It’s the time of year when you should be planning for the coming year. Once you set your plans for the year, how much of those plans should you share with your employees?
I believe it’s important to share some of your planning results with your employees. Not all of the results, though; I’ll go into those details later. First, things that should be shared:
Big Picture Goals. What do you see your business looking like over the next year, three years, five years? Your overall business plan needs to be realistic and it needs to be simple enough to be reachable. If your employees know where you’re going, they can help you get there.
Personnel Needs. Let them know who is going to help you reach those goals. That means a thoughtful discussion on what personnel you will need. What is the timeframe for hiring? What education and training will those people need to have? Can they be hired right off the street, or will these positions require a lot of training and/or supervision? Your employees need to be up to date on your company’s personnel needs so they can help you look for those folks. I would even pay a finder’s fee if someone is recommended and you end up hiring them.
Overhead Expenses. Next, a discussion of your overhead would be in order. If you’re planning an increase in business, you might also need more office space and possibly equipment. Encourage your employees to keep those issues in mind during their day-to-day activities, and to let you know of areas where you can possibly reduce overhead expenses.
Sales Goals. It doesn’t matter what type of contracting work you do; you need to generate new leads and sales. It helps if your employees know your goals so they know what’s needed to keep the business successful. Let them know your basic numbers:
- What are your sales goals?
- What is your average job size?
- How many sales of your average job will it take to get to your sales goals?
- What is your sales-to-leads ratio?
- How many leads do you need to reach your sales goal?
- How much money will you need to spend to generate the leads?
- How much does each lead cost?
When your employees know the big picture of where you want the business to go, and they understand the personnel needs, overhead expenses and sales goals necessary for that goal, they’re better able to help you achieve it. They will also see how their position is part of that plan, and your success will help them succeed.
In my opinion, there are also things that shouldn’t be shared with employees. Others disagree with me, but I believe the following information is proprietary information and should be known only by the company owner and their bookkeeper and CPA:
- Salary of the owner and their spouse
- Wages and/or salaries of other employees
- Financial details on bank accounts, credit card accounts, loans, vehicle purchases, etc.
- Net profit figures. Depending on how involved you want employees to be, gross profit figures may be okay because they might help define sales or production issues, such as jobs sold short or production overruns.
- Individual job financial information such as the sales price, building owner’s financial information, net profit on the job.
When your employees know your goals, they can help you reach them. Give them what they need to help you hit your target.
The knowledge and experience Michael Stone gained in his 60+ years in construction has helped thousands of contractors improve their businesses and their lives. He is the author of the books Markup & Profit Revisited, Profitable Sales, and Estimating Construction Profitably, and is available for one-on-one consultations as needed.
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