Employees have a vested interest in the future of the school, with a number spending many years employed by the school, and quite a few sending enrolling their own children. In these senses, employees are significant stakeholders. While each school is different and it is ultimately up to the principal and business manager to decide what will and won’t be shared, here are some things to consider before you share financial information.
Do they want to know?
Not always. Ignorance can be bliss. It can be a very respectful thing to allow someone to outwork their role without being accountable to everyone else. Others may appreciate the insights that financial information can bring, and it may give them a greater sense of confidence in the school leadership. Employees may also be stirred to prayer (and thankfulness) for the financial circumstances of the school, and this could occur in good times as well as challenging times. I believe you would have to be careful in situations of the latter, for some of the reasons I will mention below.
They will be more supportive
If they know more, will employees be more supportive of management decisions or will management be more exposed to scrutiny? Is scrutiny such a bad thing? Most of us in our roles live in a world of accountability and understand that such accountability comes part-and-parcel with decision-making. In theory, our decisions should be able to withstand the scrutiny of others.
It can be difficult to appreciate the difficulties in the distribution of finite resources if you’re not aware of the resource constraints and the range of decisions and alternatives that must be chosen from. One would hope that a rational person, when faced with the same information as others, would make the same (or similar) decisions. Disclosure of financial information and the difficult choices to be made could have the effect of increasing the pool of support.
They might not be able to cope or understand
Those in school leadership positions are charged with making decisions in the best interests of the whole school and not purely a single faculty or area. Employees can have a very narrow focus sometimes, and that focus might be limited to their own faculty (“We need more funds for the Sports Department.”) or it might give rise to claims for salary increases. If a healthy surplus is forecast, employees may not always understand that this is needed to fund capital expenditure, such as new ICT equipment or building improvements, or to repay and service debt or provide for other liabilities such as employee long service leave. It might be hard for employees to understand the differences between profit and cash (and it might be hard for us to explain it in simple terms). As an aside, this is why I think the Statement of Cash Flows is such a wonderful tool when coupled with the Statement of Income and Expenditure and the Balance Sheet because it explains how much cash was produced from operations and how it was used on financing (loans) and investing (capital) activities.
Some employees may lack the capacity or confidence to understand the finances of a school without getting easily ‘spooked’. An employee who has never seen a financial amount bigger than the value of their own home can become worried when a few more zeros are added on the end of the number. To us business managers, they are just zeros and the fundamental concepts remain the same irrespective of whether it is $1,000 or $1,000,000 (although I do recognize that the risk increases with larger amounts). It has always surprised me that the average teacher doesn’t understand the size of financial value of the school, even when they could do simple maths such as the number of employees multiplied by the average salary plus more for overheads and other expenses. But then again, we are all different and have different skills, so I guess this could be understandable.
Exposing new leaders
Certainly, one group that should be able to receive and understand school financial information is the emerging leader. Training of future leaders is an important function of the current school leadership and sharing financial information with emerging leaders exposes them to the decision-making processes and how this can sometimes not be straightforward. These emerging leaders can also have increased insight into the needs of the school and play a supporting role in the allocation of school resources. By the very nature of their emerging leadership, these should be afforded more trust (and opportunity to demonstrate trust). An emerging leader that gets sloppy with sensitive information is shooting themselves in the foot.
It’s not a democracy
School leaders, whilst hoping to increase participation in decision-making, shouldn’t run the school by consensus or democracy. While there are opportunities for consensus and consultation in managing a school, those in senior leadership positions such as the principal and the business manager do have responsibility to outwork their roles without subordinating this to others. This doesn’t stop school leaders from being accountable for their decision-making.
Enter the conspiracy theorist
One of the things that gives our world ‘colour and texture’ is the presence of the conspiracy theorist. While maybe lower in number or less rabid, I am sure they are also present in a Christian school. For these people, no matter how open you are with them, they will think something underhanded is going on. To some extent, you can only do so much for these people, and if a person believes something sinister is going on despite open-handedness, you just have to move on. However, I believe the vast majority of employees in Christian schools are people of goodwill and would welcome more openness and transparency when it comes to the financial position and performance of the school.
If you share school financial information with employees, will this information get in the wrong hands? One would hope not. There is a risk of course, but I think this is where school leaders need to be wise about what they do and don’t share, and how it is shared. Since there is a chance of a leak, it pays to share summary information and only that which, while you don’t intend for it to become public, will not do too much damage if it does. I think it is wise to be careful about releasing financial information in printed or electronic form, and information that is more sensitive in nature could be shared verbally.
Some principles for sharing
While each school is different and it is ultimately up to the principal and business manager to decide what will and won’t be shared, here are some principles you might consider if you do decide to share financial information.