Everyone looks for the ideal management style that will allow them to give their employees a career that is filled with desire and a commitment to the company. Quite often companies hold back the finances from their employees and they only show them bits and pieces of the puzzle. While this can work for some companies, other companies are adopting an open-book management style. This article will explain some of the information you need to learn about open-book management.
What is Open-Book Management (OBM)?
To start, we need to answer the question, what is open-book management? In a nutshell, you are allowing your employees to see all of the finances of the company. While you do need to keep the individual salaries private, you can show them a lump sum number of all the salaries along with all of the expenses and income for the company.
The purpose of showing your employees the finances of your company is to teach them about the cash flow of the company. You want to educate your employees on how their jobs affect the company and how little phone conversations with customers and vendors turns into financial exchanges that affect the overall output of the company. The companies that have been able to successfully implement OBM have seen an increase in business performance.
Unlike other types of management, your employees are given an extra dose of freedom. Companies encourage them to not only be disciplined, but they are required to be insightful and creative on their own.
How to implement OBM
In order for OBM to properly work, you must strictly follow the 5 step implementation process.
1. Leadership. As a leader your key role and responsibility is to teach your employees a certain philosophy that starts with giving them decision making abilities, information, and finally wealth. Be straight with your employees and give them the financial numbers they want to see. This will help them look over the financial performance of the company and perhaps they will have some tips on how they can help improve it.
2. Education. Once you give your employees a glimpse into the workings of the company and they have the power to make strong decisions, you need to educate them. Go back to their original training and teach them new skills that will help them read financial statements like your balance sheet, cash flow projections, and your income statement.
3. Information. Showing them the financial statements of the company is one thing, but it is another to actually give them access to the information they need. You need to be willing to open the books to your employees and give them the opportunity to access it whenever they need. When your employees are able to get the information they need, they can talk to one another easier and understand certain things easier.
4. Involvement. Your involvement with your employees is one of the most important aspects of OBM. When you are around for your employees, it will be easier to keep them motivated and to be there to quickly resolve any questions and problems they have. Since you are opening your books to your employees, you must be around to make sure everything is running smoothly.
5. Rewards. Now the final piece of OBM is rewarding your employees. You must be able to reward your employees with short-term and long-term rewards as it will help them to stay motivated. Rewards are a great way to keep your employees drive alive as it shows them that you want them at work not just to do a job but to contribute to a bigger picture.