**Editor's Note: Click here for the list of the companies that comprise the Channel Futures 2018 MSP 501.**
It was clear that his staff was putting in the work, but he didn’t feel they were getting results equal to that effort. His staff was busy, which was a good thing. But it also spurred a demand for more employees, which would have depleted the profits the increased business was bringing in. He knew happy, invested employees were key to optimized efficiency and production, but was struggling to find a way to make his staff feel connected and understand the “why” behind his business decisions.
“It’s the difference between knowing how to do your job versus why you do it and what impact you’re having,” says Rieger. “Having people understand the struggles of running a business makes sharing the load less of a burden for everyone, and people feel more connected when they actually understand that why.”
WEBIT has been a member of IT consultancy TruMethods from the beginning. Through his connections there, Rieger eventually stumbled upon Jack Stack’s "The Great Game of Business." It changed everything.
Stack is a proponent of a business model called open-book management, whose central tenets go against the very foundation of traditional management structures. The guiding concept behind open-book management is complete and total transparency of a company’s financial plan, providing insight to the part each job function plays in achieving goals and empowering every employee to become invested in the success of the entire organization. Management holds no secrets. The entire operation is exposed to staff, which Rieger says required some convincing in order to get companywide buy-in.
“When you open the books for the first time there are a lot of questions, so you need a good education program to make it successful,” says Rieger. “It is definitely not an easy thing to do, and it’s not just sharing numbers; it’s about creating a culture of planning and accountability.”
When an open-book model is fully successful, every employee understands exactly how their performance plays into the bottom line to the point where they essentially become entrepreneurs in the organization, able to provide forecasts to upper management that inform the very direction of the business.
“This is not just about sharing financial information,” Rieger explains. “It’s about teaching our team how a business runs and how every decision impacts the success of an organization — good and bad.”
Open-book management centers around three basic principles. First, every employee should fully understand how the organization measures success. Second, all staff members should be given the tools and knowledge needed to improve their performance and be held accountable for using them. Last, employees have to become company stakeholders and understand they directly contribute to both the success and failure of the organization.
"Open-book management is just good common sense," says Richard Delgado, entrepreneur and business consultant based in Dallas, Texas. "At the end of the day, everyone should be connected to their job and the their company's bottom line. Total transparency is the only way to do this."
The rollout, Rieger admits, was painful, and not every employee was on board by a long shot.
“The hardest part were all the staff changes that happened as a result of becoming a truly transparent and accountable organization,” he explains. “There was nowhere left for anyone to hide. In the first year of implementation, we turned over more than 50 percent of our staff. The average company can expect 20-30 percent, but we had more housecleaning to do."
But the payoff was worth it. By teaching his team how their work impacts WEBIT’s operations from an efficiency and profitability standpoint, Rieger was able to begin developing better processes. Over time, the approach has attracted the right team members to the company, which uses its open-book model as a selling point in every job ad it places.
The strategy leads to highly engaged employees, which has a direct impact on the service levels WEBIT is able to provide its clients. When staff members see the finances and how much is invested in employee compensation, for instance, they’re empowered to find ways to improve internal efficiencies so Rieger doesn’t have to keep hiring every time WEBIT gets more work. By understanding how to do that for themselves, teaching those efficiencies becomes a natural extension for clients, as well.
“By helping our team understand true cost drivers in a business, we can then provide technology services that understand what unplanned events, poor recommendations and misaligned technology really cost a company,” he says.
Under an open-book management model, help-desk techs and customer service reps have more to offer clients than platitudes about policy; instead, they’re empowered to work with the customer to find a solution, because they know exactly how that effort will contribute to the success of the organization and, in turn, their own career success.
How exactly has the pivot improved client relations? To answer that, Rieger says, he’ll just let the numbers do the talking. WEBIT’s current 90-day rolling Customer Satisfaction (CSAT) score has risen from the high 80s/low 90s to near 97 percent since the open-book implementation.
Profitability is up, and WEBIT is on the road to implementing an employee stock ownership plan (ESOP), which would make the organization an employee-owned business. Rieger says it could happen as early as the end of 2018.
“It’s been one of the best things we’ve ever done for our business, our team and our clients.”