I’m intrigued by the concept. And I’m curious to watch as some MSPs embrace open book management, and even a few embrace open salary management. The latter seems a bit extreme to me. But perhaps I’m old fashioned.

Great post and some good thoughts on a very important topic. Our experience has been that educating our team on financials is a very positive way to keep them involved in what we are trying to accomplish. Many feel that sharing numbers only gives employees information to turn and use against an owner. But with the right education, and teaching employees the need for solid cash management, correct levels of equity, the impact of margins etc. we have found that open book management is a good thing.

Employees already are making assumptions about how much money the company is making and the owner is taking home. And more often than not, it is not even close to reality. Of course employees always think owners are getting rich and they are getting crumbs. So open book can help put some reality into what the real bottom line is and then it all comes down to educating the team on why a small number there is bad for their future because there is no stability or longevity to their job if the company is not profitable.

There are lots of industry statistics out there to help drive home the point that making a profit is not bad, but necessary for long term success. It takes continual messaging and months to make a meaningful transition to open book but once there, it can be a strong motivator to get people to perform. We allow engineers and sales people to see performance of one another – and believe me that no one wants to be the bottom of the monthly report. Financial transparency is a huge driver if people understand what the numbers mean.

It also is an important part of leveraging the power of peer companies as well. Sharing between owners can be a very powerful way of identifying issues that need attention. I am not advocating publishing our financials on the web, but I do think that sharing with the right people and educating on what the numbers mean can be a great asset to leading a company to success.

Keep up the great work!

Caveat: Open Book accounting only works when leadership has cast the right vision for the company and all employees are excited about the vision. Then open book accounting really makes sense.

How wide? Whatever your comfort level allows.

During this recession I opened it pretty wide to give employees security as to where we were and that I was doing everything possible to save jobs. They appreciated that and stress levels definitely lowered.

When times are better, will I do that? Probably not. I’m sure that I’ll do with it with management, but not line employees. And even the management stuff will be more high level and budget focused versus looking at raw GL or P&L data.

Sure, I knew my salary. But I was always surprised — and appreciative — to see the dollars and cents that my employer was paying for my health care, etc. A simple single sheet of paper outlined the “value” of my health care coverage.

Later, when I worked for a college, I was amazed by the number of employees who didn’t consider their 100% paid health care coverage part of their compensation…
-jp