NFIB

Open Your Books to Grow Your Business
04/ 15/ 2002

by Shannon Scully

Six years ago, Victor Ornelas was frustrated that no one on his staff understood the overall picture at his Latino marketing firm in Dallas, Texas.

"They would tell me that we had to hire another person," says Ornelas, president of Ornelas & Associates. "I knew it didn't make sense financially, but how could I expect them to be in-tune with what was happening when they didn't have access to the company's financial information?"

So to educate and motivate his staff, Ornelas decided to implement open book management (OBM), a policy he'd read about years before that required him to share the company's financial information with the entire staff.

"Other than salaries, we have no financial secrets," he says.

Each month, his 35 employees pour over the company's financial statements, monitoring their progress from previous years and comparing themselves to others in the industry. At the year's end, all employees, except Ornelas and his wife, split a percentage of the company's profits in a structured bonus pool.

"By sharing this information, employees are able to see exactly what's in it for them," says Ornelas, who finds problem-solving is easier too, since everyone feels responsible for the company's success.

OBM has proven effective for companies of all sizes, but smaller businesses with fewer levels of management may have an easier time sharing the information.

Before employees can use the financial information, they have to understand it, which is why Bill Palmer, president of a custom cabinetry company in Fremont, Calif., decided to slowly introduce OBM at Commercial Caseworks eight years ago.

"You can't just lay all the information out in one day," says Palmer, who first focused on the most important numbers, such as the estimated cost of projects.

Palmer's 120 employees also have an incentive bonus system, and each person receives weekly updates that explain the value of their individual bonus.

Since starting OBM, Commercial Caseworks' income has grown at an annual rate of 40 percent. Though Palmer doesn't credit OBM with all the growth, he does believe it has been a major factor.

Sharing financial information with the whole staff isn't easy, and one fear of OBM is that employees may leave and take valuable information to competitors.

"So what?" says Ornelas. "We're only competing with ourselves, and sharing this information has only helped us grow."

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This article originally appeared in the November/December 2001 issue of MyBusiness Magazine, NFIB's member magazine.

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