New strategy puts workers operating like owners

Gregory Cancelada

May 2, 2002

Robert Griggs, owner of Trinity Products Inc., sits down each month with employees and goes over a profit-and-loss statement—the type of information most owners fear to share with anyone.

But Griggs wants to talk business with his 55 employees and get them actively involved in running Trinity, a maker and distributor of steel pipes and beams in O’Fallon, Mo.

Operating budgets are managed by Trinity workers, and everyone is taught to be responsible for the bottom line.

It’s a concept known as open-book management, a strategy gaining adherents nationwide.

The idea is that opening financial books to employees, teaching them to think as business owners rather than just 9-to-5 workers, and setting financial and operational targets—such as sales, profit and hourly output—will result in fatter profits, improved efficiency, higher morale and a more competitive work force.

There’s been a long list of strategies seeking to get workers more involved, but others have focused on the shop-floor level rather than a company level, said John Case, author of “The Open-Book Experience.”

In 1990, Case coined “open-book management” to describe a movement among business owners.

The movement’s guru is Jack Stack, chief executive of SRC Holdings Corp. in Springfield, Mo. In 1983, Stack and 12 other managers bought a $16 million engine-manufacturing operation where they worked and created a $160 million business using open-book techniques.

“Jack was the initial guy, the pioneer,” Case said.

People such as Case and Stack gathered in St. Louis this week to talk about open-book management and the Great Game of Business, Stack’s own ideas on implementing open-book management.

Growing interest in SRC Holding’s success led the company to set up the Great Game of Business, which offers courses, books and training materials aimed at helping workers understand financial statements and increase their participation in a business. This subsidiary sponsored the St. Louis conference.

The Great Game can be an effective tool to get employees focused on performance, said Robert H. Brockhaus Sr., professor of management at the John Cook School of Business at St. Louis University.

“The results can be very good if the organization puts enough effort in training and allowing employees to make decisions,” he said.

Great Game techniques include weekly “huddles,” where employees gather to talk about their performance.

“It is an education process to teach people about how to be successful in business,” Stack said in an interview. “Opening the books is part of that process.”

By creating an understanding of the business and setting goals known by everyone, all employees can contribute to the company’s success, Stack said.

“Isn’t it kind of insane that if the essence of business is to create a great company with a lot of value, why should only one or two people be involved in the process? Why wouldn’t you get everyone involved in the goal?” Stack said.

The other aspect is creating an ownership culture, not just offering performance-based incentives for more work, Stack said.

Ownership is the way to get employees focused on building a company’s value, said Stack, who recently wrote “A Stake in the Outcome.”

But Stack does have critics.

A program such as the Great Game overloads workers with information they don’t need for their jobs, said Richard Schonberger, the author of “Let’s Fix It: Overcoming the Crisis in Manufacturing.”

“That is overkill. It will surely engender a lot of confusion,” Schonberger said, adding that working toward a big picture could divert employees from the basic task of producing a good or service.

Instead, employees should focus on improving the business process, rather than the company, he said. “That is the better solution,” said Schonberger, who runs a manufacturing advisory services firm in Bellevue, Washington.

And implementation is tough because open-book runs counter to how people have been taught to work or run a businesses, supporters acknowledge.

“The subliminal message is: ‘Doing your job, nothing more and nothing less, is no longer acceptable,’” said Gary Brown, director of human resources at SRC Holdings. That can cause problems with workers who would rather just be told what to do, he said.

It also can be difficult for managers to embrace open-book, because they’re forced to communicate with workers, Brown said. “You’re forced into a lot of things that you don’t normally do.”

Cosmetics manufacturer Autumn Harp in Bristol, Vt., had been using open-book concepts for more than a decade and started applying the Great Game ideas six years ago, said Heidi Masterson, the company’s controller, who attended the conference.

Through stock ownership and incentives, line workers now feel more responsible about costs and making production goals of lip-balm and sunblock products, she said.

Reporter: Gregory Cancelada