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Open-Book Management

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"The beauty of open-book management is that it really works. It helps companies compete in today's mercurial marketplace by getting everybody on the payroll thinking and acting like a businessperson, an owner, rather than like a traditional hired hand." So wrote John Case, who was a senior writer at Inc. magazine in 1995 when he coined the phrase "open-book management."

Now, years later, companies are still debating the merits of opening their books to employees and vendors alike. Many tout the benefits, such as improved bottom-line results and employee retention. Still others warn of open-book pitfalls, such as employees using their newfound knowledge against the owners.

To help you learn more about the pros and cons, we've created this guide to the best resources available on Inc.com that relate to open-book management. Learn from the experiences of other entrepreneurs before you decide what's best for you and your company.

The Origins of Open-Book Management

The Turnaround
This Inc. classic from 1986 details how Jack Stack turned a dying division of International Harvester into Springfield Remanufacturing Company, one of America's most competitive small companies -- and spawned a management revolution in the process.
The Open-Book Revolution
The beauty of open-book management is that if employees know whether they're making money, your company will make money. This excerpt of John Case's book Open-Book Management: The Coming Business Revolution appeared in the June 1995 issue of Inc. magazine.
Keeping Score
Scoreboards that chart the company numbers were popular a decade ago, but slowly fell into disuse. Today, open-book management expert John Case writes, scoreboards are back but they're displaying new types of information.
Before & After
An up-close look at how one company came to embrace open-book managament and what that has done for business.

Helping Employees Understand the Financials

How can we teach our employees to understand our business?
Leadership & Strategy mentor Keith Lamb shares his advice for introducing employees to financial concepts and creating a training program to help make the learning stick.
The Keys to Designing a Great Business Literacy Program
Thinking of designing a program to help your employees understand how your business makes money? Check out these tips for making your business literacy program more interesting, engaging, and fun.
How Can We Explain Our Financial Statements to Employees?
Two CEOs share how they brought the bottom-line up to the attention of their employees.
Communication: Open-Book Management 101
By role-playing a customer with a fist full of fake dollar bills, this CEO showed his employees where the money from a sale goes - and how little is left over for profits.
Using Critical Numbers: An Action Checklist
To tap the power of critical numbers -- the numbers that determine your company's success -- employees have to see them, understand them, and learn how to move them in the right direction.
By the (Open) Book
Putting your financial information on an intranet can be unnerving. But for Ken Anderson, president of the $11-million engineering-design firm Anderson & Associates, it's a matter of trust.
The Employee-Run-Budget Worksheet
When Steve Wilson finally opened the books to employees, he had one proviso: they had to do the budgets. Cost control is great now.
By the Numbers: How Setpoint Stays in Control
Through detailed monitoring of projects' progress, Setpoint sees what projects are more profitable and discovers where money and time could be better spent.
Tracking Progress and Profit on Projects
These worksheets from Setpoint help its owners and employees calculate gross profit earned on individual projects that are underway in the company.

The Risks in Sharing Financials

The Limits of Open Books
Before sharing sensitive information with employees, consider whether they're ready for it.
Why Open the Books?
Two entrepreneurs debate the issues surrounding the sharing of a company's financial information. "Employees used the information against me," says one business owner who now shares fewer numbers.
Q&A: Sharing Information with Vendors
Sharing timely company data with key vendors can be a good way to build trust. But you can run into trouble -- as this company did -- when you don't have a written policy.

From Hired Hand to Businessperson: Changing Employee Perception

The Power of Listening
How does an old-line manufacturer in a stagnant industry manage to grow 25% a year for 10 years? By educating its employees and taking them seriously.
The Talking Cure
When times are bad, sometimes the best thing you can do is share the burden with your employees by sharing your financials and asking for their help.
What's Your Culture Worth?
At first glance, Utah-based Setpoint appeared to have nothing that an acquirer normally seeks. Nothing except an organizational culture so distinct and powerful that someone wanted to buy Setpoint just to get it.
Franchisees Thrive with Open-Book Management
Two franchise owner-operators share tips on teaching their part-time employees to think like businesspeople.
Turn Salespeople into Profit Watchers
If they're watching the bottom line, it's sure to improve.
Open Books
Teaching your employees about company finances and giving them a share of profits can improve labor/management relations and increase those profits.
How can you inspire peak performance during crunch times?
Try sharing some financial or operating data with key employees. Opening the books has helped turn around plenty of companies such as Omega Point Labs. Here's how.
Creating Companies of Companies
Asking employees to think of their departments as stand-alone businesses can help them start thinking like owners.
Hiring for an Open-Book Environment
One staffing agency screens prospective employees for the traits needed to succeed in an open-book company: trust and the willingness to learn and accept responsibility. The company swears by this useful hiring tool.

Further Reading

Online Resources

The Great Game of Business
Jack Stack's style of running SRC Holdings, an open-book management company, spurred so much interest in 1984 when Inc. magazine featured an article on him that it gave birth to an entire business that's dedicated to providing companies with services, tools, and products to learn what Stack calls, "The Great Game of Business."

Foundation for Enterprise Development and Beyster Institute for Entrepreneurial Employee Ownership
Use the site's Resource Library to discover more about open-book management. Just type in open-book management in the keyword search and discover articles and book reviews on the topic.

The National Center for Employee Ownership
Find a number of articles related to the topic at the center's Web site.




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