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 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 that which they have helped create, and because they want to understand how their contributions correlate to success. Often employees see their share of the work in isolation and never know the direct tie 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.
What Information Is 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.