Having an Open-Book Policy

Examining The Downsides

Family businesses evince concern over sharing the numbers for several reasons: They don't think every employee will want profit-and-loss responsibility, they're afraid that the competition will get wind of the numbers, and they don't want to share profits with nonfamily members.

Most key executives want to align themselves with family owners to profit as the business profits, so it would be rare for them to consider knowing the financial picture a problem. "But the concept doesn't fly with every employee," says Broaddus. "Many people just want to show up at eight, leave at five, and collect a paycheck. So if an owner institutes an open-management approach for all employees, you might get some flack. I would say, `Fine, you don't have to buy into this. You'll still get your bonus check. But if you talk down the concept, you're terminated.' "

If a key employee leaves for the competitor's firm, Poza suggests information will fall into the competitor's lap--with or without secrecy. What family business owners need to examine is what the competition can actually do with the numbers. "Probably very little," says Broaddus.

Notes Brogden, "It's something I have thought about. I've tried to look at a worst-case scenario--a disgruntled ex-employee goes to the competition and he lies, saying we're in a weak financial position. I don't think our competitors would stoop to share that information with a customer, however, because most people realize these tactics don't work to their advantage." So far, Brogden's right. "We've never had a problem."

Contact Sources

Ra Broaddus, (770) 643-0990, broaddus.tab@mindspring.com

Master Industries Inc., (937) 778-1300, info@master-ind.com

Ernesto Poza, PO Box 248155, Cleveland OH 44124

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This article was originally published in the March 2000 print edition of Entrepreneur with the headline: Open-Book Policy.

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