Getting Employees Involved in the Success of Your Business
In light of the protracted global economic cycle we find ourselves in, many business owners and leaders are challenged with finding effective ways of motivating their employees – especially given that many of them are working harder for the same or less pay.
One way is to fully engage the minds and then hearts of your team through a proven business practice called, “Open Book Management” (OBM).
Simply defined, OBM is the practice of sharing financial information with employees as well as teaching them about the measures of business success while offering financial incentives to improve performance. Jack Stack, President of Springfield Remanufacturing Corporation, and one of the successful pioneers of OBM, states that “we’re appealing to the highest level of thinking we can in every employee in our company.”
Benefits of Open Book Management
- Builds trust, faith and loyalty in employees for the organization and one another.
- Improves decision making of employees as they come to understand the myriad of trade-offs involved in running a profitable business.
- Pushes greater accountability and responsibility down the chain of command.
- Develops a strong team of business-minded professionals from which to draw upon to fill higher level roles as they become available (i.e., succession planning through promoting from within).
- Creates a mind-set amongst employees that we are all part of the solution to the organization’s challenges vs. a powerless victim looking to others for the answers.
- The “bottom line”, improved financial performance of your business.
Key Steps to Implement Open Book Management
Below is an initial list of actions that need to be taken in order to prepare for and start implementing OBM in your business.
- 1. Business owners/CEOs must be willing to “relax” control over the business and trust him/herself and his/her team. A good way to start is to set your EGO aside and allow others to start making business decisions and to even have a few “failures” along the way. Keep in mind your journey in business and those who mentored/coached you.
- 2. Have a set of established key business measures/metrics that are tied to the strategic goals of your business. Typically these items are inherent in a well developed strategic business plan.
- 3. Have readily available cost information and financial statements that can be communicated to and accessed by employees.
- 4. Start by selecting a few key individuals that you trust and know will embrace this new way of doing business. Remember, success breeds success! Once these key employees are on board, they can then be disciples and start educating others in your organization.
- 5. Educate, educate, educate! The investment you ma ke in your employees’ understanding of the financials of your business will pay off handsomely for years to come.
- 6. Conduct regularly scheduled financial review meetings with employees – typically monthly if not weekly. Employees must believe that management is serious about OBM and employee involvement and that it isn’t just another “program” that comes and goes. OBM is a way of doing business – forever!
- 7. Be willing to share a percentage of the profits with those employees involved in generating the intended results. Profit or gain sharing has been around a long time and when tied to specific results can be a powerful motivator for employees. Not only do employees feel the satisfaction of achieving established goals, but are valued by the company for doing so. If profits are not available to share, recognize employees in other tangible ways until profitability returns.
In summary, tapping the collective genius of your team of employees is one of the key responsibilities of a leader. Involving them in the important decisions of running your business through the ongoing education of the related financials and key measurements, while properly delegating the appropriate responsibility and authority is a formula for long term business success.
Jack Stack reflected on the culture he has helped create at SRC in his book, A Stake in the Outcome: Building a Culture of Ownership for the Long-Term Success of Your Business, “We’ve worked long and hard to foster an environment that brings out the best in people, giving them the confidence, the courage, and self esteem to do what they’re capable of.”
If you would like to learn more about this practice, let us know and we’ll be happy to provide you with additional information on implementation within your business.