Open Book Management
Open-Book Management (OBM) is almost certainly the best communication approach organisations can adopt to dramatically improve productivity. Despite being around for about 20 years, and being enormously successful in many American private and public sector organisations, OBM has not really achieved the level of popularity it deserves, especially outside the US.
The concept involves all employees understanding the financial objectives and progress of the organisation and trusting them to manage the business by “the numbers”. It sounds simple, but in practice OBM requires a total change in the way an organisation is run. Many challenges will need to be overcome. For example, some managers will not wish to give sensitive financial information to employees; and in listed companies there may be concerns about the release of market-sensitive information before the stock exchange is notified.
Employees at all levels need to be trained to understand the finances of the organisation, in particular the measures applicable to their own business units. Concepts such as operating income, gross margin, inventory turns, billable hours, cash flows and net revenue are not likely to be familiar to many employees.
Employees are trusted (“empowered”) to run the business in a way that goes beyond normal employee involvement. Communication about the progress of the business is largely about planning and achievement of the numbers.
A challenge of Open-Book Management, particularly in the public sector, is that if employees are responsible for dramatically improving the financial performance of their organisation, then they usually expect to get some share of the proceeds as a reward (“skip the praise, give us the raise” Jack Stack). This is typically done by profit or gain-sharing schemes. But in some cases, the opportunity to run their business units most productively will be enough reward for employees.
If you’re not familiar with the concept of Open-Book Management, download a few articles or read Jack Stack’s book (which some regard as “the best business book ever written”). The history of the concept alone is fascinating.
Resources on Open-Book Management
The Great Game of Business, Jack Stack, Currency Doubleday, 1992, paperback edition from the originator of the concept – “unlocking the power and profitability of open-book management” $US17
Open-Book Management: The Coming Business Revolution, John Case, Harper Business, 1995, paperback 1996, $US15
The Open-Book Experience: Lessons from over 100 Companies Who Successfully Transformed Themselves, John Case, Perseus, 1999, $US14
The Power of Open-Book Management: Releasing the true potential of people’s minds, hearts and hands, John P Schuster et al, Wiley, 1996, $US25
Creating an ‘Open Book’ Organisation : Where Employees Think & Act Like Business Partners, Thomas J McCoy, Amacom, 1996, $US55
Open-Book Management: Creating an Ownership Culture, Thomas L Barton et al, Financial Executives Research Foundation, 1998 (paperback $US50)
Open-Book Management – Getting Started, Cathy Ivancic and Jim Bado, Crisp, Menlo Park, Calif., USA 1997 (Fifty Minute Series Book) $US11 (simple introductory workbook)
The Open-Book Management Field Book, John P Schuster et al, Wiley, 1997, $US35
The Great Game of Business Methodology, six implementation modules (e.g. Appraisal Module), The Great Game of Business Inc., Springfield, Missouri, USA (what you’ll need if your serious about implementing OBM)
Opening the Books, John Case, Harvard Business Review, March-April 1997 (“companies of all sizes are discovering the value of open-book management”)
Open Book Management – How companies are enhancing performance through financial openness, articles from James Shaffer and Ardith Rotz, Strategic Communication Management, April-May 1997
The Open-Book Management Newsletter, from Open-Book Management, Inc., John Case (editor), Boston, Mass., USA
Great Game Associates, Lakewood, Colorado, USA (site of authorized distributor of Great Game of Business resources including awareness seminars, coaches, methodology modules). Great Games Associates
Inc Magazine (inc.com) Guide: Open-Book Management