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Seven Truths about Open Book Management
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Seven Truths about Open Book Management
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June 01, 2007
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Open book management is a powerful communication approach for improving productivity and performance. It teaches employees how an organization makes money, engages them in the business, and empowers them to share in its success.
But getting employees to think and act like businesspeople requires a deep management commitment to make business education part of the culture. While this is never easy, it can be well worth the effort.
Here are seven realities to consider before implementing or improving your open book management program.
- Many employees are business-illiterate. Profit, cash flow, gross margin, net revenue, inventory turns…When it comes to even the most basic business terminology and concepts, employees often haven’t a clue, so begin at the beginning. This doesn’t mean that you must turn your curriculum into “Accounting 101” – just keep the information simple and relevant to what’s important for your business.
- It’s the why and how behind the numbers that’s important. Open book management is more than tracking numbers; it’s about influencing them. To do so, employees need to understand why certain numbers matter to the business, what they mean to performance, and how their individual actions can move those numbers in the right direction.
- Not all numbers have to matter. Your open book program shouldn’t include every detail in the fiscal picture. Pick the numbers that are most critical to your success, as well as those that can be directly influenced by employee efforts.
- Classroom lessons aren’t sufficient without frequent on-the-job reinforcement. Give employees ample opportunities to learn by doing, and encourage them to apply their knowledge. One way to do this is to turn students into teachers, letting veteran employees mentor and train new hires on key business literacy measures. Or try role-playing sessions. With daily application, employees at every level will begin to adapt their behaviors and make decisions based on valid business principles.
- If it’s important to performance, it had better be visible. “Out of sight, out of mind” is an adage that applies to the open book program. Organizations must continually put the numbers in front of employees, posting progress charts on walls and distributing financial reports. It also helps to break down figures into hourly, daily, or weekly calculations that workers can quickly gauge and then act on. Only by publicizing key figures can companies draw on the power of their people to move numbers in the right direction.
- Organizations won’t get traction without involvement. Once a company has taken the necessary educational steps along the way, it must ask for employee involvement on business policy and process. Go beyond lip service and invite workers to participate in the discussions. Get them involved in annual planning and budgeting, hiring processes, safety programs, anything that gives them a direct stake in the organization’s success.
- Not everyone fits in. An open book workplace requires people who are willing to accept responsibility, embrace accountability, possess high levels of trust, and thrive on teamwork and team decision-making. Not every employee is comfortable working in such an entrepreneurial environment. Companies should therefore screen and hire employees with the right mindsets, talents, and traits for working in an open book organization.
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