Open Book Management
How Open Book Management [OBM] practices can transform business and personal wellbeing, employee engagement and build trust
What is Open Book Management (OBM)?
I’ve been having an increasing number of conversations recently about Open Book Management [OBM], in context of B Corp Certification and worker voice. Instinctively I think of financial book keeping. This is one aspect only. The term ‘open book management’ was first used by John Case in 1993. The first easily accessible reference is from Inc Magazine in 1995, referencing the John Case book ‘Open Book Management’. The reality is it’s far more than than the sharing of financial data and is, to my mind, internal to the operations of a business. OBM relates to the internal sharing of all business and operational information that will give employees the best opportunity to have a voice, innovate, and deeply engage with the business purpose and make the best decisions within their roles.
OBM is different to the transparency movement which relates to openness across all stakeholders, both internally and externally. Transparency to and from all stakeholders more important to company trust than competence’. We all need to be good at what we do, that’s a given. We must also be ethical, responsible, and sustainable in why we do it, not as a slogan, but by purposeful design and culture.
The Cambridge Dictionary describes OBM as:
A management style that encourages employees to work for a company’s success by sharing information with them about all its operations and results
This feels a bit narrow and one dimensional – when you share information and you get success – if only it were that simple.
As with all human endeavours it’s way more nuanced than that. Business success, as it relates to OBM, is created primarily through higher employee engagement and a voice in the business – OBM in this context is a core question within the ‘Workers Impact Area’ within the B Corp Impact Assessment (BIA) and is asked, in part, as an indicator of the quality of these two factors.
High employee engagement and a meaningful voice in the purpose & action of the business mission is fundamental to levels of trust across the organisation and personal well-being. When we truly see and feel the impact of our roles in organisational success our commitment to the business purpose thrives. It’s a self reinforcing feedback loop.
Trust building
OBM also creates the cultural working environment for trust and reciprocity, from which any business or organisation wishing to be ‘best for the world’ can build on its business and sustainability goals through enacting a wider business transparency mandate – If we haven’t got to grips with being internally open and trusting how can we hope to be meaningfully transparent to, and trusted by, our external stakeholders and customers?
Employee voice and engagement
In the CIPD Good Work 2020 survey report one of the standout charts highlights the lack ‘Employee voice’ in the UK and how this feeds into lack of engagement. Ultimately, having a negative impact on business and organisational success. The average on the ‘employee voice index’ score was 28-32%, pitifully low. This is reinforced by the UK employee engagement levels running at around only 50%. When we have no voice and are not feeling engaged how can we help our business thrive? The wide consensus is that by learning about and implementing OBM has a dramatic effect on both of these areas and the culture within your organisation.
When we know the full reality of the business and it’s operations we can use our collective intelligence and creativity to spark increased business resilience, innovation and success aligned to it’s core purpose
Your kind of ‘infotopia’
‘Infotopia’ is a term I stumbled upon in a research article (also a book and a search engine!). It started me thinking about the best conditions for OBM succss. As owners, managers or employees of our businesses do we default to only sharing facts that we are certain of? A perfectionist mindset perhaps? Any ambiguity or gaps in the information gathered or held can induce massive anxiety when being asked to share freely – What if things change? What if I don’t have all the answers? What about confidential information leakage?”
For your kind of ‘Infotopia’ you have to decide what internal business transparency means to you. The way we share, receive and understand information is always idiosyncratic. Every business, whatever the size, will have employees on all points of the information need and understanding bell curve. Information neediness varies – you have the ‘I want to know everything about everything’, the deep divers at one end and the ‘yeah, whatever’, the skimmers at the other.
Finding the sweet spot is key and can only be done by having an open conversation with staff on what level of transparency is universally useful and beneficial to them. And in what form they need it for it to be meaningful. Of course, some roles need more and some need less contextual information. The core principle here is to find a balance where opening the books on financial and operational information amplifies the potential for all employees to be engaged, have a voice in the success of the business purpose.
Meaningful information
Make sure you don’t go into information overload mode.
“Infinite information doesn’t equal infinite understanding”
Don’t data dump, context is key
OBM is not a process of dumping all operational and financial data on employees. As noted above we are all on a bell curve of information. That also goes for understanding and usefulness of the information being offered through OBM practices.
Contextual information sharing is essential. Let’s take an example of ‘open book finances’: Simple sharing your P&L account ledger would be meaningless to most employees. I hazard a guess that not many people love a good spreadsheet of numbers, FD’s and all those in the finance department excepted of course.
How we share financial data and in what context is essential. This does not mean operating a principle of ‘curated transparency’. It’s is is about context – why are we sharing, what are we sharing, how are we sharing it to to get the best universal understanding and usefulness? Again, this needs a two way discussion and agreement from the sender and receiver. Which brings me to education and learning.
Education and learning
OBM is a wonderful way to build a business that allows employees to learn and grow. This has been identified for years as a key need for individual well-being and employee engagement. A narrow job role with zero opportunity to really know what’s going on in the wider business or to learn, grow and have a voice is the worst kind of job. Can you do your best work with this kind of information asymmetry? I know from experience that information hoarding is used to assert power over others and protect the hoarder. This edited and redacted business knowledge sharing serves no one. When employees have open access to contextual business knowledge their role may still be narrow but their ability to learn, grow and be innovative within their own role and for the business benefit grows exponentially.
Not forgetting the business benefits of OBM
Would you want or do you need some of these?
- Employees start to ‘think like an owner’ – Creativity and innovation can only happen with full contextual knowledge, safety and an environment of trust.
- Better employee retention and hiring – The future workforce wants to work with open, trusted and transparent organisations.
- Better business resilience and agility – When we all know what’s going on we perceive the opportunities and potential risks sooner and are more nimble in making fast transformations when needed.
- Higher trust with customers and other stakeholders – Through the engagement and trust building of OBM the interactions and conversations that your business has with all stakeholders and the trust this builds grows.
- Be more profitable – This is definitely true from my experience and is supported by the studies that suggest a 30% profit premium when embedding OBM practice fully across a business.
Unexpected benefits
Having owned and operated a business that embedded OBM principles (and self-management) into the cultural and operational reality of work has allowed me to experience two further benefits, one human and one systemic:
The human benefit – The safety to try new things, sometimes fail, but always learn and grow. The more we know about the full operational and commercial reality of the business the more empowered we are to try new stuff and the more resilient we become.
The systems benefit – Sustainability practice across the organisation blossomed from OBM and the trusting environment it created.
This brings me back to my reason for writing this post – embedding OBM practices led to B Corp Certification where the whole business was involved in the B Corp Impact Assessment journey and ‘locking in’ good business change.
Given the benefits, why would you not try it? It may well be your pathway to full business transparency to all stakeholders – a topic for future thought.
Don’t take my word for it
Some good further reading on the subject from those practicing Open Book Management and a thought piece on the business case for OBM by Forbes. We also created a shareable slide presentation to distill the main principles into a digestible document.
Don’t take my word for it
Some good further reading on the subject from those practicing Open Book Management and a thought piece on the business case for OBM by Forbes. We also created a shareable slide presentation to distill the main principles into a digestible document.
Written by Matt Tipping
Founder of The Good Stream
Come back soon for more articles on changing the nature of business for good.
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