Dental organizations have many differing philosophies on what financial information to share with the various levels of leadership, as well as which leaders should have access to proprietary company information.

Some organizations share financial results to empower leaders to establish accountability as well as motivate them through incentive programs. Some limit financial information only to owners. Others share key financial data throughout the organization to drive transparency and bottoms-up results. 

There’s no right or wrong philosophy, but it’s important to regularly evaluate your financial communication to ensure that you are getting the desired results. Many organizations fall into the trap of simply doing things the way they’ve always been done rather than making changes and building a system that moves the organization forward. 

Here are the key points to consider when building your processes for sharing financial information (we're going to be using our Who-What-Why format): 

“Why” - Why Share Information?

Defining the “why” is the first and most important step because your “why” will determine how you evaluate the other elements. 

So, in your organization, why are you choosing to share financial information?

• Are you trying to drive profitability through bottoms-up involvement and accountability, as opposed to a top-down approach? 
• Are you communicating financial information focused to individuals’ roles and responsibilities? 
• Are you giving shareholders information related to distributions and key profitability drivers?

“Who” - Who Should You Share it With?

Once you’ve identified the “why”, define who the key stakeholders are. This typically comes down to who is most affected by the financial results as well as who can most affect change in those areas. 

Many leaders are hesitant to share what they consider to be sensitive information with key stakeholders, even in leadership. This is common in small organizations, but as your organization grows, this simply isn't scalable. Certain financial information needs to be shared in order for your company to grow. And, if you can't trust leadership with key financial information (results that their roles directly impact), then you should ask yourself if you have the right people in those positions. 

“What” - Exactly What Information Should be Shared?

Once you're confident that you have the right people, it's time to distill the information to the right leaders. It doesn't make sense to share every financial document with every team member, so what should be shared in order to get the best results?

To answer this, consider your answers to the previous 2 questions. Why you’re choosing to share and with whom will dictate the kind of information as well as the degree of detail to share with them. 

Here are some questions to think about:

• Are you sharing transaction-level details to your constituents or only high-level data? 
• Are you sharing full financial statements or only role-specific data? 
• Are you presenting raw data or in the form of ratios that are able to be analyzed in the context of industry trends?

“When” - How Often Do Team Members Need this Information?

Frequency is important. The more frequent the communication, the more actionable the information is. Particularly if there are negative trends, more frequent communication can reverse the trend more quickly. 

But, there is always a cost/benefit analysis for the frequency of information. Daily financial statements are relatively useless in full, unless accounting for daily payroll and expenses, which is laborious and cost prohibitive. Conversely, if you’re only reviewing financial results and statistics quarterly, there could be negative financial trends that are not realized and acted on until three months later. 

Financial results should always be shared as quickly as can be done accurately and effectively. Consider the kind of information being shared and determine the frequency that would be most helpful for your team members.

“How” - How Best to Present the Information?

Unfortunately, not all dental leaders have strong financial competencies. So, it’s best to frame the financial information in a format that’s easy to digest no matter the level of financial literacy. Strict financial numbers are often difficult to interpret and act upon. Instead, consider using visual aids and graphs to make the information easy to understand. 

Additionally, in-person discussion is always best, but it's not always realistic as your organization grows geographically. If you’re using video conferencing for these conversations, set yourself up for success by making sure all cameras are turned on. Face-to-face interaction will help you evaluate each individual’s understanding and engagement in the discussion.

Moving Forward: Be Prepared for Changes

Your key stakeholders will more than likely change over time. As such, the financial literacy of your organization will also change. With changes in personnel, as well as changes in organizational objectives and strategic goals, updating your financial communication process are fundamental to achieving your goals.

Keep revisiting these questions throughout the life of your organization in order to make sure you’re keeping everyone informed and on track.