Open-book management: the Pros and cons of sharing financials
Many companies make it a point to keep employees updated on the firm’s latest moves, but some take it a step further by showing them why.
Open-book management is a system some companies use to help employees really understand the business — where it stands now and where it’s going — by sharing the firm’s financial info.
Advocates of open-book management swear the system helps to foster unique employee ideas and makes companies more cost-effective and easier to manage. But there are certain aspects many firms have trouble with, namely:
- how much info to share with employees, and
- how to make that info easily understandable.
Plus, there’s always the danger of hurting morale when your company is struggling.
If you’re interested in open-book management, experts suggest easing in to it. Example: Only share one or two key metrics in the beginning — sales, shipments, etc.
To help the numbers make sense, some firms hold weekly, company-wide meetings to explain the financials, as well as a few refreshers throughout the year on reading balance sheets or income statements.
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