If you’ve heard of the term Open-Book Management you might understand it to mean “sharing financial information with employees.” Although that is true, it is one small piece of a much larger operating system we call The Great Game of Business. Frankly, you can share all the data in the world with your people; the question is, will they understand it, and what will they do with it?
The Great Game of Business is a way of running your company that gets everyone, at all levels of the business as informed, involved and engaged as the owner is in making the company successful. It’s about fully engaging employees in the business by teaching them how the business works and what is critical to success. This includes understanding how profitability is driven, how assets are used, how cash is generated, but most importantly how their day-to-day actions and decisions can make or break the business. You can see that The Game goes far beyond simply opening the books.
To help you better separate fact from fiction, we’ve compiled a list of our most frequently asked questions.
Does “opening the books” mean I have to share everything, including financial compensation?
NO. We don’t think that it is necessary to share individual compensation. We don’t find that individual salary disclosure is necessary, or even beneficial. Instead we aggregate salaries and benefits into one line on the income statement. This lump number is important for people to see and monitor.
You need to start by keeping things focused and simple, driving a common understanding of your company’s critical number and how your troops can move that number in the right direction. Don’t deluge them with too many numbers in the beginning, but don’t “hide” information from them either. We recommend consolidating your financial statement so similar line items are grouped together. However, if you do not really intend to be open about sharing information about the business, don’t start.
Doesn’t sharing financial information cause more problems than it solves?
Not if it’s done properly and with the right intention. Opening the books has to be connected to strategic business objectives, and employees need the knowledge and tools to use the financial information they’re given. Nail down those pieces and you’ll see that your people can use their newly acquired business skills to focus their energy wherever they have the greatest impact.
Most employees aren’t even interested in their company’s numbers, are they?
Most employees never see any performance numbers, and so they become apathetic about their ability to influence them. A recent survey found that 66% of employees expressed interest in learning how their company was doing financially. And 75% said they’d work harder and smarter if they could understand their company’s financial statements. Powerful stuff.
Do employees really have the capacity to understand our financials?
Sure they do. Most people can balance a check-book, follow a household budget and plan for their children’s education. And many know how to invest wisely and save for retirement. In short, they already use many of the skills needed in an open-book environment. They just need to learn your company’s financial language and how to apply it at work.
What if we can’t get real-time financial information to employees?
You get the critical numbers you need to run your business –cash flow, billable hours, order backlog –every day. Real-time information is actually created by the people closest to the numbers, rather than the accountants.
When people see how much we are making, won’t our customers demand that we lower our prices, and our suppliers will raise theirs?
Aren’t your customers and suppliers already making these demands? And if they got your detailed financials, are you sure they would demand more? You have to ask if you will be better off with employees who think and act like owners or by keeping them in the dark.
If we share our financials, won’t they ultimately reach our competitors?
Thousands of ‘Great Game’ companies share their numbers without experiencing competitive backlash. Open-book companies take a different view of this age-old fear: they see the dangers of secrecy as more problematic than the risks of openness. In fact, the level of employee engagement gained through openness can give GGOB practitioners a huge competitive advantage.
Where will we find the time to train employees, have weekly huddles, and keep our scoreboards updated?
Your commitment and investment in education and communication will pay back in the form of increased productivity and profitability. Yes, it will take time and discipline to realize these returns, but they will come.
Can you play The Great Game of Business® in a company that has multiple locations, commissioned salespeople, or with a very diverse language background?
YES. Many companies with a variety of issues have successfully implemented The Game. Keep in mind that the report cards of ANY business are universal – the financial statements.
Will it work in a very large company?
Yes. Getting a sense of teamwork, consensus, and open communication all become more difficult as the size of a company grows. Our hint: be sure to start by breaking down your organisation into all the smaller “natural teams” that exist within your company. Getting senior management support will really help the effort. Once the business is broken down, then the process of getting started is similar to that within smaller companies.