Open-book management can be fun, but the flip-side to any game is that sometimes, you will lose. Many employees will take the ball and run with it. But some people don’t want the responsibility of managing a business’ bottom line and all of the pressures it brings. The change is noticeable. Open-book management is like riding a sports car that is low to the ground. Speed is fun but being so close to the road frightens some people, and they prefer the comfort and security of an SUV.

The Main Fears

There are challenges at every step in the process. From gaining consensus through refinement, obstacles need to be overcome. One of the main fears, upon introduction, is that salaries will become known. It’s a valid concern and the only caveat of open-book management:  salaries are not divulged.

Another major concern is how employees will react to their own performance:

  1. If they exceed expectations, will they all want much more than can be given?
  2. Conversely, if the staff, and consequently the company, under-performs, will people become overly concerned and look for a more secure job elsewhere?

These are both good questions, but, in our experience, we haven’t found either scenario to be the case. When expectations are exceeded, there is more profit to share.  Since the employees are much more knowledgeable about how the business works, they understand that taking too much cash out of the business would be harmful.  They understand what it takes to keep the “goose that laid the golden egg” healthy and are careful to avoid behaviors or expectations that could cause harm to the goose.

Self Selection

Open-book management isn’t revolutionary, but it is transitional. The pace of business begins to accelerate and some people will not come along for the ride. While the thought of a higher turnover is daunting to management, it’s actually a feature, not a bug. People who prefer a slower pace of business are inadvertently slowing your business down. Open-book management puts a big spotlight on the laggards. As they leave, you end up at your core; the people who are really contributing to the bottom line will prefer the system.

To accomplish the goals of open-book management, you have to share sensitive information. There are many potential scenarios businesses run through before implementing open-book management, but ultimately, the perceived benefits have to outweigh the fear of looking bad. If you put the ball in your employees’ hands, they will score, but you have to provide the opportunity. The ball is in your court.

By Jeff Harrington, CEO and Founder of Harrington Group, Inc.