In general, employees cannot help the CEO achieve financial goals unless they have some understanding of those financial categories they can affect directly. For example, in a service environment, where time and materials are the source of revenue, sales and project managers cannot help the CEO achieve the budget unless they know what sales and billing targets they have on a monthly and annual basis and how those targets affect other key financial results. Lack of communication affects the entire organization. Lower sales for the month can have implications for cash flow, debt covenants, and company expansion plans. At the companywide level, tying bonus compensation to the company's financial performance is a popular and effective way to get the entire organization working toward achieving the company's budgeted income, cash flow, and balance sheet goals.
Bonuses can also be at the department level if good reporting is available.
Management should not be afraid to share company information with staff. If you're concerned about disclosing too much, consider filtering information, depending on its use. Financial goal setting and results reporting, at all levels of the organization, will move the company in the right direction and in unison. This is particularly important in our increasingly competitive business environment. All rights reserved.