When employees understand the financial dynamics of their business, they are better positioned to make smart choices with the company’s finite resources. Additionally, when management shares financial information, employees are in a stronger position to understand why their company makes the decisions it does.
Despite this logical truth, many companies put very little effort into educating their team about their business. So, why is that? Are we nervous about sharing too much? Do we assume that everyone on the team already understands these concepts? Do we simply not think about it?
Econ of AO
Atomic’s founder, Carl Erickson, decided to invest effort into the truth that educating your team about your business is, indeed, smart business. As a result, for the last 10 years, we’ve been transparently teaching our entire team about Atomic’s business dynamic and financials. This education happens systematically through an annual training we call the Econ of AO.
The Econ of AO is a 2.5-hour training class intended to educate our team on basic finance and accounting terms and the financial dynamics of our business. It also provides a framework for financially evaluating decisions.
The Econ of AO was created to address three key opportunities:
- Education is the core of open books management. Atomic is an open books company. Open books management (OBM) companies share financial information broadly with their team. And, in order to effectively share financial information, team members need a basic understanding of what they are looking at.
- People tend to fill in gaps of ignorance in incorrect ways. We’ve found that the best way to combat gaps of ignorance, especially with really smart people, is through transparent and honest education.
- It’s hard to have broad employee ownership without OBM. We have broad employee ownership at Atomic. Our commitment to OBM is a great tool to help keep everyone informed.
- Why we created it – 3:57
- Goals – 5:32
- Agenda – 8:08
- Examples – 12:19
- Impact – 15:57
Organizing, updating, and holding a training class every year is a non-trivial investment of time. However, we’ve observed that the training has led to better decisions, greater alignment, and increased trust. The return on our investment has been well worth it.
This year, I had the opportunity to share more information about the Econ of AO with the ExPod group.
Below is a video recording of my 20-minute presentation. The presentation touches on many key elements of the Econ of AO. The following list outlines the key elements and time markers in the video.
At the end of the presentation, I share a few lightweight ways any company can start implementing some of these concepts.