How Execs Can Inspire Trust, Engagement and Loyalty by Building A More Open Business
This is the second in a series of 5 blog posts where we are explore the business approaches that make your business more transparent. In the spirit of our own transparency, we’re sharing Duo’s experience in building it's own open and transparent culture.
Practice open-book management
Fact: Eighty-three percent of businesses in Inc.’s 2010 Top Small Company Workplaces practice open-book management. (Inc. Magazine)
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Duo Does It:
At our monthly company meeting, Duo’s executive team shares the state of the company—from monthly and annual financials to utilization and new business on the horizon. What do our developers & interaction designers know about business financials? Well, along with the numbers, the company provides some basic financial training. The more we understand what the numbers represent, the more we can all be responsible for driving those numbers in the right direction. And that’s important because we enjoy an incentive program called “Stake in the Outcome (SITO)”
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Do your employees have goals? Do they understand how their work affects the vision of the organization?
How can someone on your staff really know that they’ve positively impacted the company if they don’t understand what’s going on behind the scenes?
These are the questions that open-book management seeks to address. The basic idea is that employee education should go beyond the information they need to do their jobs well. It should, in fact, extend to helping them understand how the company is doing as a whole.
Open-book management gives employees a share in the outcome of the business. It inspires intrapreneurs, who drive innovation within your organization. It’s an honest, open and transparent approach to business that can positively impact your corporate ecosystem.
Here are three ways that you can start using open-book management to give employees ownership over the outcome of your business.
1. Share financial outlooks and outcomes.
At the most basic level, open-book management is about sharing the financial numbers that power your business.
This can be difficult, especially for private companies. For years, private SMBs have shared financials on a “need to know” basis. Open-book management forces you to loosen your stranglehold on financials in order to share them with your staff.
Consider the implications of sharing those financials internally. It is based on the premise that if staff knows how the firm is doing, it can "move the numbers" to obtain a higher level of performance. How will they really feel ownership if you aren’t totally transparent and honest with them? If you want more open business, you’ll have to open up your stance on your monthly financials.
2. Explain why benchmarks and goals are important.
Sharing financials is a big part of open-book management. But your staff must also know what numbers mean, why they were put in place, and what impact they’ll have on the business as a whole.
Every business has bottom-line goals. In open-book management, employees must understand what those goals mean. They should also understand how exactly they can contribute to accomplishing these goals. Along with sharing the numbers, it is essential to bring your staff along and upgrade their business financial IQ. They don’t have to be CPAs. But understanding a balance sheet and an income statement can be effective.
3. Develop a scoreboard that employees can access any time.
A monthly or quarterly meeting is one thing. But employees that truly feel connected to the outcome of your business may want to see how they’re performing in real-time.
Create a scoreboard that staff can access at any time. Keep it up to date. Make it easy for employees to share in the outcome of your business, and they’ll reward you by working harder to reach that outcome.
Tell us if you would consider practicing open book management. Or if you do, let us know how it is working out for your firm.
Read the first part of this Five Part Series on Five Ways to Make Your Business More Transparent