Two years ago only three people saw the annual budget of Next Step Publishing: our CFO, our accountant, and me.
Last year, I opened the budget up to the whole management team. I wanted their insights and also wanted them to take ownership of their line-items. It worked well. Everyone took this role seriously and worked hard to come in under budget and/or cut costs.
The experience made me realize that if you have the right people on your team, they'll want to take ownership and make a difference in the budget. So then I started thinking, why not open the budget to the whole company? If everyone is involved in making budgets and saving money, wouldn't that be better? Plus, they'd have a better appreciation of what really happens with expenses, revenue and profit.
So I am doing it. Next year, the budget will be open to everyone and almost everyone will play a role in managing specific line-items. Jan Resch, Next Step's VP of Finance, suggested giving bonuses to those who stay within their budget—and even bigger bonuses to those who come in under budget. This, Jan reasoned, will give everyone an incentive to be fiscally responsible. I loved the idea, so we're doing that, too.
There is a limit to all this transparency: I'm not going make salaries public, which I feel could lead to a lot of stress throughout the company. No problem: It's easy enough to show everyone a fairly detailed budget without disclosing individual salaries.
I'll let you know how it all goes. Meanwhile, please tell me (and your fellow readers) about your own experiences with open-book management.