Ducks in a Row: Open-book Management
by Miki Saxon
Among today’s most popular buzzwords is ‘transparency’.
Transparency is one of the most important underpinnings of ‘authenticity’ and ‘trust’.
Corporations large and small trumpet the transparency of their dealings—except financial ones.
(Individuals, too; they will describe in detail their thoughts, attitudes and actions, even their sex lives, but freak when the subject is their money.)
But some bosses believe that financial transparency is not only possible, but can lay the groundwork for an extraordinary culture.
Financial transparency means not just sharing all the company financials with all its employees, but ensuring they have the skills to understand them by explaining and discussion them.
It’s called open-book management and was documented in “The Great Game of Business” by Jack Stack and Bo Burlingham.
Mr. Stack and the managers bought the plant [International Harvester engine plant], renamed it Springfield ReManufacturing and turned it into a thriving collection of more than 30 businesses now known as SRC — thanks largely to an innovative strategy that came to be known as open-book management.
The basic rules are
- Know and teach the rules: every employee should be given the measures of business success and taught to understand them
- Follow the Action & Keep Score: Every employee should be expected and enabled to use their knowledge to improve performance
- Provide a Stake in the Outcome: Every employee should have a direct stake in the company’s success-and in the risk of failure
Ari Weinzweig and co-founder Paul Saginaw wanted that kind of inclusive, engaged culture when they started their company and used open-book to anchor their growth.
Zingerman’s Delicatessen, a tiny sandwich shop near the university, into a group of nine businesses that, three decades later, has 650 employees, 18 managing partners and combined annual sales of $50 million.
That’s called success and has been recognized as such and emulated a la Tony Hsieh.
Wayne Baker, a professor in the Ross School of Business at the University of Michigan, turned it into four case studies. Bo Burlingham featured Zingerman’s in a book called “Small Giants,” which is about companies that “choose to be great rather than big.” And the owners and employees of more than 1,000 companies have attended ZingTrain seminars to learn more about the Zingerman’s model.
While their approach is definitely a success, not everyone likes or wants the involvement.
Former staff members talk about the frustrations of having to placate difficult customers, as well as the stress of being “Zingy” throughout a long shift. “It is exhausting to work somewhere where you feel like you have to improve what you do constantly,” said one former worker at Zingerman’s Roadhouse.
Others love it.
Krystal Walls, who works in the mail-order business and has two children and a third on the way, said at the training session, “I have never worked anywhere where I was trusted or respected like this.”
When their little deli first succeeded they were offered substantial buyouts, as well as the opportunity to franchise, but none of those options allowed them to pursue their vision and make a difference. The company pays its people well and provides full health benefits.
“Employees who are stressed out financially, wondering how to pay for their kid’s allergy meds, or their rent or auto insurance, are not going to be able to do their job well,” said Mr. Saginaw, who has been lobbying in Washington for the last year for an increase in the minimum wage. “We’re comfortable with the notion that there’s such a thing as enough. Others may be wealthier than we’ll ever be, but I wonder if they’ve lost a certain amount of joy in their work.”
Flickr image credit: Carl Collins
August 4th, 2014 at 5:03 am
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