Open Book Management (OBM)

is the simple but powerful concept of opening the books, and especially the cost accounting records ("the financials") to all employees. It also includes teaching employees to interpret the figures, allowing them to see the connection between their jobs and the bottom line results of the company, and trusting them to make good decisions with this knowledge. The open book approach is attributed to Jack Stack of the Springfield Remanufacturing Company. Stack led a management buy-out following the demise of International Harvester. IT had enormous levels of debt, and was threatened with closure on a day to day basis. Jack Stack decided that the only way to survive was to share the business position with all employees; for them to understand the twin priorities of profit and cash flow. He did, and the company prospered mightily.

Today many smaller companies and a few larger adopted OBM in whole or in part.

OBM is about business literacy for all employees, (all employees are taught to read financial reports), about establishing clear "line of sight", about trust , about true empowerment, and ultimately about large gains in productivity through cutting unnecessary supervision and improvement through intelligent participation. Sound too good to be true? or too big a risk? Perhaps, but not according to employees of OBM companies.

All employees OBM companies are taught basic cost accounting, and know the money value of time, machines and materials. These give employees direct access to all information necessary to propose and evaluate continuous improvement initiatives themselves, and motivate them by showing the direct impact on the bottom line.