Open-Book Management

Open-book management. What the heck is it anyway?

by Bill Collier

In most companies, the head honchos run the business by the numbers. But only they know the numbers. The employees just do their jobs.

“The employees just do their jobs.” That statement begs the question: What’s the job?

It doesn’t take an advanced degree to conclude that in any setting – profit or nonprofit – each job exists to help achieve the organization’s goals.

There may be many goals, but first and foremost is this one: Take in more than you spend. This is a much-simplified definition of “profit” and is the basic key to survival for any company.

So, the organization’s most pressing need is an easy-to-understand financial measure, yet it doesn’t communicate it to the folks responsible for producing that desired result.

Can you see the problem with this approach?

In an open-book management (OBM) company, everyone runs the business by the numbers – each department, each function, each job. The employees know the organization’s goals, and they establish department goals that support them.

One widespread misconception is that OBM is simply “opening the books” and sharing the numbers with the employees.

That covers the “open book” part, but then there’s the “management” piece. For transparency to work effectively, it must be accompanied by education, communication and accountability.

Another fallacy about OBM is that the numbers are shared only downward.

Here’s the reality:
•Individuals and teams share their numbers upward, which lets others know about their progress and results.
•The top-down sharing becomes communication about how the company is doing and the impact being made by all the individuals and teams.

 But it’s much more than a mechanical tracking and sharing of numbers. Along the way a culture is built. It’s a win-win culture, where the employees want to be part of a winning team and where they want to help the company succeed. That’s because they understand that the only way the company can help them succeed is if the company itself succeeds. It’s a culture where the top brass uses part of the success to pay back the employees for their input, work and involvement in creating the success.

And what about naysayers, drifters and clock-watchers? There’s not much room for folks like that in an open-book company. For one thing, there’s nowhere to hide since everyone’s numbers are on full display. And in an environment that is relentlessly high-communication, high-expectation and positive, there’s little tolerance for anyone who’s not on the same page.

It’s much like a sports team. A win is a team win. The team celebrates and benefits together. A loss is a team loss, which is taken seriously and personally. Each team member follows the action, keeps score and cheers every progress no matter how small.
Why not approach your business the same way you’d approach any other competitive endeavor? n

Bill Collier is the St. Louis-area coach for The Great Game of Business. He works with organizations who want to improve financial results, engage their employees and create a winning culture. Bill can be reached at 314-221-8558, GreatGame.com/stl, GGOBSTL.com or billcollier@greatgame.com.