The Open-Book Managers

Why many CEOs are adopting open-book management styles.

Tweet

Many CEOs are adopting a management style based on one simple, radical idea: if you want your employees to act like owners, you've got to give them all the information any owner gets

Of all the misbegotten notions that have muddled the minds of American managers over the years, there is one, I'm happy to report, that may soon be vanishing from the business landscape.

The ill-conceived idea: that a company's employees don't need, don't want, and indeed shouldn't have access to the information that is any business's lifeblood. Don't show them the financials. Keep 'em in the dark about upcoming strategic moves. Don't tell them how their department's faring, even how they themselves are doing.

Recognize the mind-set? I hope not, because it should have gone the way of your mechanical typewriters. Think about it: these days, everyone wants employees to work smarter, to take initiative, to act like owners, right? Then tell me, how are they supposed to do any of that if they don't get the regular, nuts-and-bolts information -- the financial feedback -- that an owner gets?

All over the country, chief executives have at last begun to see this fundamental contradiction, that you can't treat people like serfs and expect them to work like colleagues. These same CEOs are letting employees into the business -- simply by providing them with the information top managers take for granted -- and are beginning to reap the rewards. Profits in lieu of losses. Growth instead of sluggishness. Even, as we'll see, a solution to that perennial problem of getting ordinary people to work together in extraordinary ways.

Now, I don't mean to get too grandiose about this. Here at INC., I confess, we discovered the phenomenon almost by accident.

For years we had heard chief executives brag about all the information they imparted to employees -- the newsletters, the videos, the staff meetings. Trouble was, most such information peddling reminded us of high-school principals at an assembly. ("And next week, everyone, we'll be getting a new copier.") Compare this all-too-conventional approach with the wholly unconventional attitude of a company such as Springfield Remanufacturing Center Corp., in Springfield, Mo. There workers on the line know -- and are taught to understand -- damn near everything president Jack Stack knows about costs and revenues, departmental productivity, and strategic priorities. When we began hearing stories of other companies taking this approach, we figured we should take a look.

Take a look indeed. In just a few days we turned up dozens of companies finding scores of ways to cut employees in on the information action. At Reflexite Corp., in New Britain, Conn., and at Reuther Mold & Manufacturing, in Cuyahoga Falls, Ohio, managers prepare annotated financial statements for employees, spelling out what every line in the company's P&L means. At Visual Information Technologies, in Plano, Tex., CEO Mike Allred conducts an employee meeting right after his monthly board meetings, covering 99% of the same material. At Re:Member Data Services, in Carmel, Ind., and at Solar Press, near Chicago, top management makes a point of walking employees through the company's business plan (see "Outline for an Open-Book Company," page 6).

Hal F. Rosenbluth, president and CEO of Philadelphia-based Rosenbluth Travel, prefers the indirect approach: every employee has an open invitation to schedule a day tagging along after him. "Nothing is kept from them," Rosenbluth says.

To be sure, we also encountered our share of rock-ribbed -- not to say rock-headed -- traditionalists. "If we told our employees how the company's doing, the first thing they'd want is a raise in pay," scoffed an incredulous businesswoman to whom I broached the subject. A middle manager at a manufacturing plant remembers sitting in a conference room with a consultant, reviewing hourly rates and job expectations for blue-collar employees. "Not one word of any of this gets out there," admonished the consultant, gesturing suspiciously toward the shop floor. Everyone nodded -- automatically.

But the traditionalists are fighting a rearguard action: more and more companies are joining the movement toward what you might call open-book management. Consider the case of Re:Member Data, which illustrates how easy it is for a manager to get started and how dramatic an effect the new approach can have.

John Davis -- colleagues call him J.D. -- is a vice-president at what is now Re:Member Data's Memphis office. The company sells data-processing systems to credit unions, and J.D. runs the department known as conversions and training. Once a sale is made, his people convert the customer's database to the new system, then train the customer's employees.

 1 | 2 | 3 | 4 | 5 | 6 | 7  NEXT 

Read more:

Sign-up for our Leadership and Managing Newsletter

Email Address: