How Wide Do You Open The Books?

There has been a lot of talk about this in my Circles this month. Just how much of your financials do you share with the people who work for you? And if you do, is it a help or a hindrance?

Here's my take on Open Book Management: As an entrepreneur, I'm pretty sure you use your financial statements to judge your company. It's not your only scoreboard, but it's an important one that helps you make good decisions. Why wouldn't you want your people working off the same scoreboard as you?

A foundational book on Open Book Management is The Great Game of Business by Jack Stack. Stack's basic premise is this: Your employees want to win, it's human nature to want to win. But in order for them to win you have to show them how to play the game and give them a way to keep score. And he advocates, from tangible experience, that your financials are great scoreboards and you can teach all of your staff members how to use these scoreboards to win the game you are trying to win with your company. Besides being practical, the book is
pretty darn inspirational. Jack's company, Springfield Remanufacturing Company remanufactures diesel engines; think of a company full of less-than-high-school-educated grease monkeys.

The risk, as I see it, is your people will come up with their own scoreboards to win a game they want to play, that may have little to do with the game you are playing. Don't you want alignment between their actions and your goals? Open Book Management is an effective way to do it. And an added benefit is that the burden of success is no longer just on your shoulders, it's spread out over the entire team.

Back to the original question: How wide do you open the books or how much to share? Wide enough that they can see the relationship between their actions and the results. That provides a lot a latitude. Crawl, walk, then run.

What are you comfortable sharing?