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Empower remote employees to make even better decisions by using the ‘open-book management’ approach: the ultimate transparent business practice
‘Open-book management’ or OBM is a business theory where companies give access to their financial information, so employees can fully understand the economics of the organisation they work for. Proven to increase productivity and profitability, companies that practise open-book management also have a more open, inclusive work culture. The reduced hierarchy, lessened sense of ‘us’ and ‘them’ and added financial incentives means everyone feels more invested in making the business a success.
The management phrase was first coined by John Case, author of Open-Book Management: The coming business revolution. It suggests companies should be transparent with their financial information so employees can play a bigger part in the business. While it means trusting people with the company’s profits and losses, expenses and cash flow systems, it has been proven to increase productivity and profitability, and can help remote staff members feel like they are essential.
Increase commitment and loyalty
OBM has been proven to result in a more engaged, committed and loyal workforce. Employees who can see the economic impact their individual decisions make on a business will often go the extra mile for the company, especially if there is a financial incentive in it for them. This openness can foster innovation, as employees feel more motivated to improve the business they work for. By letting your people track your company’s performance, teams can make smarter decisions and take real ownership of the role they perform.
Help employees make smarter decisions
There are other known benefits of OBM, including better relationships with customers. Front-line managers with a genuine invested interest in the business are usually more knowledgeable about the industry, can think like a boss and make informed decisions for the company. They also have a keener and more nuanced interest in what their customers need and expect from the company, which boosts its business reputation.
Attract key talent
The OBM theory works best when all levels of management and employees understand why the company has an open-book management system. Help them think like business owners, allow managers to be transparent and encourage your workforce to understand how the company’s performance benefits them directly. Operating in this way shows a deep level of trust for both a company, its employees and its customers, and a reputation for being transparent will often attract top talent and strengthen loyalties within the company.
Offer tangible rewards
The main idea of OBM is to encourage employees to become better business people. While a bunch of numbers may not make sense to everyone, offering training and simple business advice can help people on all levels understand what the figures actually mean. And the easiest way to make someone care about the outcome is to give them a stake in the business, which might be financial in the form of bonuses or stock. If remote employees can see how they will benefit from their company’s success through bonuses or equity in the company, it’s a win-win situation for everyone.
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