Open-Book Test

Open-Book Lessons

Will employees instantly grasp what the numbers are all about? Probably not, and the business that prints copies of its spreadsheets, hands them out to workers, and announces "we're now open-book" is making the classic goof. "The main way to wrongly implement this program is to tell people the numbers but not what they mean," says Lauter. "Sharing information is good, but to make this approach effective, you need to help them understand what it all means."

At American Express TBS, for instance, open-book implementation starts by bringing employees together to play "Profit and Cash." The board game, similar to Monopoly, teaches workers the meaning of accounting touchstones such as sales, profits, cost of goods and cash flow.

Whether via a formal game or simply through talking about business economics, you've got to raise your employees' comprehension at the starting gate. "For this program to work, the first thing employees need is an understanding of how a business operates," says Minnick. "The goal here isn't to turn everybody into accountants. But you do want them to understand how the company makes money and what effect they have."

Then there's the second most frequent goof, which is not letting employees become more involved in decision-making. "Once they have the information, they have the [ability] to become more involved," says Lauter. "If you fail to let them, you'll only create more problems for yourself. Open the books, and you have to be prepared to let your workers have a voice. If you're not ready for this, don't try open-book management."

Let's say you go over the numbers with your shipping department and they come back with a suggestion to switch delivery services to cut costs. You may be used to responding "No, I'm happy with the present service," but that won't cut it once you implement open-book management. Now when you make a decision, you need to offer an explanation. That's because as employees grasp the numbers, their sense of ownership of their jobs soars. And they simply won't put up with a boss who barks commands and expects them to be followed no matter what. "Open-book management transforms workers into active, involved, thinking employees," says Case. If the downside is those kinds of workers won't meekly obey every whim of the boss, the upside is that "these are exactly the kinds of workers your success in today's highly competitive marketplace depends on," Case explains.

How often should you go over the numbers with workers? Again, there's no set rule. "Some businesses do it monthly, others do it twice a month," says Lauter. The only must-do is to look beyond the numbers. Presenting the numbers in terms of goals for individual workgroups helps cement the context in which the numbers are viewed. Remember, the real purpose is to get each employee thinking about how he or she can contribute in a bigger way to the bottom line.

Like this article? Get this issue right now on iPad, Nook or Kindle Fire.

This article was originally published in the June 1998 print edition of Entrepreneur with the headline: Open-Book Test.

Loading the player ...

Shark Tank's Daymond John on Lessons From His Worst Mistakes

Ads by Google

Share Your Thoughts

Connect with Entrepreneur

Most Shared Stories