Column: Why open-book management drives success

Question: The company depends on me too much. We”™re not going to move forward at the pace I want if we don”™t have a team that understands the importance of hitting our goals and knows how to drive performance. Any suggestions?

Thoughts of the day: Open-book management delivers results. Getting there can be a challenge because it”™s normal for entrepreneurs to struggle with giving up control and sharing everything. In the transition to open-book, you may find that some people are long-term players and some are not up for the challenge. “What does it really mean to drive performance?” needs to be discussed up and down the line. Make sure you have everyone”™s buy-in.

What is open-book management? It”™s about involving everyone in the company in making decisions and accepting responsibility for how the company is run, making sure they have the education to properly read and interpret data, and showing people they have a stake in the outcomes they produce.

Practitioners of open-book swear by it. Employee engagement goes up. Sales, quality and profits rise because that”™s what everyone focuses on. Trust among all levels of employees grows as people seek to achieve a common set of goals.

Why does open-book work? There”™s greatness in numbers. A group of employees working together has much greater capacity to analyze, brainstorm and find meaningful solutions compared to leaving all the decisions up to a single owner or tightly held management team.

If open-book management delivers better results, why don”™t more entrepreneurial companies implement it?

Most owners start with the business sitting completely on their shoulders. They are the risk takers, the leaders, who pull the organization together, one idea and one employee at a time. That”™s how businesses get off the ground.

Once the business is up and running, it”™s a 180-degree swing to cede power and authority. It takes a lot of practice for the owner to get comfortable ceding control and building trust with networks of people who are all learning how to pursue success for the business.

Ready to try? Find out who”™s up for the game. Give employees authority to act and see how they respond. Some may shirk the responsibility, while some may try to build fiefdoms. And some will focus on common budgets, forecasts and goals that drive company success. Those people are your keepers.

Pay attention and promote people who are team- and goal-focused. Recognize the learners for the value they contribute, as they continually seek to make the company work smarter and perform better. Give people a sense of ownership by sharing details about how the company is doing and allowing people to make changes in order to improve results in the future.

Employees at every level need to be empowered to make decisions. They must be taught how to predict and measure outcomes. They have to learn how all that relates to responsibility for ensuring the company succeeds.

Show them how to read a profit and loss statement. Make sure they know what drives income. Educate people about the difference between fixed and variable income and how each impacts the bottom line. Teach them about the importance of balance sheet factors, such as building up cash reserves, managing debts and having funds aside for bonuses and investments.

Teach employees how to review and critique performance. Show them how to read reports and interpret data. Ask them to use what they”™re learning to recognize successes, identify the weak links and confront poor performance. Have them set standards for how subpar performance will be handled and how superior contributions will be celebrated. Ask people to hold each other accountable for implementing what they have set up.

Watch employee interest in the bottom line grow. Show employees how profits get used: for taxes, reserves, debt repayment, bonuses for jobs well done and shareholder distribution. And don”™t apologize for rewarding shareholders, since they are the biggest risk takers. They invest to earn a greater return in the future, back the company”™s finances in times of need and get to increase their return when things go well. If employees ask about becoming shareholders, consider sharing. It will increase retention and commitment to bottom-line results.

Looking for a good book? Try “The Great Game of Business” by Jack Stack and Bo Burlingham.

Andi Gray is president of Strategy Leaders Inc., strategyleaders.com, a business-consulting firm that specializes in helping entrepreneurial firms grow. She can be reached by phone at 877-238-3535. Do you have a question for Andi? Send it via email to AskAndi@strategyleaders. Visit AskAndi.com for an entire library of Ask Andi articles.