If opening the books makes sense to you—if you want better results and communication— then there are distinct steps that you can take to make the transition to an open book company.

Step one: Know the numbers

“I’d rather poke out my eye with a blunt stick then look at the financials.”
-Steve Leach, founder, RCD Engineering

The numbers don’t lie. If you don’t understand the numbers in your business you are at a disadvantage when it comes to running it. Many small business owners in particular don’t understand the numbers and as a result don’t know their key result areas within their business. By understanding your numbers you can discover those key result areas and decide what is important to the success of your business.

High Performance Advocates can take you through an assessment of your Key Result areas and strategic planning as a part of the process of opening the books.

Step two: Teach the numbers

“A recent study found that two-thirds of employees reported interest in learning how their company was doing as a business. Three-fourths felt they would work harder and smarter if they could read and understand their company’s financials.”
- Jack Stack

Many business owners were never taught to read a financial statement. As an entrepreneur, chances are if you learned, you taught yourself on the job.

Now you need to teach others. How will your employees learn? You will teach them. They may struggle to understand why they are being entrusted with this information, but they will soon absorb the code and start to understand the numbers.

Step Three: Identify Critical Numbers

When employees look at the critical numbers of a business it can be like learning a foreign language. At first is it exotic and illegible and they don’t think they really want to know it.

But then, the patterns start to emerge and they start to be able to apply it to their everyday work. An incredible transformation begins to happen: they start to care about the well-being of the company.

When they cross this threshold, they start to identify what matters and are able to have an impact on the results as well as a sense of satisfaction from beginning to contribute in a meaningful way.

Step Four: Keep Score

In order to impact critical areas of your company your need to measure your results. And then what happens to those results? If you want to grow or improve you must develop measurable goals to fulfill. Your team will be able to create those goals, measure them and keep score once they understand the numbers and critical areas.

This is where the rubber meets the road. Creating and implementing actionable, measureable goals and keeping score like a giant game. When everyone knows the rules and and how to hit a home run, the game is not only fun—it’s winnable.

Step Five: Develop Compensation Plans

Let’s talk about the elephant in the room. You can hear them now, your employees saying, “Why should we play this game if there isn’t something in it for us?” The beauty of open book companies is that part of this game is developing compensation systems that benefit everybody in the business and are developed by everybody in the business. When everyone understands the numbers they begin to care about their contribution and the health of your company.  Their input in creating affordable and fair compensation plans is motivational and creates, literally,  more for everyone.

Additionally tying bonuses, profit shares or equity to team results creates much more interesting games and goal-setting, as well as a scalable compensation plans, without the emotional minefield you often dance in as a business owner.

Step Six : Empower Employees by Creating a Culture of Learning

In order to get an employee from good to great you have to first get your employees from bad to good. You’re almost there…

Once you teach the books, find critical result areas, keep score and compensate appropriately, employees will be excited, engaged and enabled. But they may need some further skills. The skills they need to succeed include problem solving, decision making and communication skills. They need to understand how to build systems and create strategy. Empowerment means a culture of learning. Help each employee develop the skills they need to be successful.

Step Seven: Develop Leadership

Look for leaders. Great companies constantly develop leadership skills at every level of the business. Even the smallest companies are wise to develop leadership in those people who show promise. Hire well, open the books, have an empowered culture of growth and develop a leadership pipeline. Each employee can lead others successfully in the way you do business. Create a phenomenal work place and populate it with leaders.

Step Eight: Build the 21st Century Transparent Company

The industrial model is finished. There is a new model at play. It is called by many names: The Information Age, Knowledge Age, Network Age, Internet Age, Wisdom Age. Workers of the new millennium are expecting something better. Universal enrichment, work/life balance, the ability to grow professionally, the ability to build wealth. The day of the “fat cat” owner and the poor thankful worker are over. If you want your business to survive you need to institute a new model. Call it what you want. At High Performance Advocates we call it “The Transparent Company.” We can help you get there.