What’re the Benefits of Financial Transparency for a Float Center? – DSP 208

There’s a traditional wisdom in business that dictates certain information should be held close to the vest. Financial information, hiring information, performance metrics, and so on should only be shared on a need to know basis. More recently, there’s been a push for more businesses to have transparency in some of these areas.

Ashkahn and Graham explain their stance on transparency and the thought process behind making Float On as transparent as possible, as well as many of the benefits they see on a regular basis because of it.

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Transcription of this episode… (in case you prefer reading)

Graham: All right, hello everybody.

Ashkahn: Hey, everyone.

Graham: This is Graham.

Ashkahn: And this is Ashkahn.

Graham: Today’s question is, “do you guys share financial metrics with your staff to drive transparency and have them feel more invested (pun intended) in the success of the center?

I am in the process of building a cohesive team with my staff. We have a visual metrics board in the employee area, and I’m not sure how far to take it. Thank you so much.”

Ashkahn: This question’s right up our alley.

Graham: Bread and butter, bread and butter.

Ashkahn: Yeah, we’re all about sharing financial transparency-

Graham: Yeah, I have no problem telling everyone out there that we are all about transparency. We do. We live it, we breathe it. It’s why we make a podcast answering people’s questions and just telling them all about our personal lives. Personal Solutions Podcast.

Ashkahn: There’s a growing trend in business just regardless, I think, of what business you’re into, that’s leading to like more transparency and businesses opening up their finances and things like that. And I think it’s because-

Graham: So, you’re saying it’s the thing to do?

Ashkahn: Of course-

Graham: If you wanna be hip and cool-

Ashkahn: If you wanna be cool, you should get on this bandwagon here. I mean, I think it’s happening because it is a successful way of running a business. I think people like having more transparency leads to your business being successful. Period. I think it’s the one key metric for success. That’s all I’m saying.

Graham: We are like super biased on this. We’ve also done a fair amount of research into, into transparency and into different models and things like that too. So, I would almost say transparency, especially just with your staff and the people you bring on, almost to the point of embarrassment. Like, if it feels like you’re probably making a mistake by being as transparent with your staff, that’s almost where I like to ride that line. We’re all about it.

Ashkahn: We’re all about it.

Graham: So, I think you should share information that your staff doesn’t even wanna hear.

Ashkahn: We’re even more about it than you think.

Graham: Yeah.

Ashkahn: So here, let’s go over a couple things here.

Graham: Okay.

Ashkahn: What could the downside be? What is the most common-

Graham: Well, what’s transparency? Right, because it’s a good idea, you know, obviously to be see-through-

Ashkahn: Okay.

Graham: So, sharing your income. Sharing your expenses. Sharing what other people in the company make. Sharing what you make. Sharing what your biggest struggles are. Sharing problems that you’re facing in the higher levels of the organization.

Ashkahn: Yeah.

Graham: Sharing decision making, even for extreme things like sharing who fires someone or sharing who’s in charge of hiring. This kind of transparency of, you know, even when we bring you on staff, we’ll share the applications that the new staff members are submitting so that they have transparency of who’s a potential to come on board the team.

So, kind of anything that you could share that you might normally think that you need to keep close to the chest.

Ashkahn: Right.

Graham: That’s the kind of transparent stuff we’re talking about.

Ashkahn: And there’s like a tendency in conventional business wisdom to keep things close to the chest. There’s this kind of like old business idea of, you know, you need to keep a veil between you and your staff, and there has to be kind of like an administrative-

Graham: If they ever learn what’s really going on, it’s gonna be chaos.

Ashkahn: Yeah, exactly.

Graham: Revolution!

Ashkahn: Yeah, so I think a lot of this stems from much bigger businesses, right? The most common-

Graham: I was gonna say much stupider people, but yeah.

Ashkahn: The most common thing I’ve heard against the idea of sharing financial transparency, we’ll keep this to that for a second here, is that your employees could go work for another competing company and know all your finances, and share all your financial information-

Graham: Or launch up their own business or-

Ashkahn: Or launch up their own business-

Graham: Or see how much profit that you’re making, get disgruntled. I hear that one a lot. You know? It’s like people are afraid that if they look at the financials of the business, the employees will somehow-

Ashkahn: Will like riot or something-

Graham: Yeah.

Ashkahn: So, here’s the deal. First of all, we run float centers, right? Like I don’t think we have to be quite concerned about some other float center trying to poach our employees to learn about our financials. It’s just not that type of thing. No, we’re not like somehow undercutting another float center by manufacturing some weird product somewhere. We don’t really have those same concerns.

Graham: And if you’re the VP of a float center or something, it’s not like you’re making $2 million dollars a year while the staff members are making $12 an hour-

Ashkahn: In fact-

Graham: A float center can’t even support that.

Ashkahn: Yeah. Most of the time, if you were to ask people what they think the profits of the company are, what they think the owners or admins or CEOs are making and things like that, they usually think the numbers are bigger than they actually are. So by not sharing your financials, you’re more often than not creating a mentality that people think you’re taking home even more profits, or there’s even more discrepancy between the income of the people at the top of the company and at the bottom of the company. And by opening up your financials, people are like, “Oh, wow, I didn’t realize there was all these expenses for that and that. And this is what the actual profits are.” It’s much more often a more humbling realization of reality than people think it is in their head.

Graham: I was trying to think of what it is I even view as the actual downsides of transparency? I mean, it takes more time.

Ashkahn: It takes time.

Graham: And then, being transparent doesn’t just mean opening up your Quickbooks account to your staff so that they can go in there. Because people don’t know what they’re looking at or how things are categorized. So, really there’s this extra layer of work that goes into pre-digesting the financials that you’re releasing so your staff can even understand it.

Ashkahn: Yeah, the thing is people tend to not take extra time out of their day, people aren’t so interested in your finances, especially in a float center, that they’re gonna sit there and look through your profit and loss reports or dig through your Quickbooks or something like that. That stuff takes extra time, it takes extra know-how. Like if you, the first time you probably looked at that information, you were like, “What is this? Like what am I looking at?”

Graham: I’m sure you came away with like 20 wrong conclusions because I had no idea what I was looking at.

Ashkahn: So, for this to work, there’s a difference between kind of like transparency where you just like things are transparent technically because anyone could go look at things. I think that’s a little nice because it shows trust in your employees and that creates a better culture, but I don’t think it is as powerful as actually putting in the time to kind of really present the information to people in your company. Like the whole benefits of transparency is people having a better financial sense of how your company works. That allows them to make better decisions and have more autonomy. It allows them to feel a little bit more like they’re a part of-

Graham: Well, see, you’re skipping ahead to like where I was thinking of any of the negatives and then go into the benefits that we like.

Ashkahn: Okay.

Graham: Which I have that one. It takes time.

Ashkahn: It takes time.

Graham: Like, what else is there? Time is money-

Ashkahn: Again, the classic downsides are things that are for a way bigger business or different business-

Graham: I mean, we’ve been transparent with our finances for pretty much since the day we opened.

Ashkahn: Yeah.

Graham: And we’ve gotten better at it, and better at digesting this information and making sure that it’s actually available to people over the years. And to be honest, I can’t think of any downside other than it takes us a little more time and effort to put these together, and make sure that people are presented with it. Like it’s only upsides besides that.

Ashkahn: Yeah, it weirds people for like a day. They’re new to our company. They’re like, “You’re just gonna post everybody’s payroll?”

Graham: And even that I consider an upside.

Ashkahn: Yeah.

Graham: It’s like you get to surprise people, change their view of how the world works and that’s kinda cool.

Ashkahn: Yeah. I don’t know. I really think it’s just from-

Graham: Overcoming fear. That’s an upside too. Like you have to confront your fear and overcome it to be transparent, which is cool.

Ashkahn: Yeah. I guess I understand the other side, like if we were a big business with more trade secrets or things like that. But even those companies seem to have overcome that and it’s not really as big of a deal as anyone thinks. But outside of those sort of concerns, I’m not actually sure what the potential real big downsides are.

Graham: Or just the real ones that we faced over the seven and a half years of having open transparent financials is like-

Ashkahn: I guess if you’re like embezzling funds, someone might catch you.

Graham: Might catch you a little easier?

Ashkahn: Or if you are like grossly paying yourself so much more than anyone else in the company-

Graham: You wanna keep that a little secret?

Ashkahn: That’s gonna look bad.

Graham: Well, you can fix the books before you share them.

Ashkahn: Yeah, cook them.

Graham: Well done. So, upsides. And I interrupted you before going through some upsides.

Ashkahn: There’s a lot of upsides, but it really does take some effort to try to really make them happen. And that takes you putting time into making the finances digestible. I mean, really what this person was asking in their question sounds like the right track. They were putting some sort of board in their backroom with information on it. That’s-

Graham: Yeah, yeah, yeah. Vision board I think they said? Yeah.

Ashkahn: Every month we’d just take the basics of our finances, and we’d post them to our-

Graham: Metrics board. I don’t know why I said vision board-

Ashkahn: Metrics board, yeah-

Graham: Metrics are like way more serious. Sorry out there-

Ashkahn: Pictures of like pillows and stuff-

Graham: I didn’t mean to say your metrics board is a vision board. Metrics board.

Ashkahn: It’s a metrics board. That’s the right kind of idea because it really like, you wanna put that stuff in front of people’s faces just so that like in the normal course of them working at your place, they will come across it and look at it. We rely a lot on our log book and our Helm software. That’s our main stream of communication. And so, once a month, we do a very simple financial report that we post to there. And it’s nice to really think about what are the most basic numbers that you want people to see?

So, we just take our income and we just break it down between floats, memberships, and retail.

Graham: And gift cards. Yeah.

Ashkahn: And that just gives us a real quick breakdown of where that money’s coming from. And you know, that makes people realize what a chunk of our monthly income is memberships, and that maybe pitching memberships is gonna make the business stronger financially. And then with our expenses, we just break it down into normal supplies and payroll and kind of repair and maintenance.

Graham: Yep. And marketing. Just the really broad categories.

Ashkahn: Yeah, admin stuff like lawyers and tax attorneys and that sort of stuff. And again, that gives people a sense of how much payroll is a chunk of our expenses. And when they think about wanting different wages or stuff like that, they have something to base their ideas off of. They don’t just sit there and think about what they’re getting paid in a void of other information. They can see how much payroll is, and what it is in the context of the finances of the business. And so, that’s really nice. And we also include a couple other things, like how many floats we do each month or how many returns, a few other things that we’re just like, “Hey this is useful information for people to go in front of people’s eyes.”

Because at the end of the day, I think what happens is when you’re running your business you look at these number intuitively on your own. And after a long time of looking at these over and over and over again, you start to build-

Graham: A sense-

Ashkahn: Yeah-

Graham: A float sense-

Ashkahn: Like an intuition. A float sense. You build an intuition. You have a gut feeling. So, when big budgeting decisions come up, you know, it’s not like you’re really sitting down and crunching the numbers and manipulating spreadsheets and stuff like that. Much more often for businesses of our size, we just hear numbers, and we’re like, “I don’t know, that sounds manageable or maybe that sounds a little high.” And those feelings that we have come from seeing those numbers just casually over the course of a long time. So we’re trying to give our employees that same gut feeling. The ability to just kind of get our numbers into their bones a little bit. That’s really what I view as kind of the main goal of it.

Graham: Yeah, I’ll also say I think it’s kind of like one-third of a trifecta of cool things you can do to make it so that you have less turnover and more highly effective staff and happier staff, and things like that, right? So, there’s financial transparency, and just transparency in general, like we just touched on at the beginning; there’s giving people ownership as well, which all of a sudden, if you’re transparent about what’s going on financially and people can actually make their own decisions, and financial decisions, and stuff like that, that becomes really useful to tie into it; and the other one is some kind of stake in the business itself. Like some kind of profit sharing, or some kind of way where if the business is doing well, then they’re also doing well. And-

Ashkahn: Yeah and that’s the toughest for float centers I think.

Graham: What was that?

Ashkahn: I think that third one is just the most difficult for float centers.

Graham: I mean there are a lot of float centers that aren’t super profitable, so when you’re sharing like $20 at the end of the month, but it could be a dinner, it can be if you hit certain margins then everyone gets to celebrate together-

Ashkahn: It’s just things to keep in mind. But yeah, the kind of more traditional businessy ways of going about that are even like giving people equity in the company. Stuff like that just is a little bit more difficult on a scale-

Graham: Oh equity is super complicated and crazy and stuff like that. But you can do phantom stock. You can do profit sharing. You can just take people out to a dinner if you’re above a certain threshold for a month.

Ashkahn: Yeah, dinners are great-

Graham: And that’s the same thing, right?

Ashkahn: Like in terms of cost of happiness factors, taking people to a nice dinner feels awesome but it’s kind of the same as giving everyone like fifty bucks or something-

Graham: Yeah, exactly.

Ashkahn: But it feels way more awesome than getting a fifty dollar bill.

Graham: But, so hear me out though. With those other two things in place, all of a sudden, financial transparency does a lot more, right?

Ashkahn: Uh-huh.

Graham: Like in order to make decisions, you kind of need to know what’s going on with the finances. And in order to really care about the finances, having some kind of reward that comes along with the finances doing well, or with certain metrics being hit, or with new memberships that are gained that month, or whatever it is means you’re actually paying attention and you wanna know what’s going on with the finances of the company. And, any one of those I think are great by themselves, but in order to get the full value, I do think there’s this bigger sense of employee empowerment that the financials are but one part of.

Ashkahn: Yeah but really like you’re building a culture, right? And so, the pieces all feed into that kind of-

Graham: In our case, a sham culture.

Ashkahn: They don’t realize how much we are gonna rip the rug out from under them one day. But yeah, like this whole idea of trusting your employees, empowering people, giving people the ability to make good decisions, that all leads to better customer service. All that is propped up by all these different pillars of this stuff. So if you just do one, and you don’t do anything else, it feels odd with the other ways that you’re running your business. And when you start doing all these things together, that’s what creates a type of environment that people do good jobs in and are happy to come to work in.

Graham: Yeah, and I think you’re on the right track. I think your metrics board is a great idea. I think that-

Ashkahn: Maybe put a vision board next to it. You know, get that going.

Graham: A vision of what the metrics could be one day. But I think to us, you’ll be hard pressed to find stuff that we wouldn’t feel comfortable sharing out there or make public, And again, if you feel that fear, it’s something that you don’t feel like sharing, see if you can push past it. See what happens when you do share it. And when your entire business falls apart, don’t blame us, and we have insurance if you do.

Ashkahn: And ask your staff. Ask them what information they think would be useful.

Graham: Yeah.

Ashkahn: Get some feedback going, and you have to iterate. You’re not gonna get everything perfect the first time you try to put something together. You’re just gonna have better ideas, and remove some metrics and add more metrics, and the whole thing’s like a process.

Graham: And honestly you might be surprised how little people care. Especially if all you’re doing is financials, there’s no reward for those financials going up or down, you know, it’s actually surprising to me how much people are like, “No, I just clock in and clock out. Like I appreciate that you wanna be honest, but I don’t take the time to go through those every month.”

Ashkahn: It’s almost like the better everything’s going, the less people seem to care. So it’s nice to have those things in place and if things do start to go a little bit rougher for people, things will be in place to give you signs earlier, get people talking earlier. It’s a nice kind of safety net even when people don’t care in the moment.

Graham: So yep. Share it all. Samples of your signature. Social security number-

Ashkahn: Yeah.

Graham: Just put it all up there.

Ashkahn: Dude, we just post our fingerprints up on a piece of paper that people can take-

Graham: Personal liability board right next to that vision board.

Ashkahn: That’s a lot of boards so, yeah. But good. We believe in you.

Graham: Yeah, thanks for the question. And, as always, if you have any other questions you want to ask us, we will give completely open and honest answers. Just go to floattanksolutions.com/podcast.

Ashkahn: And we’ll answer them.

Graham: Honestly. Openly.

Ashkahn: All right. Well, we’ll talk to you tomorrow.

Graham: All right. Goodbye everyone. It’s been a pleasure hanging out here-

Ashkahn: This has been really nice.

Graham: All right, just lie down now. Take a little nap.

Ashkahn: Shhh.

Graham: Good night.

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