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Win with Open-Book Management!

George Hedley

Your company is in business to make money. Open-book management teaches managers and employees how to keep track and win the game of business. Without open-book management, most employees have no clue how well their team is doing. Opening your books will help your people get excited and play to win as they learn how their role contributes to the company’s bottom line.

Open-book management is not a tool to manipulate or control employees. It’s a system that helps companies interested in making more money get their people to think and act like business owners instead of workers. Open-book management can be taught and used by every person in your company, regardless of their position.

Are You Open to Open-Book Management?

Many business owners are afraid to open their books to their employees for various reasons. Whatever your reasons not to open the books, you are hurting your company’s results and restricting your profits. You probably haven’t tried open-book management because you think most of your employees aren’t interested in the business of your business. Or you think sharing numbers will cause problems, be shared with your competitors, or they’ll think you make too much money and therefore won’t want to work harder.

Is the Problem Your Employees or You?

Don’t believe your employees are smart enough to understand the numbers and targets? Don’t believe employees can contribute more to your company’s performance than they are now? Don’t think employees can learn what makes your company achieve the results you want? Don’t want to have employees help you make more money? Don’t think if your employees had an incentive to improve the company, they would?

Since most employees never see any financials or numbers, they become apathetic about their ability to influence them. In reality, surveys show a majority of employees want to know what’s happening at the company. And, if they knew more, they would work harder to achieve the company’s goals. All you have to do is teach them the basics of business accounting and the terminology to get them on board to help your company improve the bottom line.

The Basics of Open-Book Management

Open-book management is about sharing financial targets and results with employees and asking them to contribute and help improve the bottom line. If the company’s profits improve, everyone wins and receives a piece of the net improvement dollars. In business, if your team reaches beyond and achieves above their normal results, your bottom line improves and you should share a piece of the improvement money with your employees.

Open-book management starts with opening your books, sharing financial information, developing financial targets, and explaining the results with your managers and employees. With this information, people can use this feedback to improve the company’s short-term and long-term performance. To ensure success, management must actively manage the open-book process, hold regular company meetings explaining the numbers, and coordinate the improvement efforts.

Decide What You Want to Improve and Get Started!

Open-book management will ultimately improve your bottom line by getting everyone working together towards a common goal. It can also accomplish lots of other positive attributes, such as becoming more competitive, reducing costs, making less mistakes and more.

You decide what numbers to share. Individual salaries are never disclosed; just the big picture, project and production numbers that influence company profitability. Teach employees how they contribute to the monthly income statement, revenue, direct costs, indirect costs and profit. These numbers can be broken down into departments, jobs or accounts so people can see how they personally contribute to the company’s overall performance.

After your decision to implement open-book management, hold a company meeting and explain what is going to happen over the next several months. Get everyone’s commitment to making your company more competitive with better service and quality, and more profitable.

Track Your Key Critical Numbers!

Decide what you want to improve in your company and determine what key critical numbers you want to track and share with your employees on a monthly basis. Often in factories you see daily production goals and actual results posted. This way each team always knows its score and what they have to do to meet or beat their targets and goals.

What are your key critical numbers? Pick ones that make the most sense to your employees and contribute most to the bottom line. Focus on a few to start the open-book management process. Break them down into parts that each project or department team is responsible for. This way each employee will feel and see how they contribute to overall company results.

The goal of open-book management is to improve. To improve, people need to know what is expected. Every employee needs a target to hit and track. Set up an ongoing tracking system to keep everyone informed of their score. Everyone must know what the past performance was and how well they are currently doing in order to strive for improvement.

Making it Work!

To make open-book management work, hold regular monthly meetings with all of your employees. Share the results and discuss how the teams are doing versus their targets. These results are open to everyone company-wide. Ask each team leader to explain what is working and what needs improvement. Ask for input from all team members to ensure positive two-way communication. Make sure everyone understands the targets and goals, how they contribute to the results, and what each can do to improve the results. Make meetings fun and explain how the improvement dollars will be split among team members.

The beauty of open-book management is how well employees become one and want to win the game of business. Give it a try. Start small by selecting a few areas you want to improve. Set some targets, explain the game, decide on a reward system that compensates overall improvement, setup a scoreboard tracking system, keep the players informed of their progress, and then share the dollars saved by the teams when they beat the goals. How can you lose when everyone is working together to build a better business?


George Hedley, CSP, CPBC, helps contractors grow and profit as a professional business coach, popular speaker and peer group leader. He is the author of “Get Your Construction Business to Always Make a Profit!” and “Hardhat BIZSCHOOL Online University” available on his website. Visit www.hardhatbizschool.com for more information.