Posts Tagged ‘employee morale’

Reporting transparency w/ Employees: Why not?

January 6th, 2009 Comments off

I have had a number of comments/questions regarding the level to which employees should be aware of financial results and how much detail should be shared with them. My view, if you are not currently a public company, is that you should operate as one and provide the same level of reporting transparency.

As we kick off what will most certainly be an interesting ride in 2009, there is no doubt that we continue to find an environment of constantly changing dynamics. While I chose to push the completion of our Budget until the final few weeks of December, I have already found that there are potential material changes that arose during the Holiday break, which will likely impact our Q1 and Q2 results. Although it would certainly not allow us to achieve our budgeted results for 2009, we still have the ability to effect additional changes to maintain our profitability in 2009. However, these changes, and our profitability, will not be achievable unless the entire employee base is aware of what needs to be accomplished and are engaged in that mission.

Even our smaller entity has not been immune to the employment adjustments that have had to be made sector-wide even though we achieved higher sales in 2008. We are in a very difficult environment and need to plan for the potential continuance of these conditions. With the adjustments we’ve made it inevitably creates a sense of uncertainty. We have lost some employees to competitors. There’s a very real cost to that turnover and the loss of tribal knowledge within an organization. I also acknowledge that while I can identify the key areas that need to be addressed for savings initiatives, it’s the smaller day-to-day spending that the wider employee population can effect and create additional savings. Smaller areas not necessarily seen by management. It’s our employees that will help achieve our aggressive forecasts and our return to profitability this year. It’s our employees that will develop our new product lines and marketing materials to continue growing our market share. It’s our employees that make this company a great entity to work with.

With those few thoughts in mind, why wouldn’t I share our financial targets with our employees so they can see the map that we need to follow in 2009? How do you work towards an end goal if you don’t know what the goal is? If the employees of larger corporations have this luxury via 10-Q and 10-K filings, then why shouldn’t they have this available at a smaller entity where performance levels, I believe, are more crucial? Simply, there’s no reason not to share it and I’ve realized solid results by initiating “internal transparency” in the same manner that I work with key external stakeholders.

Thanks for reading . . . .

Jeffrey Ishmael

Do you know the cost of employee turnover?

August 4th, 2008 Comments off

Recently I’ve read a number of articles about employee turnover, the effect on morale, and the impacts to productivity. While it’s difficult to quantify the true cost and the effect on productivity within a Finance department, we can look to other areas in the company for a view of what that cost really is. Once you can quantify it, the number is pretty staggering.

With one previous company I was at, I partnered with our headquarters in France to develop a new reporting structure for the Services segment of the organization. For this segment, it comprised approximately 30% of our revenues but a much more significant portion of our EBIT. Even with this level of significance, we did not previously have the ability to measure our productivity levels, margin performance by segment, or identify areas for opportunity. We were simply working with a consolidated P&L to report our monthly performance.

The new information that we were able to use, as well as understand the costs to the organization, was both staggering and exciting since it was a huge opportunity for continued improvement.

Read the entire commentary – Do you know the cost of employee turnover?