Opening the Books: Balance Sheets - BodyShop Business

Opening the Books: Balance Sheets

Looking for a way to increase employee productivity and loyalty at your repair operation? You may need to look no further than your monthly balance sheet.

Research shows employees are inclined to work
harder if they’re familiar with how the company makes money. In
fact, in a survey by Ernst & Young, a U.K.-based consulting
firm, 86 percent of employees said they’d be more motivated to
help their employers succeed if they had access to the company’s
financial data.

That’s the premise behind a philosophy called
open-book management – a concept in which employers treat employees
as if they’re business partners.

"Open the books so people can understand
the financial aspects of the business and find out how the shop
makes money," says John Case, writer for "Inc."
magazine and author of the book, "Open Book Management."
"Sit down with employees in regular meetings and explain
what the numbers mean.

"But don’t expect employees to become
accountants overnight," he says. "Repeat, repeat, repeat.
Once they realize how a shop’s success benefits them and how much
impact they can make, they’ll snap to attention."

Case says shop owners should make a game out
of teaching employees about the company’s income statement. But
keep it simple. He recommends keeping track of the shop’s financial
success on a large scoreboard that hangs in an area accessible
to everyone. Each week, update the figures in the following categories:
gross sales, cost of goods sold, gross margins, other expenses
and net earnings.

Once employees are taking responsibility for
the company’s success, they should be rewarded. Consider giving
staff members bonuses or profit-sharing awards. The amounts can
be based on financial results.

"If net earnings reach a certain number,
tell employees you’ll give them each $100," says Case. "Suddenly,
work has changed into a game that employees want to win. People
will start watching the scoreboard and looking for ways to improve
the numbers. They’ll be motivated to cut costs and bring in extra
revenue."

Keep employees constantly informed by sharing
facts and figures on a regular basis, along with future plans
and ideas to boost business. Always ask for employee input. With
some persistence, you may see results in as little as two months.

Keep in mind, successful open-book management
takes more than a team of company-minded employees. You, too,
must be interested in building a thriving, long-term business
and realize that employees are business partners – not hired hands.

(Article reprinted courtesy of Movin’ Parts
magazine.)

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