More and more businesses are realising the benefits sharing business financial results such as a monthly P+L with employees. This new phenomenon is called "Open Book Management".
It can sound crazy for a business owner to share what has always been considered "Confidential" information with their employees but the research is showing this can actually improve the bottom line!
Whilst there are obviously some information, such as employee salaries, which may not be smart to share amongst all employees (unless you want a revolt!), sharing and explaining top line results regularly can yield great outcomes.
So why are only around 7% of private businesses practicing Open Book Management"?
The main reason is fear. Fear that employees will share information or fear they may all ask for a pay-rise. Most of these fears, if the information provided is carefully selected, can prove unfounded.
So what are the key benefits of this style of management?
1. Increase Accountability.
For most businesses, profit is the end goal. However, unless your employees can see the REAL end target, its hard for them to be held accountable for achieving it. Try setting a profit goal with your management team and watch their focus shift to not only sales but cost minimisation.
2. Increase Sales!
Not a typo! A study by the National Center for Employee Ownership found that companies that revealed financial information to their employees saw a 1-2% sales bump over what usually would have been expected. Share info and your employees will be even more motivated.
Unless you plan on living in your business 24/7, open book management is a great way of developing your employees to take more responsibility. They will understand the core metrics of the business and as a result, will learn to be able to make decisions that protect the bottom line.
Gen Y employees love empowerment. They love responsibility and performance best in an environment which fosters open communication. Open book management is one of the most powerful ways to create this empowered workplace. No secrets, a clear goal which everyone can contribute towards.
.Opening the books allows everyone to collectively celebrate successes and fix problems. By entrusting employees with vital information about the organization’s financial and operational health, you send a powerful message that the business considers every worker to be a valued partner and stakeholder in the company.
6. Happy Staff.
Sharing financial details with employees can build trust, leading to a happier, more productive workforce. Research shows employees who believe they are trusted by their bosses can better see the big picture and tend to be more loyal, productive and engaged.
It's a big step for most companies to move from traditional closed booked approach to "Open Book Management". However, most experts agree the trend to this style of management is likely to increase quickly over coming years as business owners have to adapt to Gen Y and later style of employees who thrive in such a workplace environment.
Just a thought,
CEO/Founder @ RosterElf
Magically Simply Staff Rostering