Does Sharing Financial Data Improve Performance?

I'm working with a family-owned engineering firm that has tentatively decided to take a bold step: to start sharing financial information with all their employees. I must confess that it's been hard for me to understand their reluctance to do so. Most A/E and environmental firms that I've worked with over my career have practiced some degree of what's known as open-book management (OBM).

But I've been surprised to learn that my client is in a substantial majority. According to one survey of 1,300 chief financial officers with private companies, only 7% shared financial data with all employees. Another 17% shared this information with only select employees, while 76% provided no such data to their staff.

OBM is more common in the A/E industry, with 21% of firms sharing financial information with all firm members according to the Zweig Group. Yet 36% of "fast-growing firms" practice OBM compared to only 8% of "no growth firms" and 13% of declining firms. Is there a trend here?

Zweig reports that 81% of firms that were Best Firms to Work For Award winners shared revenue data with all employees, whereas 65% shared profit data. Meanwhile, 85% of companies in Inc. Magazine's 2010 Top Small Company Workplaces practice OBM, as do 40% of Inc.'s Top 500 fastest growing companies.

There seems to be a significant correlation between doing OBM and being successful. And it makes perfect sense. Sharing financial information with employees promotes trust and collaboration. It gives employees a better sense of connectedness to the company's success. It enables them to make more informed decisions about how help improve performance and profitability. It improves employee engagement, retention, motivation, innovation, and corporate sustainability, according to a white paper published by the UNC Kenan-Flagler Business School.

Research directly linking OBM to improved financial performance appears to be lacking, but the anecdotal evidence is abundant. Spend some time reading on the topic and you'll learn of many companies that attribute their success at least in part to becoming more transparent in sharing information with workers. It's easy to see how OBM would help increase employee engagement, and the financial advantages of having a more engaged workforce are well demonstrated.

Clearly, the decision about whether to use OBM or not is a reflection of the firm's culture. One author suggested the change from keeping financial data private to sharing it with employees denotes a shift from a patriarchal culture to a participatory one. I think that's an apt description. The former is akin to playing in a game where only the coach knows the score. It's harder to build a high performing team when such information is withheld.

So if your firm is in the majority but you're open to, well, being more open, where do you start? Here are a few suggestions:

Determine what information to share and how often. Despite the name, OBM isn't an invitation to open your books completely. Certain data, such as individual salaries, should be kept private. The fact is that you can achieve many of the benefits of OBM while sharing only limited information. The most important data is that which employees can act on—helping meet sales targets, reduce expenses, increase efficiency, for example. Sharing financial data quarterly keeps staff informed, but monthly updates probably have a greater influence on performance.

Educate employees about what the numbers mean. Most are probably not adept at reading balance sheets and interpreting financial trends. OBM advocates advise executives to focus on increasing overall business literacy among their staff, explaining what makes the firm successful and giving the numbers meaning. That's more reason for being selective in what is shared, to avoid overwhelming with too much data that people don't really understand.

Sell the importance of profitability. We live in an age when profit is under assault, characterized as a benefit enjoyed only by the affluent. Fortunately, 9 in 10 A/E firms have some kind of bonus or incentive compensation program in which profits are shared with employees. So that makes it easier to sell them on the importance of making a profit. But there are other purposes that profit fulfills relative to keeping the firm healthy and employees happy. Make sure that message is communicated along with the numbers.

Provide context. Explain marketplace trends, industry benchmarks, and what the firm's numbers over time indicate. Show employees how their work contributes to the bottom line. One of the greatest advantages of OBM is giving staff members a sense of ownership and control over how the company fares.

Don't withhold bad news, but maintain optimism. There is often concern that sharing the truth about poor performance with employees will be harmful. Won't they get discouraged and maybe even consider jumping ship? That's possible, but aren't they also a critical part of the solution?

The best approach in most cases is to share the bad news but couple it with encouragement that the firm is facing the issue head-on. Describe what corrective actions are being taken, or even better (when appropriate), solicit staff input into what should be done. Of course, if laying people off or closing business units is potentially part of the solution, you'll have think hard about how much information to share in advance.

Promote a culture that handles transparency responsibly. Many firms don't share financial information because they fear it may cause conflict or rivalry between offices, departments, and managers. If that's true, you're better off focusing on negative cultural and structural influences than withholding valuable information. OBM works better in firms committed to community and collaboration. Chances are your decision to share financial information indicates a desire to strengthen those cultural attributes. Don't let a little bad behavior discourage you from pursuing that goal. Instead, fix the root of the problem.

Win More by Writing Client-Centered Proposals

Whenever I do sales training, I start by asking participants what their immediate impressions are when I mention the word salesperson. As you might imagine, their responses are overwhelmingly negative. Why are salespeople so widely disrespected? Because most of us suspect that they put their own self-interest ahead of the buyer's.

True or not, the perception persists, and you dare not ignore it when selling your own services. Nevertheless, although most technical professionals thrust into the sales role disdain the self-orientation of traditional sellers, they often mirror the same behaviors. Talking too much, listening too little, and focusing the discussion on themselves or their firm are all indicators of a lack of client focus.

When it comes to proposals, this problem is magnified—and clients contribute to the problem. Their RFPs encourage us to write proposals that shift the spotlight to ourselves. It's the little-acknowledged dark side of qualifications-based selection rules, which our industry has fought hard to establish, but which seduce us into thinking that clients actually do select on qualifications alone.

At least our proposals would suggest it. From start to finish, the average A/E firm proposal is one long (in some cases, very long) advertisement. The prevailing theme: Look how wonderful we are! Except to client reviewers the distinctions between competing firms are often barely perceptible. What does stand out is the rare proposal that puts the focus where it belongs—on the client and their project.

I've sought to make writing client-centered proposals my primary advantage over the last 20 years. It seems to work, resulting in a 75% win rate for over $300 million in fees. In this post, I'll highlight the key steps I follow in preparing client-centered proposals:

1. Uncover the client's real needs. Why is the client doing this project and what are the desired outcomes? Answering those questions would seem an obvious place to start planning your proposal. But I continue to be amazed how often the teams I work with are unable to give me satisfactory answers. Don't expect the RFP to give you the insight you need. You must engage the client before the RFP to uncover the real needs behind the project.

I break down client needs into three areas: (1) strategic needs, (2) technical needs, and (3) personal needs. Responding to all three is key to consistently writing a winning proposal. Most technical professionals understandably focus on technical needs. The RFP usually encourages this. But meeting strategic business needs is the overriding, if unstated, goal. Since there are people involved—client representatives and their stakeholders—addressing their personal needs is also an important part of delivering a successful project.

Doing the upfront work to uncover all three levels of needs gives you an advantage right out of the blocks in competing for the winning proposal.

2. Focus on goals and strategy. Most A/E proposals I read are task-oriented rather than goal-oriented. That's a notable shortcoming, especially in appealing to executive-level decision makers—those who usually have the final say in the selection. They will likely be looking at the business value your solution delivers, an angle typically missing from our proposals.

Connecting your work to the strategic driver(s) behind the project is an easy way to distinguish your submittal. Your proposal should include some formulation of the following:

• Project background—client needs, project history, site conditions, challenges, regulatory context
• Project objectives—client vision, critical success factors, desired outcomes, business metrics
• Project approach—overall strategy, project narrative, project management process, client relationship
• Scope of work—work breakdown structure, contract scope, budget and schedule

The proposals I see commonly neglect or under-develop the first two elements, where the connection to business value is typically made. Keep in mind that minimizing the description of the client's problem and desired outcomes tends to diminish the value of your solution.

3. Highlight the client experience. Clients value the experience in working with you as much as they value your expertise. If you doubt that conclusion, consider the circumstances where you've lost a client. Was it a technical problem or a service deficiency? My informal polling indicates that it is overwhelmingly the latter.

Yet almost no one writes about the client experience (or the working relationship) in their proposals. What steps will you take to provide great service in the course of the project? Answer that question and instantly differentiate your submittal. Don't settle for the typical bromides like "we listen carefully to your needs" or "we are committed to being responsive to our clients." Describe in specific terms how you actually do those things.

I've gotten good mileage out of my unique service delivery process. In fact, it has played a key role in winning some large contracts. For example, the selection committee chair for a major airline remarked during the interview, "Why are you guys the only ones talking about this? The reason we're replacing our current consultants is that we're not happy with how they've served us. You're the only ones to tell us what you're going to do differently." We won that national contract despite some serious holes in our resume.

4. Humanize the proposal narrative. Want a cure for insomnia? Put a stack of proposals beside your bed. Why do our proposals have to be so bereft of humanity and something interesting to say? The problem starts with how we've been taught to write. Technical writing is characteristically impersonal and stuffy. Indeed, it is the polar opposite of what constitutes persuasive writing.

So you need to stop making your proposals read like technical reports (not that reports should read like that either!). Connect emotionally, not just intellectually. Share your opinions, not just dry facts. Use personal language like first and second person (you is the most persuasive word in the English language).

A great proposal also tells a story. The classic story spine has these elements: (1) reality introduced, (2) conflict arises, (3) struggle ensues, (4) conflict resolved, (5) new reality results. The conflict is the problem you're solving. The struggle is the consequences or potential implications of that problem. The solution is more than a scope of work; it's a description of how the problem is to be resolved and what the new reality will be.

Your proposal story should also satisfy these narrative elements:

• There are actors, actions, and interactions. People drive the story, not organizations. Use first and second person. Refer to specific individuals where appropriate. Excessive use of third person tends to result in overuse of passive voice, which weakens the story's action. And don't ignore how people will interact—communicating, collaborating, decision making.

• Stories reveal thoughts and feelings. Share your thought process, even if the final answer is yet to be determined. Acknowledge people's emotions (e.g., frustrated client, angry community group, delighted stakeholders). Your solution ideally addresses both objective and subjective, felt needs.

• There should be dramatic tension and release. This is perhaps the most important element of a good story. When you jump to the scope of work (and your qualifications) without adequately explaining the problem and its consequences, you rob your proposal story of much of its power.

Because storytelling in proposals is so rare, I'm sure many of you will automatically discount its potential influence on the selection committee. That's fine, because that makes it all the more effective for those of us who decide to build a compelling storyline into our submittals.

5. Make your proposals concise and skimmable. Proposals have come a long way in eye appeal since I first started writing them in the 1980s. That has come with the advent of professional marketers, digital technology, and on-demand color printing. But I've generally not seen any notable improvement in the functionality of proposals—that is, how easy they are to read and navigate.

Making your proposals user friendly is a powerful, yet routinely ignored, differentiator. On this point, we shift from client-centered content to client-centered presentation. That means you need to go beyond pretty to practical. It's of little value to have the right message (as highlighted above) if it's buried in the pages. The typical A/E proposal is a tedious read.

Let's start with document length. I commonly see proposals exceeding 100 pages and wonder what their authors were thinking. Do you know how much time it would take to read a proposal that long? About three hours! Do you think selection committee members will spend that much time with your proposal?

Of course you don't. You know that they'll skim much of it, at least in the first review or two. So why aren't you making your document readily skimmable? Almost no one does. They write page after page of text as if they expect them to be read word for word. If you want to win over the client, make your proposal reader friendly—concise and skimmable.

6. Lead with client-centered content. The RFP is not your friend. Of course, you must comply with it. But don't mindlessly follow its vague suggestions and implied meanings. Many do, as if the RFP contains all the answers if they could only crack the code. I prefer an uneasy alliance, where I pursue what I think will work best for the client, unless the RFP directs me otherwise. That's because I trust what the client has told me (and the accumulated feedback from other clients) over the repurposed boilerplate that typically comprises the RFP.

One area I find myself frequently pushing back is the order of content. If the client is the centerpiece of my proposal, then I want to put the client-oriented content first (e.g., project background, objectives, approach, and SOW). That is, unless the RFP specifies something different. I typically don't assume that a bulleted list of contents means it must be in that order. But a numbered list probably does.

If that approach sounds too risky, there's another option—include an executive summary that puts the most important (client-centered) content up front. I always include an executive summary unless the RFP specifically precludes it. This summary distills the essence of your proposal, with the client at the heart of the story, in a few hard-hitting pages.

In my debriefs with clients, I've learned that the executive summary is almost always read (even when not requested) and is often a key factor in the selection decision. So if the RFP requires that you open with an overview of your firm (arrgh!), you can counter with a well-written executive summary that immediately makes it clear that the client's interests come first. That sells!