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.

BUILDING THE OPERATING SYSTEM STEP-BY-STEP
Financial literacy is crucial, but you have to go beyond the financials and build the Open Book operating system. Financial statements are mostly about the past. They’re too general to be actionable, and they don’t package numbers in ways that help employees figure out what to do next. So, the next step is to build the system that provides a direct line of sight between daily actions and financial results.

“There has been no silver bullet in regard to profitability. Rather, it has been the sum of many small improvements.”

Start by identifying your critical number. For SRC in 1983, it was the $8.9 million loan. Everything was aimed at reducing that number. For Atlas Wholesale Food Company in Detroit, MI, net profit percentage is the critical number. CEO John Kohl and his employees identified key activities that link each person’s job directly to this number. They forecast these numbers and track actuals on a weekly basis, having these discussions in group “huddles” and deciding what actions should be taken.

Atlas has eight huddles, each with its own specific critical number. For example, the night shift/warehouse huddle’s critical number is mispicks. The accounting huddle’s critical number is accounts receivable days. And, the purchasing huddle’s critical number is cost of goods sold.  Every employee participates in at least one huddle.

Atlas also develops mini-games—small-scale incentive plans designed to fix a problem or exploit an opportunity. For example, one mini-game focused on reducing dead inventory, resulting in a 15% reduction in just four weeks. Another mini-game focused on reducing mispicks, yielding a 37% reduction in costly picking errors.  A third mini-game focused on energy use, slashing energy costs by 30%.

“There has been no silver bullet in regards to profitability,” says John. “Rather, it has been the sum of many small improvements.” Net profit for the last two years is the highest ever. Sales grew 13% in 2013 and 11% in 2014 in an industry where double-digit internal growth is unheard of.

IS OPEN BOOK FOR YOU?
If you want actively engaged employees who think and act like business owners, and you have the courage to share the financials, then Open Book is the way to go. You can start with financial literacy and mini-games, gain experience, and build the operating system step by step.  Open Book is an essential component of a positive business that produces superior financial performance and a workplace in which people thrive.

 


MORE LIKE THIS

  • Get the CEO Briefing

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

    Roundtable

    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.