How Can We Explain Our Financial Statements to Employees?

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Get a discussion going. Brian Quint, CEO of Aqua Quip Pool & Spa Inc., a Seattle retailer and supplier of pool products, wanted to start sharing financial information at his $8-million company. However, he worried that his 80-plus employees would find the financials intimidating. So he gave everyone a blank income statement, with labeled line items but no numbers. Then he asked the employees to form groups and discuss what numbers they thought should go into the blanks. "One group had me making a million in net profit, and one had me losing a million," says Quint. After that introduction, Quint handed out the actual income statement and explained what contributed to each expense line--and how each employee could help control expenses.

Another idea: break the statements down. Prakash Laufer, CEO of Motherwear, a catalog company for nursing mothers based in Northampton, Mass., started with his company's average net sale of $100. Then he broke the sale down to show how much of the $100 went to each line item on the company's income statement and how much was left over in pretax and after-tax profits. Last August, Laufer held a meeting to celebrate that the $5-million company had taken its spring 1996 loss of $3.23 on that typical $100 sale and raised it to a 1997 profit of $11.23--a change he attributes partly to the original exercise.

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