The Case for Open-Book Management

If you are looking for a way to empower your employees to perform better, consider looking into implementing open-book management.

“It helped us out tremendously in engaging the team, getting them to participate in the overall success of the business, because they understand enough about what their actions and behaviors every day do to affect the business positively or negatively,” says Doug McDuff, president of Landscape America, based in Wrentham, Massachusetts.

Benefits of Open-Book Management

Open-book management can create a serious ripple effect on your company’s profits, operational efficiency and overall culture.

J.T. Price, CEO of Landscape Workshop, based in Birmingham, Alabama, says when he took over the company in 2014, they had very low margins, but they weren’t transparent about it. Because employees didn’t know the company was struggling financially, they had no sense of urgency around improving performance.

“Sharing financial information and setting measurable incentives and goals created a culture where high performers are rewarded and employees want to be at the top of the chart,” Price says. “This has led us to be one of the more profitable large companies in our industry.”

McDuff says before practicing open-book management, certain behaviors like damaging equipment were far more common at his company.

“We don’t see that stuff anymore,” McDuff says. “They’re focused on not damaging property or equipment. I think it’s not because they don’t want to get in trouble, but it’s because they’re accountable to the numbers that we show them week over week.”

Mark Aquilino, president of Outdoor Pride Landscape & Snow Management, based in Manchester, New Hampshire, says that open-book management also helps mitigate surprises with materials or subcontractor bills. That awareness helps departments communicate and drive smarter decision-making.

“It’s allowed us to better identify where growth comes from because we know where margin comes from and have a better understanding about our organization,” Aquilino says.

McDuff says one impacted area that surprised him was their improved safety.

“I think it’s just because the teams holding each other accountable for accidents and making sure that we’re being as safe as possible,” McDuff says.

Aquilino says that because their team knows when the organization is winning, it can be a great motivator.

“There are times of the year when you’re behind the bonus line, or you haven’t earned a bonus this quarter, and you start having discussions as to what you can do to influence that,” Aquilino says. “Those small conversations, they’re just amazing with what they do in building the culture.”

Price says transparency also helps the company culture be less political as it doesn’t matter who you’re friends with at the company; what matters is following the company values and performing.

Ryan Markewich, owner of Creative Roots Landscaping, based in British Columbia, Canada, says that open-book management has created a feeling that there are more hands lifting the heavy work of running the business.

“I can see it in the young people the most now is they are just stoked about going to work,” Markewich says. “They’re excited about growth as leaders and learning a life skill that just is not taught in our traditional education system.”

McDuff says that because the team is all on the same page, they will rally together and try to win together versus struggling with a divide between production and sales.

“I personally wouldn’t be able to run a business without it again,” McDuff says. “I would never start up a business or continue running Landscape America without it. The value of it is so immense and covers so many different things. Our culture is better, our retention with our team is better and our client retention is better.”  

Drawbacks to Be Mindful Of

McDuff notes open-book management can sometimes negatively impact employee morale if the company misses sales goals and other departments are performing well, but they still won’t be able to reach their bonus for that quarter.

“Being transparent and open is really fun when you’re winning, but when you’re losing, it really sucks,” McDuff says. “But you have to be consistent. You have to deliver that message. You can’t only tell the team what’s going on when it’s when it’s positive.”

Price says not being clear and consistent with the information you share is a common mistake. Also, don’t choose to share less information just because some individuals get angry when their low performance is seen in the shared numbers.

Aquilino says that even if they’re forecasting 60 days out that they’re going to be short, open-book management allows that person or department to not suffer in silence but to come together as a team and look for ways to influence the outcome.

“We get to influence the game live,” Aquilino says. “We don’t have to wait. We can be proactive and when we’re doing it as a team versus as individuals, we’re going to do well.”

Aquilino says it’s important to note that open-book management is only impactful if you are willing and able to commit to it.

“If you think it’s a one-and-done type event, you’re sadly delusional because long, lasting cultural change and consistently, higher profits and a more sustainable business are not something that you create overnight,” Markewich says. “It really takes a solid shift in the way you think about sharing your data and your information.”

Only forecasting occasionally and not following through is not helpful. If you are not hitting your numbers, this information needs to be shared with the team as well.

“We still go through the same exact behaviors, whether we’re having a tough year or a good year, because I think that the transparency and the communication drives trust,” McDuff says.