Sharing The Bottom Line With Workers

by Patrick Appel

Seth Stevenson recommends open-book management:

Some owners or managers might be reluctant to share numbers with employees. One concern is that workers might leak information to competitors. But if employees have been sufficiently motivated by equity stakes or bonuses that are entwined with company performance, the last thing they’ll want to do is harm the company by aiding a rival. An employee of Square, the privately held San Francisco–based payments company, tells me that over the multiple years that Square has been sharing financial numbers with its employees, there’s never been a single leak—despite operating within the incestuous, cutthroat realm that is the Bay Area technology sector.

Another worry is that sharing numbers might fuel employee resentment over how budgets are distributed. But according to [Open-Book Management author John] Case, most low-level workers vastly overestimate how much of their company’s revenue is profit. When they learn how thin the margins truly are, they develop far more respect for attempts to limit needless expenditures. In situations where layoffs become necessary, opening the books can help workers understand why the company was forced to cut jobs. Case credits open-book management for frequently defusing adversarial relationships between labor unions and management.