Many successful companies practice open-book management that includes disclosing financial information to all employees. What are the potential benefits of this disclosure?
Disclosing financial information to the staff and assisting them in understanding the statistics, because not every employee has economic education and can understand a database, they can observe company’s operations from inside and be aware of the path towards its objectives. When there is some bonus or income distribution plan, workforce will better value program’s performance and see how its labor helps the company achieve these objectives. Furthermore, employees can produce own strategies or strategies for the whole team in order to ensure company’s positive results. Those are more effectual motivation programs. Also, clearness calms fuss. It, for example, can help the company to avoid passionate speculation about its future (and more significantly, the staff’s role in its future). It is worth to mention that open-book management provides fresh opinion. Employees are able to generate new ideas that progress productivity (Melnick, 2012).
Why would some companies not want employees to have access to all information in a company, including financial information?
One of the most vulnerable to leaks is the information directly relating to accounting, namely financial records, reports, business plans, contracts, prices, wages and employees’ personal information. Half of these details leave a company not by the fault of the insiders, but the usual randomness. Leakage of financial information may not only spoil reputation of the company, but also result in serious financial loss (the cost of eliminating the consequences of disclosure, claims, inspections, loss of customers, and so on). For example, there are cases where competitors have bribed the accounting staff of the company and through it they obtained data of “black” accounting. After that, the company has come-site inspection. Inspectors, whom the competitor gave incriminating evidence, it was not difficult to find a violation, because they knew what and where to look. “White” accounting may not be less interesting to outsiders, if someone wants to lure valuable employees. Moreover, the release of such information could jeopardize the suspicion of the chief accountant or CFO. Workers with tiny trust in a company and workers whose precedence varies from those of the organization may consider open-book management as one more strategy to employ dissatisfied and unhappy employees. Values of open-book management emerge to avoid issues that can straightforwardly affect personnel; so, workforce whose criticisms and worries have been mainly unnoticed may experience hurt concentrating on increasing a commercial attitude among workers (Holmes).
How do you think owning a piece of a company, through profit sharing or stock options, affects employees’ attitudes?
Of course, it does. Being a part of the company through possession of its components ensures increased loyalty and intention to improve its operation, which results in profit growth. In this case, employees work for their own company. They relate to the company with more respect and desire to help its development.
Besides open-book management and profit sharing, how else can The Sky Factory motivate employees?
Subordinates should understand an adopted compensation plan. Arbitrariness in promotions and rewards leads to cynicism, but not to an increase in motivation. If a new program is taken from the ceiling, workers start to think that the leaders do not respect them. The company should give clear answers to the questions of subordinates on how the system of rewards can affect their daily operations. Also, to achieve professionalism in any work, the employee should strive to become the best in the field. Fascinated by studying people certainly grow in the position and develop complementary skills. Therefore, the knowledge and training can be used as a reward and motivator, namely additional training, conferences and training employees who have achieved significant results in the work, and whose achievements have been recognized colleagues. Knowledge is a powerful motivating factor; it costs surprisingly cheap compared to its true price.
Based on the company you would like to start, how would you ensure that you build a collaborative work culture that incorporates a shared vision among your employees? What are the advantages and disadvantages of your strategy here?
The first advantage is that the corporate culture helps foster a team spirit for all employees, so that they are guided by common principles and approaches in their work. Such a system makes staff friendly and cohesive body that works more smoothly. The friendly team easily perceives changes or innovations; it is easier experienced difficulty or failure, faster decisions. Also, each employee understands his place, objectives and value to the company. The result is improved performance. The crucial disadvantage is that not all people on the first day can be arranged under the existing system. If someone does not follow the general rules of the system, it can be fraught with loss of place even during the probationary period, regardless of how he is a good specialist. So, as corporate culture may seem unusual for a beginner, soon every employee is aware that the implementation of the basic laws of the company is essential for streamlined and efficient operation. Only the team that works on the same principle be able to achieve success.
Melnick, L. (2012). The benefits of open-book management. Retrieved from http://lloydmelnick.com/2012/11/20/the-benefits-of-open-book-management/
Holmes, S. (n.d.). What Are Some Risks in Sharing Financial Information With Employees? Retrieved from http://smallbusiness.chron.com/risks-sharing-financial-information-employees-40046.html