When It Comes to Growth, Only the Truth Will Do

In the financial advisory business, and in a lot of other small businesses for that matter, compensation has more to do with company growth than is does with the value or experience of your employees. Don’t get me wrong, you should pay a reasonable compensation for the position for which you are hiring someone. But if your firm is not growing or is not growing as fast as you anticipated, then increasing salaries is not always an option from a cash flow perspective. Therefore, your employees need to know this.

In my experience, I see an overwhelming number of business owners who will “hide” or fail to share with their employees the status of the company financials and their personal desires on growth, fearing that when employees see more information about the company, like expenses or owners’ compensation, they will make judgments on it. In truth, the opposite happens.

Employees who don’t know the company financial status have only a one-dimensional perspective on the business. The only thing they see is new clients coming in and existing client billings. But they have no idea what’s on the other side of the fence and what each of those clients cost the company. When you are open about the books, your employees gets a full view of the company, including what the company can afford to pay them.

As a result, two things happen. First, they are more motivated to assist in areas to help the company grow faster, so they can get rewarded. Second, they are more aware and appreciative of what it takes to run a business. This in turn helps keep them around a whole lot longer even without a salary raise.

Next week we are going to talk about training these employees to get the best leverage of their talents to help grow your company, faster.