Better transparency doesn’t just apply to brands selling to customers – employees are increasingly demanding to know more about their companies, too. That’s led to the resurgence of open-book management (OBM).
It's a policy whereby leaders openly share their businesses’ financial position with staff. The idea is that OBM leads to better engagement, bands people together, and lets them see where their work is having a tangible impact – that way the company can make more informed decisions from the ground up.
Online deli Zingerman’s has been practising OBM for a few years now: ‘Because we’re all on the same financial page and accessing the same information, we’re able to align better,’ says co-founder and CEO Ari Weinzweig.
Katie Frank, a managing partner there, says OBM made sense when the company had to furlough its entire staff last March. ‘We could share our level of cash, what our cash projections looked like at full rates of pay, and what they would look like with a 20% salary reduction. OBM helps us to frame our decisions differently.’
Putting it into practice
Keep this in mind if you’re thinking of heading down the OBM route:
First, explain why. Teams need to know that they’re not suddenly responsible for managing the company’s finances. That accountability stays with the leadership team. OBM is simply a way of encouraging open communication.
Then, explain what. Not everybody will be financially literate or up to date with accounting terminology. Break down what the numbers mean in real terms.
Finally, listen. In OBM, you need to be as open to receiving information as you are to doling it out. Despite it not being their formal remit, someone on the team might have an incredible idea on how to better the books.