Practically Speaking is a weekly column that addresses your most pressing business dilemmas. The advice is the opinion of long-time business owner Gene Marks. Send your questions to PracticallySpeaking@fortune.com.
I’m aware that a few of my employees are bringing home office supplies. To me this is out–and–out stealing. What do I do?
There is a long, storied history of employees who have stolen office supplies, and you’re going to fool with tradition? You’re not the first business owner to go through this and you certainly won’t be the last. Taking home a few extra sticky pads isn’t exactly a capital crime.So unless you’ve got someone walking out the door every week with a MacBook or a copy machine, I wouldn’t let it trouble you.
Still, I do recognize that leaking this stuff is an expense and the expense can mount up over the year. And yes, technically it’s stealing. But there are two simple ways to combat this.
The first step is to lock up your supplies. Find a closet, stick a padlock on the door and give the combination to your office manager or someone else entrusted with the security of the inventory. It may seem draconian, but locking up these supplies will take away any motivation someone may have to walk away with them. You don’t have to make this a formal announcement. Just quietly do it. The less temptation, the better.
Secondly, put someone in charge and have a requisition process. Without adding too much bureaucracy to your business, just come up with a procedure for requesting supplies. It may be a simple knock on the door of the office manager or it may be a requirement to fill out a form. In either case, make the employee go through a step or two to ask for what they need and put someone in charge of doling out the inventory. This now creates a transaction where two people are involved, and unless there’s an office-supply plot to destroy your company, you’ll find that the extra pair of eyes to add a new level of internal control.
I run a privately held company and don’t like anyone to know my business. And that includes my employees. How much financial information should I be sharing with my staff?
I have a client, a roofing company, whose owner believes in full disclosure and transparency. He distributes his company’s sales and profit information monthly to his managers. He posts sales numbers by product lines on a big whiteboard in the employee lunchroom. He talks about how well, or not well, the company is doing. He freely shares the costs of his products and sales prices. He believes that to run a good organization, the entire organization must know the data. And he pays bonuses based on this data. Does this work?
In some ways, it does. His employees do feel more involved. They know their financial goals and what they need to do to achieve them. Their results are more quantifiably measured. They know where they stand amongst their peers. They’re aware of how well the company is doing and also sensitive to when things aren’t so great. They appreciate the trust given to them by the owner.
But there are also drawbacks. My friend has experienced some resentment, particularly when the company is doing well and people start thinking “hey, he’s making a lot of money here and I deserve more.” He has also suffered when employees leave his company and go to a competitor knowing full well his selling prices and margins. A few times, he told me there are heated debates about how overhead costs are applied to sales because they reduce margins and their commissions. He’s even been accused of deception – “I don’t think you’re not showing all your profits so you can avoid more bonuses,” one employee once told him.
So what’s the answer? Full disclosure or no disclosure? It’s a compromise. Sharing your full, detailed income statement with your employees is too much information. But sharing sales data is important. And using margin percentages is also helpful so people know how profitable it is to sell a product or provide a service. Base your bonus calculations on these top line numbers and avoid disclosing the bottom line income you’re making as much as possible. You’re not a public company and there’s no reason for your employees to know just how well (or not well) you’re doing. That’s one of the perks of running your own shop.