Evaluating Open Book Management

Frequently, I run across business owners who keep all their finances a secret. When I ask them why, they don't usually have a very solid reason. Often times, it’s just a perception of the owner that sharing makes them vulnerable—or perhaps their managerial style just doesn't fit with an open book policy.

But, in today’s economic climate, you need all your employees to understand and contribute to the finances of the company. Giving employees an understanding of the financial outlook allows them to offer thoughts, ideas and suggestions. The only thing that absolutely has to remain confidential is salaries, bonuses and other perks. Otherwise, sharing the full financials has allowed some companies to openly discuss the issues--and come up with real possibilities of salary adjustments or other company cutbacks. Because employees were part of the discussions, they may be more cooperative and understanding of the decisions rather than feeling unstable about the well-being of the company and their job security.

Additionally, it builds the employees feeling of "ownership" in the organization. Employees feel more involved in the process, which leads to more commitment and motivation to act.

Finally, remember what you share is up to you. You can share actual figures or percentages of as much or little as you feel comfortable. A general rule of thumb is to start sharing little by little—and focus the information on those that are relevant to company performance and how they can help. Be sure you educate the employees for what they are about to see so they can interpret it accurately.

Of course, there can be down sides to open book management. You need to research the possible negative impacts and make a decision for your specific situation.