Open book is getting more clear all the time. The company depends on me too much. We’re not going to drive forward at the pace I want if we don’t have a team that understands the importance of hitting goals. And knows how to drive performance. Any suggestions?
Thoughts of the Day: Open book management delivers results. Getting there can be a challenge because it’s normal for entrepreneurs to struggle with giving up control and sharing everything. In the transition to open book, you may find out that some people are long-term players, and some are not up for the challenge. “What does it really mean to drive performance?” needs to be discussed up and down the line. Make sure you have everyone’s buy-in.
Why an open book is a powerful success tool
What is open-book management? It’s about involving everyone in the company in making decisions and accepting responsibility for how the company is run, making sure they have the education to properly read and interpret data, and showing people they have a stake in the outcomes they produce.
Practitioners of open books swear by it. Employee engagement goes up. Sales, quality, and profits rise because that’s what everyone focuses on. Trust among all levels of employees grows as people seek to achieve a common set of goals.
Why do open books work? There’s greatness in numbers. A group of employees working together have a much greater capacity to analyze, brainstorm and find meaningful solutions, as compared to leaving all the decisions up to a single owner or tightly held management team.
If open book management delivers better results, why don’t more entrepreneurial companies implement it?
Most owners start with the business sitting all on their shoulders. They are the risk-takers, the leaders, who pull the organization together, one idea and one employee at a time. That’s how businesses get off the ground, to begin with.
Look forward, not back
Once the business is up and running, it’s a 180-degree swing to cede power and authority. It takes a lot of practice for the owner to get comfortable ceding control and building trust with networks of people who are all learning how to pursue success for the business.
Ready to try? Find out who’s up for the game. Give employees the authority to act and see how they respond. Some may shirk from the responsibility, some may try to build fiefdoms. And some will focus on common budgets, forecasts, and goals that drive company success. Those people are your keepers.
Pay attention and promote people who are team and goal-focused. Recognize the learners for the value they contribute, as they continually seek to make the company work smarter and perform better. Give people a sense of ownership by sharing details about how the company is doing and allowing people to make changes in order to improve results in the future.
Employees at every level need to be empowered to make decisions. They must be taught how to predict and measure outcomes. They have to learn how all that relates to responsibility for ensuring the company succeeds.
Challenges of an open-book
Show them how to read a P&L. Make sure they know what drives income. Educate people about the difference between fixed and variable income and how each impacts the bottom line. Teach them about the importance of balance sheet factors, such as building up cash reserves, managing debts, and having funds aside for bonuses and investments.
Teach employees up and down the line how to review and critique performance. Show them how to read reports and interpret data. Ask them to use what they’re learning to recognize successes, identify the weak links, and confront poor performance. Have them set standards for how sub-par performance will be handled and how superior contributions will be celebrated. Ask people to hold each other accountable for implementing what they have set up.
Watch employee interest in the bottom line grow. Show employees how to use profits. For example, taxes, reserves, debt repayment, bonuses for jobs well done. Additionally, shareholder distribution. And don’t apologize for rewarding shareholders, since they are the biggest risk-takers. They invest to earn a greater return in the future, back the company’s finances in times of need, and get to increase their return when things go well. If employees ask about becoming shareholders, consider sharing. It will increase retention and commitment to bottom-line results.
Looking for a good book? The Great Game of Business, by Jack Strack, Bo Burlingham.
