As a business coach and consultant, I’m always interested in learning more about successful management strategies. One such strategy involves opening the books (and everything else) to the employees, who are referred to as “associates” and often tying compensation and bonuses to the achievement of certain goals and profitability. As a result, they buy-in to the goals of the company and find all kinds of ways to reach them; which makes it a win-win situation for all.
Former Representative Richard Gephardt, a great advocate of innovative and successful management strategies, referred to this methodology as “an overall approach to corporate governance that treats the employees like co-owners of the business who have to make sacrifices and take on the burdens that any owner assumes” in his book “An Even Better Place.”
One of the things that drives most successful management strategies is a unique approach, something not usually found in the run of the mill company. When you open the books, associates become part of the decision making process and have input as to how the company is run, how their products or services are marketed, how staff is compensated, and more.
Jack Stack, author of the “open the books” blog, is pioneer in this innovative strategy. In his opening post of this series, he stated: “The idea is to get employees to start approaching their jobs as if they owned the place, which in fact they might. Now, not all business owners who open their books share ownership with their employees. At SRC, we do share ownership through our employee stock ownership program, or ESOP. When someone has been with us long enough to take responsibility and make decisions, it makes sense for them to have skin in the game as well.”
Yesterday, he updated us with some new information on how they are achieving buy-in from their associates on a new marketing plan and how the company would proceed in an effort to recover from the recession. Employee confidence had dropped to a low of 68% by mid 2009, down from 79% 6 months before. The decisions that were made by listening to the associates, helped to bring this number back up to 81% by the end of 2009.
According to Stack, they decided “to cut prices on the existing product line and to find ways to operate with lower costs and shorter lead times. Just as important, the company also expanded its mostly agricultural product line by converting its gasoline-fired engines into natural-gas driven power generators. Because these generators are less expensive to operate, they found new markets doing things like powering electrical grids and oil fields, especially in Canada and overseas. The company is closing in on a deal with a major international trucking company that would push the associates past their critical number and allow them to earn their full annual bonus.” (read the entire post here)
They also got the associates involved in paying attention to “fluctuations in natural gas prices…”, following government subsidies to farmers, understanding why they have lost a sale, and when they moved to a more modern, but small facility, sought the advice of associates on the design of workstations and whether any new equipment was needed.
If you’re considering some successful management strategies, give open books some careful consideration.
To learn more, visit the open book blog, or The Great Game of Business.
Susan Martin, Business Leadership Coaching
