open book management

Open book management style: helpful or hurtful for business?

January 30, 2013

open book management

Open book management style: what is it?

When I was a college student, I remember someone showing my class a link where we could look up all of the staff and faculty’s salaries. My mind was blown – I never thought I could be privy to such information. But it was an eye-opening experience that helped me understand their professional experiences while working at the university. In regards to corporate America, how many employees really know what their company’s financials look like? Would adopting an open book management style improve company performance?

First coined by John Case, businesses that employ open book management strategies share important financial and corporate information with all employees, not just senior executives, and allow employees to have a direct influence in the success and or failure of the business.

If a company is performing poorly, nothing is off of the table, and employees can see just how badly things are going which will hopefully motivate them to do better. On the other hand, if an employee does something that improves the company, they are made aware of that as well, and shown how their efforts are responsible for boosting profitability and success.

Pros and cons of open book management

Those who support this style of management like it because everyone has access to the data they need in order to make informed decisions. Businesses that operate with a hierarchical information access approach can suffer because only executives know the true status of the business. Those who are lower in command have only vague notions of what’s going on, and because they aren’t able to see things for themselves, may not have a sense of urgency or drive to do everything they can to help make things better for the company. This essentially leaves all of the responsibility in the hands of management.

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However, this type of management could also create pandemonium if a company is performing poorly; employees could see drastic revenue drops and begin anxiously talking with co-workers, essentially becoming distracted and further worsening things. Additionally, staff could become resentful after seeing the salaries of their peers and superiors, which could lead to disagreements.

There are benefits and drawbacks no matter which way you look at things – so if you can’t make a definitive case for or against it, perhaps try a hybrid approach and share some of the data points you normally reserve for investors and execs with employees in order to improve their performance. This allows them to be more in tune with the company as a whole and can increase their personal investment in seeing it grow.

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Destiny Bennett is a journalist who has earned double communications' degrees in Journalism and Public Relations, as well as a certification in Business from The University of Texas at Austin. She has written stories for AustinWoman Magazine as well as various University of Texas publications and enjoys the art of telling a story. Her interests include finance, technology, social media...and watching HGTV religiously.

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