Every management team has its own dynamics. Some operate in a fully transparent environment, other keep information strictly on a "need to know basis." But what impact does the sharing of information have?We're frequently surprised by how little financial information some management teams are privy to. The CEO reckons they don't need to know and the CFO reckons they wouldn't understand the information even if they had it.
But how can you ask a management team to drive growth and profitability in a business if they don't understand the numbers?
We came across this debate with a recent client. The business was doing well and was profitable, but they were about to hit some challenges with the loss of a key customer. The management team had half the financial picture - but no real understanding of the impact that losing this customer would have on the bottom line. Cries of "we need more resources," and "pay us bigger bonuses" abounded.
Following some debate with the board, it was decided to share the full picture with the management team - right down to the bottom line. The impact has been interesting. The calls for more resources have stopped. The team now realizes that throwing more bodies at the problem isn't the answer.
Management team bonuses are now tied to bottom line profitability, not to top line revenue. And the impact - according to the CFO - has transformed the way they manage the business. For the first time, they are truly accountable.
So before you decide to keep financial information only on a "need to know basis," stop and think. What might the impact be if the people driving the business had more information?