If you’re looking for a great way to build employee trust and engagement levels, you may want to consider incorporating an open book leadership strategy. Open book leadership is the sharing of business financial information with employees. No, you do not have to share employee salaries, but most of the other numbers on the P&L and Balance Sheets are fair game.
Think about it, your employees probably believe that your company and leadership team are making gazillions of dollars each year. They see the orders come through for tens of thousands or perhaps millions of dollars, and they think all that cash is going into the pockets of the company’s owners. Employees only hear about company finances when times are tough, and cutbacks need to happen. By sharing the “real story” of your financial situation in good times and bad, you’ll close the gap that exists between leadership and the workforce.
While many leaders feel that sharing the organization’s accurate financial picture, especially in difficult times, may scare employees off, it has the opposite effect. Open book management gives employees more of an ownership mindset. It eliminates their misperceptions and encourages employees to take a more active role in increasing corporate productivity and profits. After all, your employees know their job better than you know their job. Why not give them opportunities to spot small fixes that can add up to big money over the long term.
Two main areas are necessary for a successful open book program – leadership transparency and financial literacy education. Leaders must be willing to let their employees glimpse the organization’s inner workings, but the employees also need to understand the numbers they are seeing.
Financial literacy means that employees have a basic understanding of how an organization earns money and turns a profit. It helps them understand how their job ties into the company’s mission and profits. Employees don’t necessarily need an accounting degree, nor do they need to understand every aspect of a balance sheet or account ledger. Instead, they should have a basic understanding of the numbers that most closely impact their job function or their department. When employees start to see a direct correlation between their work and the company’s bottom line, both engagement levels and profits begin to rise.
When company leaders treat their people like owners, employees can grasp the challenges ahead, and they have the information they need to come up with solutions. Even better, open-book leadership gives employees a stake in the outcome.
