Similar to the open source concept used in software development and distribution, there’s a management concept known as open-book management.

The idea is quite simple: the financial reports (the company book) must be open to all employees in order to help them make informed decisions.

The basic rules are:

• Give employees training to understand the financial information
• Give employees all relevant financial information
• Give employees responsibility for the numbers under their control
• Give employees a financial stake in how the company performs

We cannot apply open-book management from one day to another. People need to be taught on financial book reading and interpretation, but I believe this concept makes sense for any company.

For further reading:

http://en.wikipedia.org/wiki/Open-book_management
http://www.greatgame.com/

Some additional information:

In its simplest form, Open-Book Management is a way of running a company that gets everyone focused on helping the business be successful. Employee goals and accountabilities are tied directly to the success of the company. It teaches all employees what is critical to success and how they can make a difference – both individually and as part of a team. Employees know and understand how they each contribute to the financial performance of the company, in such a way that they truly understand how the business works.

The Great Game draws from the successes and failures of thousands of open-book management practitioners to show how any company can teach its employees:

• How to think and act like owners
• How to promote continuous learning at every level of the organization
• How to fire up employees’ competitive juices
• How to broaden the concept of leadership
• How to delegate responsibility for the business
• How to drive innovation and build value in the business
• How to improve financial results for the company and themselves

I really like this concept and I’ve been using it for a long time, even without knowing its name. It is easier to do anything if we know the reason for doing it, and open-book management makes the reason very explicit.

Please checkout my other posts on leadership.