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This powerful transparent practice can change your store

This powerful transparent practice can change your store

By: Melanie Reid, Carolee Colter

Transparency in management implies openness, communication and accountability. One powerful transparent practice is Open Book Management. By teaching staff members about the financial health of the business, managers invite them into the conversation about strengthening the financial bottom line.

Just Food Co-op, a community-owned natural foods retailer in Northfield, Minn., opened its doors in 2004. Once it successfully navigated the initial challenges that every startup faces and began to experience financial stability and sales growth, management felt it was time to engage the staff in the continued success of the business. Since the cooperative business model encourages staff members to become stakeholders in the business, the Open Book model was a natural fit.

In 2011, management started teaching the co-op's 50 employees about key financial indicators and how their work impacts the financial condition of the business. However, managers went beyond just posting sales figures on the wall or showing labor numbers on the schedule.

Instead, they designed work sessions where staff members were invited to walk through the financial statement and balance sheet and ask questions about what they saw. The financial manager played a vital role in literally "opening the books" to staff members and encouraging them to question the numbers.

What is Open Book Management?

The Open Book Management model was popularized by Jack Stack in his book The Great Game of Business. Stack, who famously said, "Secrecy is baloney," postulated three basic principles:

1. Know and teach the rules, so that employees can understand financial data.

2. Follow the action and keep score, so that employees can use their knowledge to improve performance.

3. Provide a stake in the outcome, so that employees receive financial rewards for the company's success.

Incorporating one or more financial "games," alongside the educational component, is another important aspect of Open Book Management. Providing an opportunity for staff members to earn bonus money by meeting certain goals creates a powerful incentive and helps to gain and keep engagement.

Because in the grocery business margin and labor are key controllable expenses, Just Food Co-op made a game of the margin minus labor equation. Put simply, if MML is better than budget, bonus money is paid out to staff. Additionally, management found that Open Book breathed new life into the traditional profit sharing structure they had in place but had rarely paid out.

The numbers come to life at the weekly Open Book meeting where all employees are invited to check in on progress and share ideas.The "story" of the previous week is told, figures are posted and forecasts are created for the coming week.  Announcements are made, news is shared, recognitions are offered and everyone leaves feeling well-informed, energized and ready for another successful week.

There is power in transparency. When staff members participate in improving the financial success of your business, there are multiple benefits: increased employee satisfaction, higher sales, great ideas implemented, better customer service and improved financial results. 

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