Open book management essentials
Aug 11, 2008
I have written many times in the pages of The Zweig Letter about the importance of open book management (sharing the financials with everyone in the firm). It’s much more than a buzzword. It’s the one best way, in my opinion, to get everyone plugged into the idea that what they do impacts how the firm does, and how the firm does impacts how well they, as individuals, do.
This is a powerful idea and not one to be glossed over or ignored, although a surprising number of A/E and environmental firms still poo-poo it. If you are not practicing open book management in your firm, you are really missing out on something that is, essentially, a free motivator. Not to mention one of the very best management training tools you can use to help anyone understand how an A/E or environmental firm makes (or loses) money.
So, if you want to do open book right, here are some essentials you MUST follow:
Commit to it and do it! Stop fighting the idea of open book management. Worries about competitors seeing it, your people not understanding it, and your ability to get the report information together every month have to be set aside. The benefits far exceed the costs!
Do it on time, every month. Strive to get the report out within five days of the month closing. Finding out how July went in September is ridiculous.
Simplify! No one wants to see a “Yellow Pages” worth of details on the company’s financial performance every month. Boil it down, for Heaven’s sake! Show the critical data and nothing else. And, give a page worth of narrative from the CEO to explain the significance of what is happening with the numbers.
Continuously refine your report. Just because you have been doing your report one way doesn’t mean you can’t change it to make it better. There is always a way to make it better. Concentrate on finding better ways to predict the future, easier ways to explain what’s happening to people who don’t know as much as you do, and finding better metrics that cannot be manipulated by those who want to fool the system. These ideals should be helpful to putting the right kind of open book management information together to get the most from it all around.
Originally published 8/11/2008
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