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Business Literacy shows trust in your employees, Greg Paterson


Business Literacy shows trust in your employees, Greg Paterson

By GREG PATERSON, CEO, REEF

Many companies encourage participation in their business via suggestion schemes, self-managed work groups and other empowerment programs. However, if employees are to participate effectively, they need to be prepared and trained. As a result, many employers provide training in team building, problem solving and communication skills.

While all these programs are very useful, what companies often overlook is the most important element if employees are to contribute effectively – education about the basics of the business.

When we ask employees to participate, we are really asking them to actively contribute to the success of the operation. Yet it is important to define success, teach employees how to measure it and show them the contribution needed. For example, it can be frustrating for workers if they are asked to help the company improve its profits but don’t know how profits are measured. For employees to be involved in improving the business, they must be able to speak and read the language of business.

While many employers may believe that their employees will be unable to understand financial information (or that they won’t be interested), research shows that companies which have embarked on business-literacy training have found that employees of all backgrounds and education levels can learn, and indeed, are interested in learning about the numbers.

It involves teaching employees such basics as:

  • How an income/expenditure statement works and what the numbers really mean.
  • The difference between profit and cash and why that’s important.
  • Key operation measures that employees themselves can affect.

The following steps can help in successful business literacy training:

Determine what to teach – when employees understand key financial statements, they are more likely to also see the rationale behind decisions that are made for the overall health of the business.

Keep it simple – Important financial concepts and definitions can be simplified and the language made consistent. For example, decide what you want to call profit and use that term exclusively.

Teach using the familiar – in explaining business literacy, it can be a good idea to show the management of personal finance is similar to how it’s done at work.

Tie it to the company – business literacy training gets employees much more interested in the company’s numbers… that is not only important but also healthy. After an employee understands the concept of an income statement, ask them what percentage of revenue they think is profit – then surprise them with the real number!! They may begin to realise for the first time, why containing costs is so important.

Show employees where they are in the numbers – during business literacy training, the age old question ‘What’s in it for me?’ becomes ‘Where am I in the numbers?’. The answer is important so your employees can apply the new concepts to their jobs. For example, your sales representatives affect telephone and other communication expense line items. Showing related line items of expenditure may help employees understand the impact that waste has on the financial health of the agency.

Show your commitment – teaching business literacy shows that you trust your employees and believe they can contribute to its success.

Finally, business literacy training should not involve the teaching of ‘accountancy’. It should simply provide the context and framework for employees to intelligently participate in the business.


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Business Literacy shows trust in your employees, Greg Paterson