What Is Open-Book Management?
Open-book management (OBM) is the business practice of creating transparency by sharing financial information with employees. This includes financial education for your employees and showing them how their production influences the company's finances. It is an easy-to-learn and fun management system intended to be a discipline that is developed over time, rather than being a one-time fix.
The idea behind this concept is that when employees gain a better understanding of how the organization is run, they become empowered by this knowledge and it gives them “a dog in the fight,” so to speak. This is because people will fight for whatever they've helped to create. Employees are also more engaged because they're naturally curious about how their workplace contributions correlate to a company's success. Employees often see their share of the work in isolation, never knowing how it directly ties to how much they are helping (or hurting) their employer. When this information is unknown, people will assume that their hard work is enabling the company to make a great deal of money, of which they see little. As owners and managers, we know this isn’t the case.
Open-Book Management is...
Open-book management at its most effective far outperforms the simple definition of “sharing financial information with employees”. Open-book isn’t just about opening your financials to your company, it’s about responsibility, ownership, results, and growth; all of these things can come together to move the needle forward in your organization. With proper training and knowledge, all levels of your business start to act and engage just like owners or leaders. Fully engage with your employees by teaching them the workings of your business and the financial literacy needed to understand your books. With this knowledge, everyone begins to be able to make decisions that impact the business on a daily basis, everyone gains a stake in the outcome. The heart of The Game is very simple: We believe the best, most efficient, most profitable way to operate a business is to give everybody in the company a voice in how it’s run and a stake in the financial outcome—good or bad. Our ultimate goal is to create a “business of business people” who think, act and feel like owners.
What Information Gets Shared in Open-Book Management?
The whole point of The Great Game of Business® is to get employees thinking about how their individual tasks contribute to improving the company. The specific financial information being shared is only the information that is necessary to accomplish this, and every organization will have slightly different numbers they focus on.
Because information about salaries and bonuses is not impacted by employees, those details are not shared with employees. However, generally, the more open you can be with the statistics that affect your financials, the better—because it builds trust.