Summer 2006                    return to newsletter contents page

BRIGHT IDEA

Make Business Literacy and Financial Transparency Part of Your Company and Watch Your Profits Soar

by Joseph Knight, MBA and Karen Berman, Ph.D.

Today's business environment requires that everyone in the company must contribute to organizational success. Imagine the power and energy your organization would have if your leaders, managers and employees acted like businesspeople. It is possible to harness that energy through two business initiatives—business literacy and financial transparency. Through the case of Oscar’s Delivery Service Inc. (ODS), you’ll learn about the transformation from employee to business partner and how to make that happen.

ODS is a national transportation company. Each employee has a high school education at most, and the work can be difficult. In the early 1990s, a new regional vice president arrived on the West Coast. She had worked in smaller regions and assumed that the work she did there would apply to this larger region. But she quickly learned that she couldn’t connect with each individual; there were just too many.

Then came the biggest shock of all: a union attempt. Though the union was not voted in, the vice president took it as a message from employees that they felt disenfranchised. Yet she knew their teamwork and commitment were key to success.

She came across the ideas of business literacy and financial transparency, which fit her philosophy that employees should be partners in success, and fit with ODS’ philosophy that employees are a competitive advantage. ODS already offered a strong salary and benefits package, but she knew that creating a company of businesspeople meant more than just pay and benefits.
Business literacy and financial transparency are interrelated and based on the idea that for a company to succeed, everyone must understand how success is measured and how they make an impact.

Business literacy focuses on teaching about the business from financial, strategic, process and leadership perspectives. Financial transparency is the step after business literacy, ensuring everyone in the organization has access to information so they understand where the company is going, how it will get there and what the results are so far. In financially transparent companies, financial results are shared and discussed weekly or monthly with everyone in the organization.

These ideas depend on each other—without business literacy, financial transparency is meaningless to employees; and without financial transparency, business literacy is just one more training program that went nowhere.

Getting Started

The first step at ODS was to assess employees’ level of understanding of the business and the organization’s culture. The assessment revealed, among other things, that:

• Employees didn’t understand the information already being shared, although management assumed they did.

• Employees believed their work had little impact on the company’s success.

• Middle management couldn’t identify or define the organization’s key numbers.

The findings informed the development of a business literacy and financial transparency program called “You Are the Difference.” Everyone in the organization attended a half-day training session that outlined ODS’ philosophy, strategy, income statement and key measures. Three “Money Maps”—strategy, path and moneyflow maps—were used as part of the training program and the reinforcement process. After the training, managers began holding weekly meetings, setting short-term goals, and posting and discussing financial results.

You can accomplish business literacy in many ways, including games, training classes and online learning tools. Financial transparency comes about through whiteboards, goal-setting, weekly meetings and overcommunicating about the numbers.

The ideas of business literacy and financial transparency are appealing to many entrepreneurs, yet implementation can become cumbersome and dry. Maps simplify the process. They include the big picture and the details, allowing employees to learn how the business works and where they fit in. These are not process maps, road maps or flow charts. They are illustrations that support both business literacy and financial transparency.

All the elements of ODS’ program were critical to its success; the Money Maps were the tools that bridged business literacy and financial transparency. These maps were integrated into the business literacy training session and are used as ongoing financial transparency tools. The money-flow map, for example, is updated monthly. Employees see the impact of their efforts and learn where to focus their attention.

In classroom training, learning builds linearly and is reinforced by spiraling back and integrating the basics into more complex concepts. Maps accelerate learning and encourage the student to be the teacher by discussing numbers, activities and processes with peers and superiors.

Business literacy and financial transparency can transform people and organizations. When integrated into how managers manage, how leaders hold people accountable and how employees work, it simply becomes part of the organization.

Put on a New Face

Today, ODS is a different organization. The word employee is not longer used; everyone is a business partner. Customers send e-mails to managers, using the phrase “business partner” as they describe the high level of customer service and professionalism. Profitability has risen without an increase in sales. EVA results have jumped to new levels. Vehicle and workers’ compensation costs are down. Profit sharing is at its highest ever. And, just as important, trust has increased, turnover has decrease, and morale has improved.
To start your company on the path toward business literacy and financial transparency, consider the following:

1. Identify needs. What do your employees currently understand about the business? What are the key drivers of your company’s success?

2. Consider the long-term nature of business literacy and financial transparency. They are not “flavor of the month” programs; they are changes in how you run your business.

3. Create a training program, then share business results weekly or monthly.

4. Use managers and leaders to encourage discussions about the business.

5. Lead the process with your words and actions.

About the Authors

Joseph Knight is a partner and senior consultant with the Business Literacy Institute and is a finance and business literacy trainer. He is a professor at the University of Phoenix and Westminster College of Salt Lake City. He spoke to FPPA in 2005 on Bottom Line Results and will be presenting at the October, 2006 FPPA Management Workshop on Building Financial Intelligence.

Karen Berman, Ph.D., is the founder of the Business Literacy Institute. She published the first academic study in the field of business literacy and now consults, speaks and writes on the topic.