The book, first published in 1992, chronicles the heroic tale of a visionary manager (Stack) who turned around a failing International Harvester plant by teaching his factory workers how to read financial statements and opening the company's books to motivate them to think like owners and save their jobs. Stack turned his experience into a philosophy and became the father of open-book management.
I first stumbled upon Stack's classic in an airport bookstore on a business trip in 1997. Up until that point, our four-person home-based web design firm, NetCreations, had never done more than about $50,000 a month in sales. With Stack's book in hand, I sat down with my partner and our two employees and told them that the following month, February 1997, we were going to crack $60,000 in sales for the first time and pay them each a $500 bonus for helping us get there.
Though our staff was pretty skeptical, we got on the phone, dialed for dollars and, on the last day of the month, hit our goal. My partner and I took them out for a champagne lunch and, the next month, I raised the bar to $70,000. By the end of the year, our little company had rung up $1 million in sales for the first time--and that was a year before the dot.com market took off.
Ironically, most small business owners are deathly afraid of opening their books for fear that their employees will march into their office and demand a raise. As a business owner myself, that's exactly what I'd want my staff to do--as long as that "raise" is structured as a percentage of the additional value (measured in sales and/or profits) that they helped me create.
That's how I run my consulting firm, Axxess Business Centers, and that's a big part of the reason why our hardy team of business plan writers and numbers-crunchers is still together after eight years of market volatility.
So, take a page from Stack's playbook and ask yourself how much more money you think your company would make if you opened your books and incentivized your employees to think like owners. You'll be glad you did.