Learning about open-book management is one thing; putting it into practice is quite another. Because it’s such a big business strategy change, many business owners are hesitant to take the plunge. To help you envision how to get started with open-book management (OBM), here’s a Q&A with a real-life practitioner who recently implemented OBM at her company:
1. Now that you’ve implemented it, what is your definition of OBM?
Open-book management is the practice of creating transparency around how your company makes money and loses money. It also provides a format for each employee to impact those things.
2. What did you do to prepare for OBM?
- First, we created our scorecard, which in essence is a modified Profit and Loss statement that we would use to document our plan and track our on-going progress.
- Next, we assembled a design team – internal team members who would help us to initially roll out OBM.
- We then began having weekly OBM huddles with the design team to review/discuss the current forecasted numbers.
- Finally, we prepped for rollout to the entire company.
3. Were you nervous to share the books?
Yes because of two reasons:
- Running a business can get messy. There are potentially uncomfortable situations, such as when staff members see months that are unprofitable, or large amounts of debt. You know what they say, "ignorance is bliss," but life isn't just bliss. Having awareness for where the problems are (and every business has problems) is the only way the team can help create solutions to the problems.
- Privacy. We worried about what level of detail to show, such as salaries. We opted to not show individual salaries; but many companies do.
4. What information do you share?
We try to share as many numbers as we can — tool costs, revenue from clients, other expenses, etc. — with the exception of individual salaries. The more transparent you can get, the better. It builds trust.
5. How do you feel OBM will impact the bottom line?
We don't know yet how it will impact the bottom line, however, once our team understands how we make money as a company – as well as what each person's upside is if we meet our profit goals – I suspect everyone will be more aware and engaged on reaching the goals. They'll realize that if the company wins, we'll all win. All for one and one for all!
No one said implementing open-book management was easy. But neither is riding a bike for the first time. If you want to experience the thrill of conquering something new that will invigorate you and your company, you have to take the first step. So what are you waiting for? Get started with open-book management today!