193:; open-book management aims to achieve a level of understanding of company finances between all employees to the degree that they are able to report predictions to upper management. In order to motivate employees to strive for change, open-book management focuses on a "Critical Number". The number is different for every company but it is a number that represents a prime indicator of profitability or break-even point. Discovering this Critical Number is a key component of creating an open-book company. Once this is discovered, a "Scoreboard" is developed that brings together all the numbers needed to calculate the critical number. The Scoreboard is open for all to see and meetings take place to discuss how individuals can influence the direction of the "Score" and therefore, ultimately, the performance against the Critical Number. Finally a Stake in the Outcome is provided which can be a bonus plan that is tied to Critical Number performance or it can include Equity sharing or both.
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for the company. However taking a company from "normal" to open is not as easy as just sharing financial statements with employees. Open-book management is considered to be a success when companies allow improvements on their financial numbers to come from the bottom tier of employee rather than
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The basis of open-book management is that the information received by employees should not only help them do their jobs effectively but help them understand how the company is doing as a whole. According to Case, "a company performs best when its people see themselves as partners in the business
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is the only practitioner-led conference on creating a culture of ownership by teaching employees to think and act like owners . At the event, business leaders learn from people who have used open-book management to increase the size, profitability and
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pressure exerted by a traditional top-down management system. (Johnson, 1992 as cited in
Aggarwal & Simkins, 2001). While employees need to be trained to understand
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in their companies . The conference consists of sessions, keynote speakers and workshops that are specifically targeted to each phase of open-book management.
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Kidwell, R.E. & Scherer, P.M. (2001). "Layoffs and their ethical implications under scientific management, quality management and open-book management".
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all relevant financial information about the company so they can make better decisions as workers. This information includes, but is not limited to,
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In a company fully employing open-book management employees at all levels are very knowledgeable about how their job fits into the
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Follow the Action & Keep Score: Every employee should be expected and enabled to use their knowledge to improve performance
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Provide a Stake in the
Outcome: Every employee should have a direct stake in the company's success-and in the risk of failure
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Know and teach the rules: every employee should be given the measures of business success and taught to understand them
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385:"Johnson, H. T. 1992. Relevance Regained: From Top-Down Control to Bottom-up Empowerment. New York: The Free Press"
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Open-source radio interview of a CEO explaining how his company functions under open-book management.
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Case, J. (1995). Open-book management: The coming business revolution. New York, HarperCollins.
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rather than as hired hands" (Case,1998 as cited in
Pascarella, 1998). The technique is to give
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Employees are challenged to move the numbers in a direction that improves the company
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The company should share finances as well as critical data with all employees
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Stack, J. (1992). The great game of business. New York, Currency
Doubleday.
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Similarly, in 1995, Case made sense of open-book with three main points:
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Davis, T. (1997). "Open-book management: Its promises and pitfalls".
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Stack uses three basic principles in his management practice called,
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Stack and Case conceptualize open-book principles in similar ways.
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Relevance
Regained: From Top-Down Control to Bottom-up Empowerment
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Pascarella, P. (1998). Open the books to unleash your people.
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