What are the "critical numbers" on "Open Book" management?

May 14, 2010 11:11 AM

What's it like to work in or own a business that uses the "open book" financial management system?

A few years ago, the "open book management"/"critical number" approach was being touted as the next-best thing du jour. It achieved considerable press, primarily through a book called "The Great Game of Business." There are lots of articles and websites trumpeting this approach (well-known Zingerman's in Ann Arbor, Michigan, for example), but not finding much written from a more detached, objective viewpoint or by people who have actually worked in a business that used this system.

Anyone ever own, manage, or work in an "open book" business? What's it like? Did you notice a difference? Did it "feel" different to you than other places you've worked?

Pony Question: If anyone's ever taken the Zingerman's "Fun Flavorful Finance" / Open Book Management course, what was your experience like? Is it worth the time and cost?

posted by webhund to work & money (2 answers total)

My former company was like this. No one really called it "open book" or "critical number," though: the phrase that kept coming up was "commitment to transparency.

Reference points: for-profit consulting firm / government contractor; ~500 US employees in one office, ~3,000 internationally in developing countries.

I started at the entry-level and left as a manager.

What "commitment to transparency" means:

- Everyone has access to everyone else's salary information.
- Notes from executive meetings (including budget round-ups) are posted on the intranet, and mid- and sometimes junior-level staff are frequently invited for various reasons.
- Everyone has access to everything on the intranet, except HR documents that legally need to be private (health insurance data etc.) and some security information that just does not need to be widely disseminated.
- There's a big emphasis on educating entry-level staff on business acumen, despite very few staff having business backgrounds (mostly degrees in technical fields related to development).
- The company is moving towards employee ownership, albeit slowly.
- Physically, there's an open office plan and enclosed offices all have glass walls.

I don't have diverse enough work experience to really compare the experience of working there with working anyone else, but there was definitely a feeling of being part of a team, being empowered to make changes, and being included. The company promotes on talent and provides plenty of opportunities for advancement.

Anecdote: Once I asked someone two rungs higher than I was to send a sensitive email that I had written, stating that I felt the content was above my pay grade. He looked at me rather witheringly and said, "nothing here is above your pay grade. Send the email and let me know if you get any blowback." End of story. I never made that mistake again.

It was a wonderful place to work and I left for purely personal reasons (moving across the country).
posted by charmcityblues at 6:23 PM on May 18, 2010

I once worked at a small startup product development company (they wanted to be Ideo when they grew up). It had been open-books-ish before I started, when there were fewer people.

The CEO/founder, "Mike", once explained to me why they moved away from that kind of openness. The revenues/jobs/contracts for this company weren't a steady stream so much as they were a famine/feast "cycle" (meaning that the whole business was dependent on getting contracts and sometimes the financial situation could look rather uncertain on paper).

There was this one guy ("Brad") who had worked there, but who was made very nervous by the uncertainty of the company's finances, so he left. Mike used to always tell stories about Brad, and I could tell that he really regretted his leaving. In any case, Mike said that they kept the books closed to avoid scaring us all. Since this was a tech firm in the mid-1990s, it would have been very easy for any of us to find more boring/predictable employment.

In all the time I worked there, I never heard of anyone's pay being late. Somehow it worked, then the company changed into something else and, I think, the remnants were absorbed by one of the former clients. So, in the end, everyone was taken care of. Go Mike.
posted by amtho at 7:49 PM on May 18, 2010