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What Is OBM

What Is OBM

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Published by: housingworks on Jun 30, 2011
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06/30/2011

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HOUSING WORKS EMBRACES OPEN BOOK MANAGEMENT What Is Open-Book Management (OBM)?

Open-Book Management has been used to describe a management style where financial information is openly shared with all employees. OBM is educating all employees about the agency’s business and exchanging business information among them to support their involvement as responsible business partners with significant and timely rewards based on business performance. What does OBM Require? OBM requires five things: Leadership, Business Literacy, Information, Empowerment and Reward 1. Leadership: To operate an OBM organization requires a certain personal leadership philosophy. A leader must be eager to share three things with the employees of his/her organization: a. Information b. Decision Making (Control) c. Wealth 2. Business Literacy: Business Literacy means training and developing the knowledge and skills of employees to do everything their jobs require. This includes understanding the business context within which their work is done. In OBM, everyone's job becomes larger because each person must understand how the business operates financially and how he or she can affect its financial results. Financial reports like the income statement, balance sheet, and cash flow statement become new tools for everyone to understand and use. 3. Information: Sharing financial information is the defining hallmark of OBM. Revealing "confidential" data about a company's financial performance has constituted "opening the books." Key financial and operating measures are carefully defined, measured, and intensely managed by all employees to produce results. These are called the firm's "critical numbers." 4. Empowerment: OBM invites a high level of employee involvement with business affairs. Providing a structure for involvement and the mechanisms for it to occur are what turns motivation into action. The more thorough the education, and the more extensive the information exchange, the greater the involvement can be. 5. Rewards: Giving everyone a significant personal stake in the financial success of the firm is also characteristic of OBM. Educated and informed employees who are deeply involved with the business will produce results. It will no longer be a case of employees coming to work and "doing a job." Employees gain a more tangible sense of accomplishment in an OBM operation. OBM stresses rewards linked directly to the "critical numbers" and profits. In Housing Works situation they will take the form of cash bonuses.

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Why Adopt OBM? The advantages of successful OBM are: 1. Solid financial performance of the business. 2. Improved security for the firm and its members. 3. Increased satisfaction with work. 4. Substantial and sustainable personal compensation and wealth building. OBM does not mean that employees will suddenly cease internal bickering, customers will become instantly delighted, quality will make a quantum leap upward, or cash flow will be more even. All these things take hard work. OBM is simply one approach to doing that work. In the end, OBM isn't 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. When is OBM Finished? OBM requires continual attention, energy, patience, and the agency’s resources. All its elements must be combined to a level of intensity before the synergy and power of OBM take hold in an organization. Partial efforts don't succeed. OBM offers rewards, but only from hard work. OBM is never finished because there are always new twists to running the business. The perpetual dynamism of the marketplace guarantees an OBM firm will remain a learning organization.

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