The following is a guest post from Michael Paull, CFO at The Ahola Corporation. Opinions are the author’s own.
Does your marketing team discuss EBITDA in the breakroom? Have you heard HR conferring with IT about last quarter’s margins? Does the operations manager stop by your office to inquire about the revenue forecast? If so, congratulations! You’ve built an engaged, informed team that thrives on transparency. That transparency is a strategic advantage. An environment like this often leads directly to improved performance.
Financial transparency is a challenging topic for many finance leaders. Historically, financial performance was closely held by the finance team and senior leadership. This information was often deemed confidential and not for the eyes of the rank and file. “Why would they need this type of data?” and “They wouldn’t understand it anyway” were common refrains.
Additional reasons for apprehensiveness include the inviting of unwanted scrutiny or simply a challenge to their authority. Concerns around power, control or even personal identity often played a role. As societal transparency has accelerated and permeated many aspects of our lives, this notion has taken hold in companies, both large and small. Even public companies, whose financials are available for all to see, are sharing more granular financial data with their teams. It is important for finance leaders to realize that sharing certain financial data with their employees yields benefits. So, what are those benefits and associated risks? Equally important, what should be shared?
It all starts with trust. When a CFO can stand up at a town hall meeting and present financial results, it can’t help but create trust. By sharing something incredibly important and often characterized as confidential, employees will generally feel grateful for the information. The feeling that they are being included and trusted with such crucial information will go a long way to getting them on board with your plans and engender a sense of belonging and ownership, justifiably so. As a leader of the company, you are telling them about the direct results of their efforts.
Strategic sharing
Once you share this information, the next step is to guide your team through it. Help employees make the connection between their work and the company’s financial performance.
How do their individual and collective efforts impact these results? What can they do to move the numbers? If you have an engaged workforce with the right people in the right roles, they will be actively seeking this insight. It’s not always straightforward as to how an individual can impact the results. As a leader, you need to create that line of sight. Presenting this data must include a call to action. If not, while interesting, it will not help you, your company, or your employees.
Presenting financial data to your teams will also help promote alignment. While the management team may be on the same page, employees are not always privy to the corporate goals and vision. Sharing this data communicates and reinforces what is important to the management team and should therefore be important to everyone. Cascading and consistent messaging can greatly help your cause in this critical area.
When employees are armed with this knowledge, they will undoubtedly make better decisions, assuming incentives are properly aligned with the desired outcomes. Once they see what is important and how they can move the needle, it becomes an empowering situation.
Employees start to think as an owner might, truly focusing on the big picture. Not only will some employees be thinking more strategically, but they may also discover ways to improve their daily jobs at a tactical level. This can drive efficiencies and reduce costs. Ultimately, we desire a better-performing company. A highly performing company should be able to provide more attractive compensation and benefit plans for its employees. A virtuous circle that we all want to be a part of.
This initiative is not entirely without risk, but you can control this to a great extent by carefully choosing what to share. Ultimately, it’s important to keep in mind that some data may be disclosed outside of the company. Confidentiality agreements aside, this is something that is an unfortunate reality.
Additionally, some employees may not like what they hear and may choose to leave the company. While certainly a risk, that presents an opportunity to reassign duties or upgrade with employees who are a better fit. While most companies invite some level of healthy and constructive discord, you do want everyone to buy into the goals and the path of how to achieve them at some level. In the end, I think you will find that the benefits of sharing outweigh the risks and that this is a strategy worth pursuing.
Determining key metrics
Now that you have decided this is the right path forward, what do you share? In the absence of facts, people tend to create their own narrative. You need to share enough to avoid that outcome, but you do not want to overshare. Oversharing can obscure what truly matters, and you should be able to concisely and accurately communicate with a handful of metrics. Core metrics such as revenue and margins should be standard. Comparing these to budget and prior year results provides appropriate context for better understanding.
Some companies might share EBITDA and cash flow metrics. This can become challenging, as beginning to share certain metrics often creates an expectation of ongoing transparency. If the numbers are going the wrong way and you are concerned about alarming employees, harming the culture, or exacerbating a tough situation, you may be tempted to stop sharing. This is a mistake and will signal exactly what you are trying to avoid. Things are not going well, and you may have a cash flow issue or another issue that could lead to job cuts. Worse, you will erode trust.
Before deciding on what to share, be sure you are committed to the process, in both good times and bad. After all, the mission here is to create a more cohesive and invested workforce. Who better to help solve your problems than your team? Other metrics to report might include pipeline data or production and utilization metrics.
It is important to share meaningful data that can tell a story, be understood and drive the desired action. This data should be a subset of what management uses internally or for board and investor reporting. This should not be a new set of metrics that are disconnected from what you are currently utilizing. Know the score, report the score and the score will improve. Words to live by.
How often you share this information depends on your company, but monthly is a suggested minimum. You will want to measure and report the change frequently enough so your team can see the impact of their actions. Some companies have a culture of real-time feedback. I have worked for companies that had monitors throughout the office that continually displayed key metrics by department and at the company level. It may take some experimenting, but you will discover the appropriate cadence in time.
In today’s competitive and fast-moving environment, financial transparency is not just a leadership preference, it is a strategic imperative. When CFOs share the right data with consistency and clear context, they can drive alignment, build accountability and inspire informed action across the organization. The risks are real but manageable.
With thoughtful execution, the impact can be transformative. Transparency fosters a more engaged workforce, stronger decision-making and a culture where financial success is understood and shared. Finance no longer operates from the sidelines. It leads from the center of the business.
