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Should you share your company's financial woes with employees?

This story appears in the August 2008 issue of Entrepreneur. Subscribe »

In 2005, Randy Haran happily shared his company's financial details with employees. Air Composites Inc., which performs repairs for airlines, had sailed through a banner year as sales doubled and profits soared. Hourly workers cashed profit-sharing bonuses equal to about a third of their earnings. But in 2006, his airline customers tightened their belts, his competitors sharpened their aim, and employees found themselves working harder and earning less. "It was a very challenging year," he says.

Yet Haran, 44, kept sending new hires to a four-hour financial literacy class and updating employees weekly with figures and forecasts on sales, margins, and cash flow. In fact, as his emphasis switched from maximizing bonuses to preserving jobs, the DeSoto, Texas, entrepreneur never wavered from his commitment to keep the books open in good times and bad. "When they don't have the money that they once had, some will bellyache," Haran says. "But others will figure out how we can make this work."

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