Open-Book Management Can Drive Performance and Results

One subject that came up over and over again at GROW! 2019, from both our presenters and our attendees, is transparency. At The Grow Group, we believe in being HOT—in leaders and their teams being Honest, Open, and Transparent with each other. When you’re HOT, all conversations are on the table and the organization can grow dramatically as a result.

But being HOT when it comes to your company’s financials can be tricky to implement and navigate. Many owners worry that if they adopt an open-book approach and their numbers aren’t good, their team may lose confidence in the company. But as Grow Group executive coach Jim Cali points out, if your numbers aren’t where they should be, then engaging your team is the best way to improve them. Your employees can’t help fix what they don’t know needs fixing.

Conversely, many owners worry that if their numbers are really good, their team may think they are pocketing all the money for themselves. If this happens, then you very likely have a cultural problem, not a financial one.

Here are two relatively simple but effective tactics you can take to help establish financial transparency at your company:

  1. The Penny Exercise. Lay 100 pennies out on a table and tell your team they represent your company’s annual sales. Then identify all the direct and indirect costs you have to deduct from your sales to arrive at your net profit, and remove pennies according to the percentages those costs represent. When your team sees that you have to pay for goods and equipment, salaries, rent, insurance, and tax; service debts; and reinvest for next year, they will have a much fuller understanding of what it actually takes to run your business. 

  2. Visible Scoreboard. Implement a visible scoreboard in your shop on a monitor or whiteboard with weekly, monthly, and annual financial metrics that your team can see and understand. Clearly indicate the goals and fill in where you actually stand as the year goes on. Your weekly efficiency rating, monthly net profit percentage, and sales year-to-date are all good numbers to track here.

BWS Landscaping in Richmond, VA, is using open-book management to drive results.

BWS Landscaping in Richmond, VA, is using open-book management to drive results.

Financial transparency can go a long way to fostering a culture of progress; team members want to know how their company is doing and how they directly contribute to it. Brad Swortzel, president of BWS Landscaping in Richmond, Virginia, and a member of one of our ACE Peer Groups, has implemented open-book management with his leadership team and seen measurable results—his company has grown from $600K in sales in 2015 to what he projects will be more than $2.5M in 2019, and financial transparency has been a significant driver of that.

Eager to give this a go at your company? Like anything else, develop a clear plan, start slow, and stay consistent. Be HOT, and watch your company grow in the process.

Have a great week!

Vince Torchia
Vice President, The Grow Group

P.S. Interested in learning more about our ACE Peer Groups? Join us in New Orleans, March 25–27, at a special kick-off meeting. You’ll gain a thorough understanding of what being an ACE is all about and what our peer group program can do for you and your bottom line. Email vince@growgroupinc.com to learn more—we have just a few spots left.