Friday, June 21, 2013

Open Book Management

Open-book management (OBM) is a management phrase coined by John Case of Inc. magazine, who began using the term in 1993. However, the concept's most visible success was by Jack Stack and his team at SRC Holdings .
The basis of open-book management is that the information received by employees should not only help them do their jobs effectively, but help them understand how the company is doing as a whole (Kidwell & Scherer, 2001). According to Case, "a company performs best when its people see themselves as partners in the business rather than as hired hands" . The technique is to give employees all relevant financial information about the company so they can make better decisions as workers. This information includes, but is not limited to, revenue, profit, cost of goods, cash flow and expenses.

Stack and Case conceptualize open-book principles in similar ways.

Stack uses three basic principles in his management practice called, The Great Game of Business
His basic rules for open-book management are:

  1. Know and teach the rules: every employee should be given the measures of business success and taught to understand them
  2. Follow the Action & Keep Score: Every employee should be expected and enabled to use their knowledge to improve performance
  3. Provide a Stake in the Outcome: Every employee should have a direct stake in the company's success-and in the risk of failure(1992)

Similarly, in 1995, Case made sense of open-book with three main points:

  1. The company should share finances as well as critical data with all employees
  2. Employers are challenged to move the numbers in a direction that improves the company
  3. Employees share in company prosperity

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