was speaking with a customer last week about her security officers’ misperceptions of her company’s finances.  Many of you reading this article have also probably walked away from conversations with officers thinking “He has no idea…”  I personally remember having a conversation with one of my best officers who had recently been promoted to sergeant.  During the conversation he explained that based on his promotion, he deserved a much better raise than what he had received.  That comment by no means came as a surprise.  But what did surprise me, was his next comment “You’re paying me $11.00/hour, but I know that you’re charging the client about $30/hour…” I was totally shocked.  The officer was a very intelligent and capable young man, so I didn’t understand why he thought we were able to command a billing rate of $30.00 per hour on a STATE contract.  Especially since the truth was, we were billing about half of that amount.  But because I was afraid of sharing our security company’s financials, I didn’t fully address his assumption.

That single conversation gave me a much better understanding of how our officers and employees perceived who we were as a company.  It also helped explain why some of our officers believed that we as owners did not care about them and why some officers were less than willing to give their jobs their 100%.  Many security officers, including many that work for you, feel the same way because they believe that your company is profiting millions while many of them struggle to make ends meet.

In the years following that conversation I often considered sharing some aspect of our company financials with our employees.  Unfortunately, I never got up the courage to follow through with it for one reason or another.  In all honesty, that is the one thing that I regret not having tried prior to selling our security guard company.  In the security guard industry, now more than ever, security guard companies depend on their officers to be fully engaged with their jobs and make constructive suggestions to improve service.  I believe that sharing some basics about your company’s financials would help in achieving that goal.  That is what Open Book Management is all about.

In small to medium-sized companies, officers may think that they have a good feel for the total revenue of your company.  Those same employee’s also tend to feel that they have a good understanding of the company’s expenses.  So in their heads they believe that they have a good understanding of your company profits and how much managers and owners are taking home.  But we all know that what officers think you take home is A LOT different than reality.  Educating  your employees on your company financials helps debunk the myths and creates both a sense of empowerment and ownership.

Why Should You Share Your Security Company’s Financials

In today’s security guard industry competition is more fierce than ever and your company needs to be operating at full speed.  Imagine having all of your employees, not just managers and supervisors, trying to maximize results.  I believe that open book management can help your security guard company achieve just that.  By sharing key financials and metrics you can engage your entire employee base in addressing and solving problems.  In many cases you may find that your employees may present you with answers that you might not have thought of on your own.  Additionally, this transparency also aids in building a workforce that is more committed to your company’s overall success.

By sharing your financials you can also help your employees understand the “WHY” behind certain decisions.  When your employees are working in a vacuum they don’t see or understand the financial picture.  When they don’t understand the financials, the decisions that management makes may seem unfair or inexplicable to them.  Transparency will help them understand the “why” and increases their acceptance and compliance.

Lastly, helping your employees understand the financial “Big Picture” helps minimize the “we/they” dynamic.  In many security guard companies officers sometimes feel that they and their managers are often at odds.  When management understands the difficult economic environment that a company faces they may feel like the officers don’t care or don’t act with a sense of urgency.  Many times it’s not that they don’t care, it’s just that they don’t understand the big picture.

Tips on Sharing Your Security Company’s Financials

If you want to try using open book management here are few tips to follow:

  1. Most employees probably aren’t accountants, so they won’t understand the intimate details.  Present the information in an easy to understand manner using graphs and charts as appropriate.
  2. Decide what information that you are willing and comfortable with sharing.
  3. Don’t share salaries as it could lead to unnecessary drama and jealousy.
  4. Disseminate the financial information regularly and outline key metrics that you and your employees should be monitoring.
  5. Develop a way to help employees understand what the numbers mean.  It may take a while, but after several months you will begin to see that your employees have begun to understand and will eventually have an “ah hah” moment.
  6. Ensure that there is a venue for your employees to follow-up with management to make suggestions and give insights.

In the end, I know that this is a very foreign concept to most people, especially in the security guard industry.  Sharing your security company’s financials can lead to prying or uncomfortable questions from your officers.  Although no one wants to be put in a difficult situation with tough questions, realize that if your employees are asking those types of questions then they are getting engaged with the process.

More:  If you still aren’t convinced check out this article from Harvard Business Review.

Do you practice open book management in your organization?  If so what lessons have you learned? If not what stops you from doing it?  Please feel free to leave your comments below.

 

 

By Courtney Sparkman

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