For more than 25 years, we’ve helped thousands of companies implement open-book management to its fullest capacity. Along the way, we’ve developed a list of common mistakes companies make while using transparency and open-book management in their organization. If you think you are not executing open-book management correctly, or are not seeing the results you expected, then you may be making one of these four common errors:
1. You're Doing Open-Book Reporting...Not Open-Book Management
If you’re just getting started with open-book management, it’s okay to ease into the process by simply reporting or sharing the financials at the end of each period. By sharing the company’s financial results and opening the books to employees, it shows you can trust them with information.
Think about it - sharing a past financial report is only so useful because we can’t change history. The true power of open-book management comes when you use your company’s living financial statements to forecast and change financial results that have yet to occur – in The Great Game of Business, we call this practice “forward forecasting.” Check out this video clip where long-time open-book practitioner Harlan Geiser of Integrity Technology Solutions explains the difference between reporting and managing open-book.
2. You're Not Teaching Your People Business
By allowing your employees access to real-time financials, it’s important to make sure that they fully comprehend those reports. They may understand how their individual actions and behaviors impact the bottom line, but you need to make sure they understand all the data to their fullest potential. In order for them to do so, this may require some additional education and opportunities.
Even employees who have an advanced education may not be comfortable with basic business or accounting principles. It’s crucial that you provide business and financial literacy training (as well as ongoing exposure to the concepts) to employees at all levels of your organization to ensure they have a basic understanding of how business works. Making these concepts unintimidating was our main focus when we created The Great Game of Business, and we wanted to help every employee understand that business can be looked at like a game: you simply have to know the rules and understand how to impact the score.
3. Employees are Not Informed
Once you’ve started sharing information with employees, you have to make a concerted effort to keep them “in the know.” If you are not consistently communicating with them, they’ll lose interest…or worse, they’ll assume you have something to hide. So, returning to the game analogy, what would you do in any sporting event to keep the team informed? You Huddle, right?
Keep employees in the loop on a consistent basis through your weekly Huddle. If you’re not getting your employees at various levels together to share information, you’re missing a big opportunity to keep everyone informed, focused and dedicated to The Game.
4. Employees Are Not Engaged and Informed
If you’re in the pattern of getting employees together to share information, you’ll soon come to realize that information sharing is a two-way street. Open-book management comes to life when you move from sharing the numbers with your employees to them sharing the numbers with you. Your employees are bright, competent people. After all, you’ve educated them about your company’s goals and taught them the basic premises of business financials. Now, it’s time to let them track the operational and financial metrics they most closely effect.
Give employees the power to keep track of their own daily progress. Allowing them to tell you how they’re doing and what they need to do their job better will not only free-up the leadership team from micro-managing employees, but it also empowers employees to think proactively about how they do their jobs.
Open-book management and financial transparency are increasing in popularity as technology and social media continue to reinforce our expectations to have access to information. But don’t forget that, while simply sharing information has its benefits, you won’t see the true benefits of open-book management if you aren’t educating, informing and engaging employees as part of the process.
Want to learn more about how you can keep your entire staff up-to-date on financial literacy training? Find out how you can customize each employee's training needs and easily track learners' progress with our eLearning platform.
More articles you might like:
- The Huddle: Where the Action Happens (Even Virtually
- Communication Will Make or Break Your Great Game Implementation
- 4 Easy Strategies to Communicate Financials so Employees Understand