Open Book

Management
What is open book management?
Philosophy of involving every
employee in making a firm more
successful by sharing financial and
operational information.
It involve four basic practices (1)
training employees (2) empowering
employees (3) trusting employees
(4) Rewarding employees
Open Book Management
 What is the purpose of showing
employees all finances?

The purpose of showing your employee

the finances of your company may,

 To teach them about cash flow of the

company.
 Educate employees.

companies who are able to

successfully implement OBM seen
increase in business performance.
 How to implement OBM?

In order to implement OBM

properly you must strictly follow
the five steps in implementation
process.
 Leadership
 Education
 Information
 Involvement
 rewards
 leadership

As a leader your key role and

responsibility is to teach your
employees a certain philosophy
that starts with giving them
decision making abilities,
information, and finally wealth.
 Education
Original training of employees to
teach them new skills that will help
them read financial statements like
your balance sheet, cash flow
projections, and your income
statement.
 Information

Actually give employees access

to the information they need. You
need to be willing to open the
books to your employees and
give them the opportunity to
access it whenever they need.
 Involvement

When you are around for your

employees, it will be easier to
keep them motivated and to be
there to quickly resolve any
questions and problems they
have.
 Rewards

Reward your employees with

short-term and long-term
rewards as it will help them to
stay motivated. Rewards are a
great way to keep your
employees drive alive as it shows
them that you want them at work
not just to do a job but to
contribute to a bigger picture.
 Adopting OBM

Most companies, after practicing

open-book management for at
least two or three years, become
true believers and strong
advocates of the practice. The
idea of open-book management is
exactly as it says: All of your
financial information is shared
with your employees on a regular
basis.
 Why Adopt OBM?
Many companies adopt OBM because
of following reasons;
1. Solid financial performance of the
business.
2. Improved security for the firm and
its members.
3. Increased satisfaction with work.
 Why Adopt OBM?
OBM does not make things easier. It
makes them better. All these things
take hard work. OBM is simply one
approach to doing that work. OBM is
not about money at all. It's about
excited people tackling a challenge
and adding value to their lives and
the world in which they live.
 Merits of OBM

 Encourage ideas
 Satisfaction of work

 Increasing employee motivation

 Increasing organizational efficiency

 Demerits of OBM

 Business owners who choose not

to open the books to their
employees
 business’s bottom line increase,
employees are more likely to
seek immediate improvements in
compensation rather than being
satisfied with the promise of
future reward.
When is OBM Finished?

OBM is never finished because

there are always new changes to
running the business. The
perpetual environment of the
marketplace guarantees an OBM
firm will remain a learning
organization.
 Case study
Open Book Management Creates
Sustainable Bottom Line Results
A look at Cisco-Eagle's open
book management culture.
 CONCLUSION

 Should you decide to share financials,

consider how you will reveal the
information.
 Many companies that share financials
offer accounting classes and meetings
on a monthly or biweekly basis to
explain the details and field questions.
Companies don’t hand out 10-Q
reports but offer simplified versions of
the records that provide the core vitals
of the company without overwhelming
employees.
 conclusion
 Communication is key to successful
open-book management. If you are
comfortable sharing your company
financials, you must also be
comfortable explaining what those
numbers mean for your staff.
Otherwise positive reports can yield
false expectations; and conversely,
negative reports can raise fear
regarding job security.
 conclusion
 Ultimatelythe decision whether to
proceed depends on your comfort
level and your knowledge of your
employee base