What Is Open Book Management

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What Is Open Book Management?
OBM is essentially a business philosophy in
which an organization shares financial data with
employees, explains the numbers through intense
training and on-going communication, and rewards
employees for organizational improvement.
2
OBM Organizations
Approximately 2 of US companies practice OBM
including

• Manco
• Allstates Business Insurance Division
• The Body Shop
• Pace Industries

• Sprints Gov. Sys. Div.
• Chesapeake Corp.
• Intels Embedded Microcontroller Division
• Amocos Systems Div.

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Four OBM Best Practices

• Every employee must see and learn to understand
  the companys financials.
• Training begin slowly with key numbers.
• Customized or off-the-shelf training programs.
• Games or simulations.
• Education breeds understanding.
• Employees begin to think like owners managers.

4
Four OBM Best Practices

• 2. Managers begin to hold employees responsible
  for performance in their individual units.
• Employees responsible to make the key numbers
  move in the right direction.
• Focus short as well as long-term financial
  health.
• The Great Huddle concept.

5
Four OBM Best Practices

• 3. Compensation system tied to organizational
  success.
• Very common bonus programs.
• Less common ESOPs.
• Compensation tied to easily-understood measures
  of business-unit performance.
• Publicly-tracked measurement systems or
  scoreboards.

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Four OBM Best Practices

• 4. The use of games and sports analogies.
• Scoreboard system tracks daily progress.
• Huddles, not meetings.
• Unlimited number of games that can change
  periodically.
• The games have rules understood by all, and at
  the end of each game, there is some type of
  payoff for getting a win.

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If bowling were business
Work is a lot like bowling, except there is a
guy called a supervisor who stands in front of
the pins with a curtain.He can see the pins, but
the bowler cant. The bowler throws the ball,
hears something, and says, Howd I do? The
supervisor says, Change your grip. The bowler
says, But howd I do?The supervisor says,
Move your foot. The bowler changes his grip and
moves his foot and throws another ball.He hears
the pins fall and asks, How am I doing?The
supervisor says, Dont worry about it. Weve got
a review coming up in six months and well let
you know then. -- Charles Coonradt,
The Game of Work
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Game Example
Mid-States Technical Staffing ServicesFill
the Bucket Game
Goal Every time the company hits 75K in net
profitability, a bonus is paid. Rules 1. The
first buckets of the year pay less than the later
ones. 2. If year-to-date sales are at least 25
above last years whenever the bucket is filled,
the bonus doubles. Results 1992 1993 1994 Re
venue Growth 0 18 40 Return on
Sales 6.7 10.3 11.3
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Some Parting Thoughts . . .
Open-book management is a business strategy, a
way of organizing a company to survive in a
mercurial new economy. If your company can get
along with people who think of themselves as
well-paid hired hands, good luck. I hope your
happy situation lasts. John Case,
Editor Harvard Management Update
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Some Parting Thoughts . . .
If business is truly a game, how can you expect
to win when only a handful of players know the
rules? David Dwinell Dwinells
Visual Systems
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Some Parting Thoughts . . .
I would find it difficult, really difficult to
go work for somebody else that wasnt doing this
kind of stuff. It would be really, really tough.
Because I have been allowed. Ive been
trusted. Leo Henkelman, Employee
of Sandstrom Products, an
open-book company
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Some Parting Thoughts . . .
Id sure as hell rather own 51 of a company
with 10 million in sales than 100 of a company
with 300,000 or 400,000 in sales. . . . I work
a lot less, I make more money and the value of
the company is a lot higher. Its marvelous that
I dont have to make every decision and be the
one to turn the lights off at night. Bill
Pickens, Owner Pool Covers, Inc Richmond,
CA