The Value of Running “Open Books”.

The Value of Running “Open Books”.


Ask yourself this – Why would you not share financial information with all employees? What do you have to hide and why?

I have found that running open books engenders trust, fiscal responsibility and team cooperation. I wanted to encourage this value onto those at my company as well. Early on I held classes to explain to my employees how to interpret the numbers; what they were looking at and why it was important. I continued these classes monthly for new employees.

While Profit and Loss information is important to owners and management, it might not seem as important to employees. That is, UNLESS they are incented and remunerated in some way to contribute to efficiency and profitability. A simple, clearly defined bonus or employee ownership plan can work, one that is not a “gimme” but one that each individual or team has to work for that will measurably improve profitability. Open books creates a system that empowers everyone at the organization, from the bottom up, to be an entrepreneur.

Everyone in my company became aware of which departments and processes gained or lost money for the company and how their precise roles contributed to (or detracted from) income. They could see what was hurting the bottom line, or rather the potential gains their roles could generate.

One report many of my employees found interesting was the business backlog report coupled with the forward looking cash flow – essentially how much known business was signed and not yet booked, and how many months ahead we could pay our bills.

One other thing – as employees are privy to significant internal confidential information it is essential to require a signed, well worded confidentiality agreement from every employee.

A business is nothing if there is no internal coordination, trust and efficiency. Empowering employees though open books along with sound business strategy is a recipe for entrepreneurial success.