Motivating employees to care about the financial health of the business can be a daunting task for any business owner. However, it is a critical step to ensuring the long-term success of the business. In a recent episode of the Kid Contractor podcast, host Caleb discussed this topic with guest Carla from Cycle CPA. They discussed how to get employees motivated about the numbers and shared some practical tips that can be implemented in any business.
Carla recommended practicing some form of open book management where the business owner shows as much or as little of the financials as they want. However, she emphasized the importance of showing the gross profit percentage margin, which is a rule of thumb for the industry at around 50%. This helps employees understand the financial health of the business and how their work contributes to its success.
Carla also shared how she helped a particular business put incentive plans in place to motivate their employees. This involved creating a balanced scorecard for everyone, which had metrics related to the quality of work, timeliness, and efficiency. The team had a monthly review where they discussed their performance and how they could improve. Based on this review, the team received a bonus payout, which tied their performance to the success of the business.
What stood out from the discussion was how the focus shifted from the business owner telling employees what they need to do, to working with the team as a whole to achieve the business's goals. It is about making the company a better place to work, which involves investing in good machinery, creating a good working environment, and having good leadership. As Caleb pointed out, if employees are going to spend one-third of their day or life working, it should be a good experience.
In conclusion, motivating employees to care about the financial health of the business is a crucial step to ensure its long-term success. Implementing open book management, creating incentive plans, and fostering a positive working environment are practical ways to achieve this. As business owners, it is essential to shift the focus from telling employees what to do to working with them as a team to achieve the business's goals. By doing this, employees feel valued, motivated, and invested in the success of the business.