Open-Book Management


What It Is

Open book management is a way of running an organization in which the information received by employees not only helps them do their jobs effectively, but also helps them understand how the company is doing as a whole.[1]


Why It Matters

In its simplest form, open-book management is management method that orients employees towards building a better business.[2] Instead of using typical motivational tools and expecting employees to complete their assigned tasks, open book management attempts to actively involve employees in all aspects of the business. In the words of John Case, who coined the term ‘open-book management’, “a company performs best when its people see themselves as partners in the business rather than as hired hands.”[3] According to a recent UNC Kenan-Flagler white paper, when done well, open book management can lead to more empowered employees, higher levels of innovative thinking, and an improved bottom line.[4]


Getting Started

Open-book management is sometimes incorrectly thought to be as simple as sharing financial information with employees. True open-book management requires the building of a partnership with employees. In The Great Game of Business, author Jack Stack highlights three basic rules for open-book management:

    1. 1. Know and teach the rules.
    2. 2. Follow the action and keep score.
    3. 3. Provide a stake in the outcome.[5]


1. Know and teach the rules

Before you can empower your employees, you must be sure that they know and understand how the business operates, and how success is judged. From a practical standpoint, employees need to understand such things as the company’s financial statements and other metrics.  From a more personal standpoint, employees need to understand how their role contributes to the company’s success.


 2. Follow the action and keep score

In short, information is transparent and shared. Employees understand the indicators of performance (see step 1). These indicators are accurate, updated regularly, and shared with everyone whether the signs are good or bad. Through feedback, coaching, and communication, employees stay up-to-date, ask difficult questions, and contribute to the decisions that shape the company. 


 3. Provide a stake in the outcome

Through steps 1 and 2, employees should understand both the health of the company and how they play a role. But they must also understand how the health of the company and their own decisions affect their paychecks. Motivation and incentives should be in line with the overall company’s performance, not just individual performance. When the overall organization’s goals are met, employees benefit.


Going Further

Implementing open-book management is not always easy. It will require effort from both management and employees. To begin:

    1. 1. Learn more about open-book management from a manager’s perspective.
    2. 2. Consider how your company’s goals can align with open-book management.
    3. 3. Take steps to ensure that your employees are educated on company performance.


1. Learn more about open-book management from a manager’s perspective

Open -book management is not as simple as just sharing information. It often requires a shift in thinking on the part of management. Reading perhaps the two most widely-regarded books on the topic – Open-Book Management and The Great Game of Business – will provide an introduction to this thought process.


 2. Consider how your company’s goals can align with open book management

As you learn more about open-book management, you will see that it’s not simply adding new incentives to your existing business. It may require a realignment of incentives across your company. Analyze your current incentives and motivational measures in your company. If your company currently focuses on competition and rewards on an individual level, think about what will need to change to move toward the incentives of an open book management company.


 3. Take steps to ensure that your employees are educated on company performance

Your employees may not be ready to jump into an open book management system.  Be sure that they have access to learning materials that will get them acquainted with financial statements, sales reports, operational reports, or other performance measures at your company. 


Case Study

UNC business school’s Center for Sustainable Enterprise recently conducted a case study on open-book management. The full case can be downloaded for free. The study found that clearly communicated and understood goals lead to improved profitability and teamwork, which leads to higher levels of employee satisfaction and lower turnover. Organizations using open-book management report that employees:

    • Feel a stronger sense of ownership in the organization
    • Develop more trusting and collaborative relationships with employers
    • Understand the cost structure and make better informed suggestions for improvement
    • Understand the need for cost controls and become more responsible in how they use the organization’s resources
    • Demonstrate innovative thinking
    • See the big picture and become team players


All of these factors lead to an improved bottom line. Further, a study conducted by the National Center for Employee Ownership found that organizations that practice open book management experienced 1-2% annual increases in sales growth above typical projections.

However, open-book management is not without its challenges and doubts. For example, even proponents of open-book management do not advocate complete transparency: sharing individual compensation across employees is generally not recommended. Despite this and other challenges, however, the UNC study shows that implementing open book management can be done, and is often well worth the effort.


Resources for More Information


Open book management attempts to reject the “employee mentality” and move toward a “culture of ownership.” When successful, an open-book management company will not only have engaged and empowered employees, but also an improved bottom line.



[1] “Open-book management,” Wikipedia, accessed 25 July 2013.

[2] “What Is Open-Book Management?” Open-Book Management,, accessed 25 July 2013.

[3] “Open-book management,” Wikipedia, accessed 25 July 2013.

[4] Jessica Thomas, “New White Paper: Embracing Open-Book Management to Fuel Employee Engagement and Corporate Sustainability,” UNC Kenan-Flagler Sustainability Blog, 1 February 2012,, accessed 25 July 2013.

[5] Aaron Buchko and Bernard Goitein, “Employee Engagement Through Open Book Management,” Peoria Magazines, March 2011,, accessed 25 July 2013. 

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