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Do Employees Need More Financial Information?

Do Employees Need More Financial Information?

by Dennis Jacobe

Over the past several months, in both the news media and the halls of Congress, there has been much discussion about the need for higher standards with regard to corporate disclosure -- or, as some would term it -- financial transparency. Obviously, corporate investors need full disclosure in order to make sound investments, and stockholders deserve full corporate financial transparency if they are going to put their money at risk.

Often overlooked in these discussions, however, are the needs of company employees. While many employees are stockholders, even those who are not are company stakeholders. Clearly, the financial well-being of a company -- or the lack of it -- can have an enormous impact on its employees. Every employee of a company has a major stake in the way that company performs, and therefore deserves a full and accurate view of its financial performance.

Many Employees Want More Financial Information

Do employees need more financial information about the companies they work for? A significant percentage of them think so. According to the July Gallup/UBS Employee Outlook Index survey*, one out of three private-sector employees working at for-profit companies say they get too little financial information about the company they work for. In sharp contrast, only one out of 20 employees say they get too much financial information about their companies.

Will employees get the additional financial information they need? The answer is not clear. The Securities and Exchange Commission (SEC) has no reason or authority to force companies to provide financial transparency to those employees who are not company stockholders. Still, companies that provide such transparency are likely to have more highly engaged and productive employees. Therefore, full corporate disclosure for company employees is not only in the public interest, it would also benefit corporate America. Many U.S. companies may voluntarily increase the amount of financial information that they provide their employees in the months to come. Still, additional disclosure requirements should be included in the financial reporting reforms yet to come.

Most Employees Talk About How the Company Is Doing

Seven out of 10 employees say that they talk to other employees about how their company is doing financially on a monthly basis. Another 12% say they talk about it once a quarter.

Employees Get Information in Different Ways

Companies provide their employees with financial information in a variety of ways. The most popular approach seems to be holding regular employee meetings (live or by teleconference); 38% of employees say they get financial information about their companies in this manner. Employees also say they get financial news from the companies they work for by mail (18%), from their bosses (16%), and by e-mail (14%).

About one out of three employees (35%) say their company provides them with financial information on a monthly basis. Nearly another third (29%) say their companies provide this kind of information quarterly. Surprisingly, nearly one in five employees (19%) says that his or her company never provides such financial information to employees.

Key Points

Clearly, most employees are interested in the finances of the companies they work for, and it appears that many of the employees who never get any financial information would like to receive it at least quarterly. Because happy, productive employees are the foundation of every organization's success, it seems that American companies would be well advised to keep their employees informed about company finances.

*Results for the Employee Outlook Index are based on telephone interviews with a randomly selected national sample of 660 adults, aged 18 and older, conducted July 9-11, 2002, and July 22-24, 2002. For results based on this sample, one can say with 95% confidence that the maximum error attributable to sampling and other random effects is ±4%. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.


Gallup https://news.gallup.com/poll/6577/Employees-Need-More-Financial-Information.aspx
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