Close this search box.
Close this search box.

Engaging Employees With “Open Book” Finance

In 2014, only 31% of American workers were engaged at work, according to Gallup, with the youngest employees—Millennials—the least engaged generation. Open Book Finance can help. Much more than just sharing the financials with your employees, Open Book is an operating system that provides employees with a direct line of sight between what they do and financial results—including their own—and the information they need to make good decisions daily.

In today’s world, Business has completely taken a turn in almost every sense. Business owners are taking a ton of loans from multiple lenders to get their business in the market and repay the loans as and when the business begins to make profits. One of the main factors which is helping them do this is coming into a trust deed with all the lenders, which then gives them ample time to repay the money on a monthly basis. With Open Book, everyone thinks and acts like business owners. Companies that use Open Book perform in the top 10% of their industries, according to Denison Consulting. Southwest Airlines, Harley Davidson, and Whole Foods are among the 4,000 companies around the world that use Open Book.

Open Book is the brainchild of Jack Stack, CEO of SRC Holdings in Springfield, MO. In 1983, he and a dozen managers purchased Springfield Remanufacturing (SRC), a rebuilder of heavy engines and parts, from its failing parent, International Harvester. They paid $9 million—$100,000 in equity and a loan of $8.9 million at 18% interest. Doesn’t sound like a formula for success, does it? But if you had invested $1,000 with Jack in 1983, you would be a multi-millionaire today. Even Warren Buffett didn’t do nearly as well as SRC in the same period.

“Companies that use Open Book perform in the top 10% of their industries.”

Jack had the insight that business is like a game. It has rules. It has scores. And players win or lose as a team. SRC began teaching everyone the rules of business, developing and keeping score with operational and financial metrics, and sharing the financial rewards. The results speak for themselves.  Today, SRC has over 1,200 employees, 17 business units, and a stock price of $199 per share (up from 10 cents per share in 1983).

Financial literacy is the first step. Everyone should know how to read the four basic financial statements: balance sheet, income statement, cash flow statement, and statement of changes in equity (a.k.a. statement of retained earnings).

Rich Smalling, CEO of American Innovations (AI), found a fun and creative way to teach the basics of financial literacy. AI protects people and the environment by helping oil and gas pipelines run safely and efficiently. Rich used the analogy of the checkbook to explain the income statement until he heard about a furniture manufacturer who explained it by cutting up a chair with a chainsaw.  Rich adapted the idea: “We just cut a pipe into four pieces, representing cost-of-goods, people costs, all other costs, and earnings. The first time we used the pipe, I saw more lights going on than in all the years of using the checkbook analogy.”

Now AI employees routinely refer to the pipe, such as making the pipe bigger (increasing sales).  In 2012, Rich started explaining how profit sharing worked and tied it to the pipe. Employees were told how much money was on the line before the year started. “Making it public and tying it to the pipe made a big difference,” Rich says.

Rich doesn’t attribute all their success to Open Book. However, in the five years since introducing the pipe and making profit sharing public, AI grew at a compound annual rate of 14.4% (more than double the rate in the five years before). AI reduced its debt by 70%, improved employee satisfaction scores, and boosted earnings. Profit sharing was a record 8% of salary in 2014.

“The real benefits are broader,” Rich says. “Our team is more engaged and has a better understanding of the realities of running a business.”


  • Get the CEO Briefing

    Sign up today to get weekly access to the latest issues affecting CEOs in every industry
  • upcoming events


    Strategic Planning Workshop

    1:00 - 5:00 pm

    Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process

    Executives expressed frustration with their current strategic planning process. Issues include:

    1. Lack of systematic approach (70%)
    2. Laundry lists without prioritization (68%)
    3. Decisions based on personalities rather than facts and information (65%)


    Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns.  They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning.  Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process.  This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented.  If you are ready for a Strategic Planning tune-up, select this workshop in your registration form.  The additional fee of $695 will be added to your total.

    To sign up, select this option in your registration form. Additional fee of $695 will be added to your total.

    New York, NY: ​​​Chief Executive's Corporate Citizenship Awards 2017

    Women in Leadership Seminar and Peer Discussion

    2:00 - 5:00 pm

    Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations. 

    Limited space available.

    To sign up, select this option in your registration form. Additional fee of $495 will be added to your total.

    Golf Outing

    10:30 - 5:00 pm
    General’s Retreat at Hermitage Golf Course
    Sponsored by UBS

    General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.

    The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.

    To sign up, select this option in your registration form. Additional fee of $295 will be added to your total.