The avant-garde concept of sharing crucial financial and operational information with employees, which can be accessed by anyone from the organization at any point of time, is referred to as Open Book Management. Such practice will not only help employees to see the big picture, it will also make them feel responsible for the organization’s growth and success.
If you are a business leader, it might be really difficult for you to imagine the situation when all of your employees know about the finances of the company. Implementing this concept at your workplace requires an effective framework so the employees understand and act on that information. You can also decide what data will be shared and how frequently will it be available for employees. Also, bear in mind that sharing wrong data at the wrong time can lead to rapid disaster. The main objective of Open Book Management (OBM) is to make employees view the business as a business owner and to get that, companies have to do much more than simply allowing them to access the financial information. Employees need to have financial literacy to understand the information that they are provided with and then act accordingly to work for a better outcome. They also need to be motivated to use the information for the betterment of the organization; otherwise, the shared information can do more harm than good.
The Concept of Open Book Management
The best and most profitable way to run a business is to let every employee know how the business works and then empowering them to make their contribution and giving them a stake in the financial outcome, may it be good or bad.
If implemented properly, the benefits of OBM are not limited, to employee retention and improved bottom-line results. Some of the surprising benefits of OBM are:
Better incentive programs
By keeping open financials and making your employees understand about all the digits that they see in the spreadsheet, you can provide them with a better idea about the company’s financial situation and how it is using the funds to achieve its goals.
By sharing company strategies, employees can come up with new and innovative approaches that might highly impact organization’s profitability. Any company will do better when they are not limited to what the senior executives think and will harness the inventiveness and aptitude of everyone who is a part of the company.
Eliminate office politics
When the information is available to everyone, the chances of employees playing politics and forming gangs decreases considerably. The main reason behind office politics is that people at different levels have different information and they can use this to their benefit by sharing wrong or partial information with others.
Better focus on work
People get pried when they feel something uncertain and know that information is kept hidden from them. Their focus would be diverted to know the matter completely, but when the management has nothing to hide, they will be more focused on work rather than snooping.
Higher employee morale
If you assure your employees or team members that you are open about all the information and everything that is going on in the business, they are more likely to trust the organization and stay loyal to it. It also encourages them to share everything that is happening at their end. This information is really helpful in decision making and will improve the environment of your workplace.