Giving employees skin in the game
Many finance leaders are challenged by how to convey financial information to nonfinancial employees in interesting and meaningful ways. Because of this, employees can have varying degrees of interest and concern regarding their employer’s profitability.
To help employees better understand how their everyday work affects the bottom line, bring them off the sidelines. That’s what our company did — we let them be part of the game. This article discusses how we went beyond ratios and spreadsheets to create a better team, one in which all our players understood how their skills translated to the company’s success.
From the beginning of my tenure as CFO of Brains on Fire, a marketing and creative agency with 25 employees, I’ve struggled with how to engage and hold our team accountable for the company’s financial health. We tried using a giant thermometer to track yearly goals. We used money from the board game Monopoly to help everyone understand where and how we spend it. We tried other gimmicks I hoped would spark interest in the long term, but they weren’t effective. And now I know why.
You can’t encourage your team to be involved in finances if you don’t give them power and buy–in when it comes to money. The thought of giving financial control to anyone other than the finance team and senior leadership sounds scary, but here’s how and why it works.
We were inspired after discovering the work of Jack Stack, who formed a successful employee–owned company in the early 1980s and wrote about that transformation in The Great Game of Business. Stack’s team–rallying concepts also caught our eye in Conscious Company magazine. An article there detailed how Zingerman’s Deli took the concept of open–book management and turned the deli into an entrepreneurial empire (see “How Zingerman’s Deli Became a $40 Million Business,” Conscious Company, Oct. 4, 2015, consciouscompanymedia.com).
By sharing financial information with employees, and making a game out of the numbers, organizations can empower individuals. Zingerman’s Deli eventually became employee–owned — workers care enough to use every bit of mayo from the jar because they see how that adds to the bottom line. And that’s what we wanted at Brains on Fire: employees who see the correlation and contribution of everything they do at work.
Using open–book management, everyone gets to play and make decisions that affect whether you win or lose. No one person is in charge of making sure the company is profitable for years to come, and people continue to get paid. It’s a team sport. Hence, it’s a game.
The Great Game of Business method focuses mostly on manufacturing companies. Here’s how we adapted it to the service industry. We are confident that other organizations, or segments of larger companies, could adapt the same simple core concepts for their team.
Step 1
Focus on two main goals for the year. Shareholders, owners, and the CFO should agree on the two biggest drivers of success and profitability, and then share that information with the rest of the company. To effectively communicate financial goals to the rest of the company, you’ve got to keep things simple and focused. Provide too much information and you can lose companywide focus.
Reaching specific profitability targets and signing a specific number of retainer clients have been our two goals each year. Both goals are important in our industry for sustainability and growth. For other companies, goals could focus on sales growth or product launches within a set timeline.
Step 2
Host a financial boot camp. Teach your team how to read financial statements. Keep it simple. Everyone needs to understand how you make money and how you spend money. To play the game, you must attend financial boot camp. The CFO provides a recommended budget for the year and a detailed history of past transactions to the team at the financial boot camp. For example, employees at Brains on Fire wanted to know how much we spent annually on travel or certain software. You review the budget together. The entire team signs off on the budget for the year with a vote by email.
Step 3
Establish a shared responsibility regarding expenses and revenue, sometimes referred to as “spend” and “make.”
Spend: All transactions over $500 not agreed upon in the budget meeting voted on during boot camp require a group majority vote with a quorum (60%) present. Any unknowns for the year must be voted upon. Any employee making requests for a budget expenditure not agreed upon in the initial budget review will submit a request to the CFO and then make a formal request for “unknown” at the weekly team meeting. For example, your company may vote on a continuing education budget for the year, but you don’t know how that breaks down until employees make requests to attend classes or conferences throughout the year. Employees would need to put a request before the team for a vote if the training costs more than $500.
Make: The new business team meets once a week. All new business clients and proposals are discussed here. All employees are welcome at the new business meeting to listen or add input on pricing, deliverables, timing, and staffing.
Step 4
Positively reward successful behavior. Bonuses are staggered as you start to reach two main goals for the year. For example, if one of the goals is reaching $5 million in revenue for the year, you can stagger bonuses for quarterly or six–month intervals and have a final bonus for completing the goal by year end. If the team doesn’t meet the agreed–upon goals, bonuses aren’t awarded. No exceptions.
In 2016, our first year playing “The Brains on Fire Game,” our internal adaptation of The Great Game of Business, we had the most profitable year in company history. Seeing our team fully engage in a concept that gives members control and transparency has been amazing. Employees now keep work in–house instead of using a contractor because they know the choice affects profitability. Employees ask what they need to do to make sure we regularly meet goals. Team members ask questions and provide solutions to problems we hadn’t explored before.
The weight of new business has shifted from a few to many. Our shareholders now have a greater sense of stability knowing that everyone is concerned about the company’s financial health. As the CFO, I share the information, projections, and professional recommendations with my team, but we ultimately make those decisions together. We expect the positive results to continue, and our team to benefit, as we grow and hone the game.
For example, we added stretch goals and “mini games” throughout the year, as suggested by employees, with bonuses attached. We also learned the most powerful bonuses aren’t always monetary. For example, employees have shown enthusiasm for reaching a goal that awards them Friday afternoons off in December.
The simplest way to encourage and get your employees to care about being profitable is also the most difficult, because it means giving up control. Most CFOs and shareholders feel the full weight of creating a sustainable company that provides steady employment for their team, who then provide for their families.
We strive to hire the best and brightest we can afford. So why would we not trust, educate, and build up a team of employees who understand how we make and spend money as if they own the company? In “The Game” model, we share the burdens and successes of running a business with our very smart and talented team of employees. We, along with many other companies over the years, have seen the benefits of opening up the financial workings of the company for our entire team to engage.
About the author
Brandy Amidon (brandy@brainsonfire.com) is CFO of Brains on Fire, a marketing and creative agency based in Greenville, S.C. She has worked at Brains on Fire for 12 years.
To comment on this article or to suggest an idea for another article, contact Neil Amato, a JofA senior editor, at Neil.Amato@aicpa-cima.com or 919-402-2187.
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For more on how Brains on Fire implemented its game, listen to the JofA podcast “How to Keep Employees in the Game.”
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