How Open Book Leadership Builds Trust
Some time ago I conducted a training session for a number of restaurant employees. I prefaced my training session with an explanation of how restaurants made money, and that the average restaurant makes about a 5% profit.
As soon as this fact rolled from my mouth, a number of servers who were present with their owner turned to her and questioned “Is that right?” The owner nodded and confirmed “Some months, yes.”
The staff then turned around to me and many of them exclaimed, “Well, we’ll need to help Cathy make more money then.” The sense of teamwork to rally and help their boss make her business more profitable was the most incredible aspect of that training.
Usually in consulting with business owners, I find that most of them never share the financials with their employees.
The usual excuses abound:
“They don’t need to know.”
“I can’t trust them, why should I show them the books?”
“It’s not their job to know.”
“We can’t show them what we really make.”
“They’ll want a raise!!”
Then there are always the unspoken excuses that being open-book will reveal issues, such as impropriety, false reporting, bleaker financial pictures, and so on.
Business owners and leaders who want to increase engagement can easily develop trust by adopting an open-book culture that lets employees know the financials, a more connected and positive workplace results. This study from the University of Michigan underscores some of the benefits of this approach.
Here are some of the other benefits of adopting an open-book culture:
- It give employees information to make informed decisions
- It builds trust in all directions of the organization
- It enables people to make decisions to better increase bottom line, without being told so
- It gives employees a better understanding of how strategy and goals are, or are not, meeting financial goals
- It holds leadership and the entire organization accountable for financial stewardship
- It indirectly asks people to give input on ways to help make revenue, and save on costs
- It gives people a deeper insight as to your industry so they can develop their knowledge more thoroughly
- It also builds more experts in your industry and deepens your organization’s competency and acumen
While it’s clear there are so many advantages for open book leadership, there is one disadvantage however – holding unethical leadership accountable. The case is pretty clear, if you want people to open up and engage, you will need to open up your books first.