I'm hearing more and more buzz about open-book management across the managed services market. In theory, opening your financial books to employees allows everyone within your company to focus more aggressively on business results and profitability. But does open-book management really work?
First, a little background. I heard chatter about open-book management in three places in recent months:
- During HTG peer group meetings in Orlando, Fla.
- During our December 2009 webcast (archived at the bottom of this page) with TruMethods' Gary Pica and ConnectWise's Arnie Bellini
- In our own comment forums, where Everon Technology Services' Mike Cooch raised the subject earlier this week.
What's the Benefit?Inc. Magazine summarizes open-book management nicely here:
"The beauty of open-book management is that if employees know whether they're making money, your company will make money."For the deeper details, Inc. points readers to the following book: Open-Book Management: The Coming Business Revolution, by John Case.
On the upside, open communications about your company's financials help employees understand why a company may -- or may not -- be able to make certain business or financial moves. Also, employees can feel empowered to keep their own business expenses under control.
But the big question: Just how wide do you want to open your books and what are the risks? Do you really want employees to know your monthly cash flow and other costs?
I'm avoiding the temptation to offer up more pros and cons because frankly I think readers can fill in the blanks better than I can...