What I have come to realize after nearly 20 years as an employee and now 10 years as a business owner, is that essentially all organizations are the same inside.
All organizations want their income to be bigger than their expenses. All organizations want their assets to be larger than their liabilities. All organizations want to have more cash coming in (as a result of their operating, investing and financing activities), than cash going out.
What I have also come to realize is that organization’s who thrive, help educate their employees, on how their work on a daily basis impacts the organization’s money-making model. This is what we call, “Building the intrapreneurial spirit.” Can you imagine an organization (regardless of whether its a corporate business; an educational entity – private or public; a non-profit organization or governmental municipality), where every employee treats their organization’s resources as if they were their own?
It is very effective if you supervise the work of others to invest some time, educating your direct reports on how their work impacts income, expenses, assets and liabilities. Every person has an impact on the financial health of the organization. Great leaders are able to make the connection between input (labor) and output (financial performance). If your employer is a publicly-traded corporation, its easy for you to access the latest financials and draw the connection for you direct reports. If your employer is a private entity, ask if you can share a snapshot of the financials with your direct reports and cite your reason. If you work for a non-profit entity, public educator or government entity, your financials are publicly available information anyway and so they should be easy for you to access. Great leaders are great educators and they invest time, regularly to help their people learn.
I’ll guarantee you that if you invest some time educating your direct reports on how to read financial statements and are able to connect the work of each person to the financial statements, you will collectively make a much more positive impact on the financial health of your organization. Likewise, you will be able to garner ideas as to how to improve financial performance, once people better understand the statements and see they connect with their daily work.