In almost three decades of coaching hundreds of companies on improving profit and engagement, my advice has never changed. It's always been to help your employees think and act like owners, and to treat them like partners. This tends to lead to better financial results for the company and better lives for the employees who drive those results.

If you already are a business owner, you know a few things. One of them is that most of your employees have never owned a business. So how, exactly, do you get people to think and act like they're financially literate?

Plenty of owners might think we just gave away the answer--but this couldn't be farther from the truth.

There isn't anything inherently wrong with teaching financial literacy to your employees. Without any kind of business acumen, you run risks of every sort. Hourly workers won't bother paying attention to costs like inventory and supplies if they think the company is rife with revenue. A "customer is always right" mentality might lead them to offer discounts you can't afford. A business-illiterate employee often hinders your company's value instead of helping it.

The instinct to throw money at the problem can be a real one. Businesses pay for financial training in the hopes that knowledge will mean power. Well-meaning trainers offer a one-size-fits-all course on things like income statements, balance sheets, and cash flow. But the effects are likely not only short-term but also irrelevant to your staff's day-to-day work. Financial literacy doesn't translate to many folks, so it doesn't engage many folks.

Some companies might take financial literacy more literally. One large American industrial equipment manufacturer we worked with decided that investment training was the way to go, and got every employee versed on working capital. The CEO began by training 150 managers himself. Each of them went forth to train a few thousand below them, and so it continued, from the top down. It didn't engage employees, and it certainly didn't drive long-term profits.

What if, instead, they'd gone the other direction? What if they'd asked their employees on the frontline what the company's best improvement opportunity was, and then asked their customers, and finally their managers? What if they'd worked from the ground up?

Business literacy engages employees in tangible operational economics, not abstract ideas. It's built on things your employees already know. It guarantees employee support because it's grounded in their input. And it doesn't cost you a thing.

The process starts with a brief employee survey to gather ideas on improving the business. Managers compile the feedback with input from customers and from the financials to determine the most pressing issues. They agree upon an objective operational metric that everybody in the organization understands and can affect, like gross profit dollars per project, or safe tonnes of ore shipped.

At Boardman Manufacturing in Oklahoma City, we asked each employee to submit one thing they individually could do to improve the performance metric and consequently improve the bonus for everyone. Managers sorted the ideas by type, and then gathered groups of 10 to 15 employees to review the ideas, evaluating the improvement opportunity of each. In the case above, the annualized value of the collected ideas was over $4 million. Realizing only half of this would change the projected bonus from two weeks of pay to three months of pay. 

Whenever a client asks me about our financial literacy training program, I say, "What training program?" No training is required. There is no class. It's all learning done the best way--by doing. It's all hands-on because the approach is concrete. It's not financial literacy, it's business literacy.

In lieu of training, there's a conversation that's critical to your company's business literacy, and it's one that you'll have again and again, hopefully every week. Every team should discuss how their daily decisions affect your performance metric. You'll make the number visible to everyone, somewhere you can update and track it. You'll talk about its movements, and how to make it go up in the coming weeks. Maybe it's labor efficiency or material costs. Ideally, you'll tie an incentive to the metric's performance, so that everyone can share in the incremental profits.

The key is that the learning isn't static--the practice reinforces understanding of the economics of your business, week by week. Employees who understand the economics are motivated by them. They're engaged in the business of making money. When they do make money, wages are likely to improve, drawing stronger talent to your workforce. This level of engagement brings a competitive advantage that, I'm guessing, financial literacy just can't offer.

In terms of return on investment, financial literacy is a cost center. Business literacy, on the other hand, has the potential to be a significant profit center. So which hand would you choose?