Do you make it a practice to share financial information with your employees?
Not that you need to copy them on your Profit and Loss statements, but if you don’t share some details, especially your actual profit margins, they’re going to come to a grossly mistaken conclusion because, while they do see all the money coming in every day, they are only dimly aware of all the expenses.
A favorite exercise of mine, especially when I’m on the road, is to ask my restaurant servers what percent profit on each dollar of sales do they think their employer makes after taxes.
Employees need to know how you’re really doing
Here’s what they tell me: Roughly 90 percent of them estimate it’s 40 percent or more! No wonder these folks all think they’re deserving of healthy raises and better benefits packages.
The reality is that a wildly successful restaurant probably sees about an 8 percent return and, in the most recent reports, the average for 212 different U.S. industries was just 6.5 percent.
So, if you’d like to eliminate all the unfounded grumbling, clue your people in.
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6 Things Your Employees Will Fail Without
And who knows — it might be just the incentive they need to come up with some creative money-saving or profit-boosting ideas.
This was originally published on Mel Kleiman’s Humetrics blog.