| What if there was a way for you to get your | | | | I tried to find a publication, article or speech that |
| employees truly invested in helping your company | | | | discussed problems encountered with OBM-a pros |
| earn a profit and achieve its key goals? You'd just | | | | and cons analysis, if you will. I couldn't. To the |
| tell your employees what you're trying to | | | | contrary, there are volumes describing the |
| accomplish and how you're progressing, and they'd | | | | improvements that companies have made in |
| become rabid fans and supporters. | | | | productivity and profits as a result (whether |
| Does this sound too good to be true? Well, it | | | | directly or indirectly) of making the move to |
| actually happens in some companies where | | | | share more of their financial and business planning |
| management has been able to adjust its way of | | | | information with their employees by using OBM. |
| thinking about the employee-employer relationship | | | | What About Your Company? |
| and practice true Open Book Management, or | | | | Are you practicing OBM at your company? If not, |
| OBM. | | | | could it be because you're afraid that risks like |
| Think about this for a minute: Public companies | | | | those described above are greater than the |
| share their financial results with the world, but | | | | potential benefits of having your employees truly |
| primarily because they have to in order to freely | | | | invested in your company's success? Maybe you |
| sell their stock. However, most privately owned | | | | don't think your employees really want you to |
| companies don't share their financial results with | | | | succeed. Or maybe you don't believe that |
| anyone, unless they have to in order to get a | | | | employees' feelings about the company's success |
| loan, file their tax returns or sell the company. | | | | really have anything to do with actual results. |
| Public Information: Good or Bad? | | | | If you haven't been willing to consider practicing |
| By definition, a public company's financial | | | | OBM at your company, either you haven't heard |
| information is available to every employee of the | | | | any success stories of companies that have, or |
| company. Is that a bad thing? Given the | | | | you don't believe them. I'll go with 'you haven't |
| extraordinary efforts that most privately held | | | | heard them,' so here are a few: |
| company CEOs go to in order to keep financial | | | | Pool Covers Inc. - This company, which has been |
| information away from their employees, you | | | | using OBM since 1994, was featured in a Wall |
| would think so. | | | | Street Journal article last year. The CEO credits |
| The mutual feelings of mistrust between | | | | OBM with helping the company's value grow an |
| employers and employees often run deep, | | | | average of 23.8 percent a year from 1997 to |
| perhaps stemming from the lack of loyalty they | | | | 2007. During the recession, the company had to |
| perceive from each other. Employees think their | | | | consider its first-ever layoff. Astonishingly, six |
| companies will lay them off at the drop of a hat | | | | employees volunteered to be laid off based on |
| (or net income) and employers think their | | | | the financial information they had seen, rather |
| workers focus largely on doing as little work as | | | | than have the company struggle and perhaps not |
| possible while pocketing office supplies and looking | | | | make it and everyone else lose their jobs. |
| for a better job somewhere else. Management's | | | | Dorian Drake International - When this company's |
| thinking often sounds something like:o "If they | | | | employees began seeing the financials in 2002, |
| know we're making a profit, they're going to | | | | they realized that some departments were |
| demand raises, bonuses and a membership in the | | | | getting better deals from vendors than they |
| local health club."o "If they know what our goals | | | | were for similar purchases. The resulting changes |
| are and we don't reach them, we'll have to explain | | | | in purchasing procedures helped the company go |
| why."o "If an employee leaves and goes to work | | | | from a $500,000 loss to a $200,000 profit in one |
| for a competitor, there goes our competitive | | | | year-with no increase in sales. |
| advantage when he tells them all about our plans | | | | Springfield ReManufacturing Corp. - This was an |
| and strategies."o "Explaining this stuff in lay terms | | | | ailing division of International Harvester when a |
| is a lot of work, and periods of poor profits can | | | | new CEO assumed control as part of an |
| create anxiety that we can handle but our | | | | employee-led buyout. The biggest change he |
| employees can't."o "If our employees find out | | | | directed was cultural. The company created and |
| how much money we make, our customers will | | | | embraced an environment of open |
| find out and we'll get requests to cut our prices, | | | | communication, learning and development, and |
| or our suppliers will find out and they'll want us to | | | | trust. |
| pay more for what we buy." | | | | Management taught employees how to read a |
| Now think about this: On any sports team, every | | | | balance sheet and began sharing key financial |
| player knows the game plan, their evolving role in | | | | information with them. As a result, employees |
| it and what the end goal is. And they all know at | | | | learned how key performance measurements |
| any given time whether they're making progress | | | | such as defect rates and order backlogs impacted |
| toward reaching this end goal. | | | | the bottom line. The result? From 1983 to 2004, |
| So why do so many business owners and | | | | the company's sales grew from $16 million to |
| managers consider it anathema to keep their | | | | more than $160 million. |
| employees (i.e., their team) informed about their | | | | So, do you think OBM might be worth a try at |
| progress? Or in other words, why do so few | | | | your company? Experience has proven that the |
| owners practice Open Book Management? | | | | rewards far outweigh the risks. Go ahead, give it |
| Ironically, it seems that companies are more likely | | | | a try-I'm willing to bet that, like thousands of |
| to practice OBM when they get into trouble. | | | | other business owners, you'll be glad you did. |