Income statements shared with employees may also need an accompanying explanation
Sharing an income statement and balance sheet with the ranks can be a powerful tool for motivating performance, but not if employees don't understand them. So the financial statements at employee-owned Reflexite Corp., in New Britain, Conn., come complete with explanations for each line item.
The idea came from a discussion president and CEO Cecil Ursprung had with key managers. "One of my bright, capable managers said, 'I hope you publish something diffferent from what I got, because I don't know how to read the thing,' " Ursprung says. "I thought, we'd better do some educating when we hand this out."
The annotations, for such items as prepaid expenses ("This is the value of expenses paid in advance, such as insurance premiums"), appear in fine print in the right-hand margin, close to the appropriate number and with a line connecting the two.