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Are You Really Opening the Books?

Jul 12, 2019 by Rich Armstrong 0 Comments

Really opening the books GIG

Inspired by Rich Armstrong & Steve Baker's upcoming book, Get in the Game: How to Create Rapid Financial Results and Lasting Cultural Change.

For nearly forty years, The Great Game of Buisness® has been known as the “open-book people.” The term open-book management (OBM) was coined by John Case in Inc. Magazine back in the 1980s, and the name stuck. With SRC and Great Game’s approach to OBM, Jack Stack, our CEO and founder, was even dubbed the “Father of Open-Book Management” by Inc. But if you ask Jack what he thinks of OBM, he’ll tell you—it’s not just about opening the books! Financial transparency is worthless without education, accountability, and reward. The only way to see your people AND your organization grow and transform is by teaching employees how business works.

If you approached an employee at your company and asked them, “Who creates the financial numbers in your company?”, what would they tell you? In almost every case, they’d tell you the CFO, the Accounting Department—you know, the ‘numbers guy’. In reality, it's them. With every decision they make, and every action they take, they are creating the financial numbers in the company.

Too often in business, we fail to show the players the big picture—the overall score of The Game. We tend to manage from the sidelines, focusing on individual performance and process results. Meanwhile, the employees—who have their hands on the ball and are most likely to change the score—are left wondering “What’s the score?” This is where open-book management and transparency become essential. 

Over the years, we’ve learned that the term “open-book management” can mean different things to different people. When you mention the term “open-book” to business owners and CEOs, many of them will respond by saying, “Oh, yeah, we do that.” For these companies, it might involve simply posting the annual report on the bulletin board or throwing some numbers in a PowerPoint presentation.

For others, they might share top-line sales figures on a monthly or quarterly basis or make their financial statement available online for employees to peruse. Long-time practitioner Harlan Geiser says these companies are “open-book reporting;” essentially saying, “I’m going to share my numbers with you as long as it’s too late to do anything about them.” 

Yet another response might sound something like: “I just don’t trust that my people will understand the numbers," trying to "protect" their people from the numbers. “My people don’t need to know any of that,” or “They just need to do their job, focus on KPIs, and the financials will take care of themselves.” But will they?

If you’re going to play the Great Game of Business, you need to trust that your people really do want to know what makes the business tick. Contrary to conventional thought, people are far more interested in how they can contribute, how they can make a difference, and how they can tell if they are winning or losing

GGOB goes far beyond simply opening up the books. Sharing financial information does not necessarily mean employees understand or realize how their daily actions and decisions affect financial performance or the health of the company. GGOB is not a spectator sport. It’s about understanding how the business works, the employee’s role in it, and how they can take action. 

There is real power behind your entire team—not just your accountants—understanding how the company makes money and generates cash. And it’s just as critical to establish a line of sight that helps connect how the actions and decisions each person makes on a daily basis impact those numbers. It’s the fans who know the score, but it’s the players who change the score.

We must educate our people about the business they are in, empower them to use that knowledge to improve the business, and engage them by giving them a stake in the outcome—and opening the books through the Great Game of Business opens the door to make that happen.

 

This blog was inspired by Rich Armstrong and Steve Baker's upcoming book Get in The Game: How to Create Rapid Financial Results and Lasting Cultural Change. Find out more about how to open the books and empower your employees in the step-by-step guide to implementing the Great Game of Business below.

Pre-order your copy of Get in the Game


 

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Topics: Open-Book Management, Transparency

Rich Armstrong
Written by Rich Armstrong

Rich Armstrong has nearly thirty years of experience in improving business performance and employee engagement through open-book management and employee ownership, with service as a business coach and as a current executive at SRC Holdings Corporation, a thirty-five-year old employee-owned company and one of the United States’s top one hundred largest majority employee-owned companies. Rich has been instrumental in the ongoing development of SRC Holdings’ open-book management and employee-ownership practices through practical, “firsthand” experience leading several of SRC’s business units. This experience has enabled him to successfully apply these practices in both small- and large-scale company implementations around the world. He coauthored the update to The Great Game of Business—20th Anniversary Edition. Rich is a graduate of Pittsburg State University and serves on the board of the National Center for Employee Ownership (NCEO). He cherishes his time with his wife, Alicia, and four children, Ryan, Ethan, Rylee, and Jackson. Rich’s guilty pleasure is making music in his home studio and playing in his ’90s rock tribute band.

About The Great Game of Business

Our approach to running a company was developed to help close one of the biggest gaps in business: the gap between managers and employees. We call our open-book approach The Great Game of Business. What lies at the heart of The Game is a very simple proposition: The best, most efficient, most profitable way to operate a business is to give everybody in the company a voice in saying how the company is run and a stake in the outcome. Let us teach you how to develop a culture of ownership, where employees think, act and feel like owners.