The difference between an entrepreneur and an employee is as wide as the gap between a homeowner and a renter. Because homeowners know that they benefit from the condition of their property, they look after it. Renters--and employees--don't care. They'll do what they're told but they don't even look for the big picture, let alone see it.
In 1983, Jack Stack, President and CEO of SRC Holdings Corporation came up with a system that made every employee feel like they owned the company. He called it Open Book Management. Instead of the company's books being available only to the chief executive and the accountant, every employee could see exactly how much the company was spending and how much it was earning. The idea was to make everyone feel that they were invested in the firm and made a difference to it.
When Stack began using the process, his company was in trouble. Today, it has revenues of more than $450 million.
This is how you can do the same thing in your business:
- Know Your Key Indicators
Some figures are more important than others. Employees have no influence over the rent, for example, so focus on those numbers that staff can influence. Those Key Performance Indicators will act as targets that everyone will want to meet.
- Meet Every Week
Hold weekly meetings with all the staff to go over the figures and explain what they mean.
- Make Those Meetings Count
If you're holding weekly staff meetings, you're going to be losing time, so make sure those meetings are effective. Spend 20 percent of the time discussing what happened but 80 percent of the time talking about the steps staff can take to improve those results.
- Assign Responsibility
Companies that use Open Book Management assign responsibility for a line of data to an employee who can influence it. Each line owner has to explain the data to the rest of the employees, forcing them to take ownership for that part of the business.
- Make Plans And Forecasts Together
When a manager tells front-line employees what's expected of them, those employees often feel that the managers haven't got a clue; they're not facing customers any more and they don't know what it's like. When those employees been involved in those discussions and agreed to them, they'll feel they have to prove that they made the right decision.
- Share The Rewards
The employees don't actually own the company so they don't benefit in the same way as shareholders. But companies that practice Open Book Management give employees a "gainshare" bonus, a financial reward that comes after the investors have received their share.
"When we first started Open Book we failed to meet or beat the financial plan for the period more than once, so the team started out failing," says John Fishcher, founder of StickerGiant, a company that practices Open Book Management. "After two six-month periods the team finally got a gainshare bonus, the energy when we finally crossed that hurdle was amazing."
Open Book Management might not be for everyone but if it makes employees work as hard as you, it might be worth trying in your company.