This fourth and final installment in our series of articles covering the workshops of the 2006 Best Bosses Conference focuses on the afternoon sessions addressing open book management and internal leadership development tips and strategies. For a recap of the other two afternoon sessions, click here. The four morning sessions are split into two articles; click to read Part 1 and Part 2.
Why Great Organizations Use Open Book Management
“We were having financial issues with rising costs in the automotive industry, so we first looked at open book management as a way to survive. Then we realized that having transparency and sharing responsibility was a great motivator, and it led to better performance.”
– Jeff Jeffery, President and CEO, IRMCO
Before introducing this session’s panelists – Steve Randazzo, president of St. Louis-based marketing communications agency Pro Motion; Jeff Jeffery, president and CEO of IRMCO, a manufacturer of environmentally friendly lubricant technologies in Evanston, IL; and Moderator Bruce Nims of The Great Game of Business – Winning Workplaces Vice Chairman Paul Lehman shared an appropriate anecdote.
He recalled that at a holiday all-staff meeting in the early 1980s, when sales of the company his family co-owned, auto parts manufacturer Fel-Pro, were flat, the management announced to the company’s 3,000 employees that the bonuses that were coming would be the same amount as the year before. Not too long after that, Fel-Pro’s executive team decided that employees shouldn’t be given just the “good” financial updates; they should know more of the whole picture, including the bad news – the flat sales that year that led to accordingly flat bonuses. Lehman noted that from then until the family sold the company in 1998, open book management (OBM) became a priority.
OBM has become much more commonplace in organizations since then – especially in small, privately held companies. Still, many owners and leaders don’t know where to turn to implement this practice. Thus, this session proved to be a popular one for conference attendees. Nims, a business coach with The Great Game of Business, a company that grew out of Jack Stack’s well-known book of the same name, guided the two leaders in exploring what led them to implement OBM and the effects that it’s had on employee motivation, retention, productivity and the bottom line.
Jeffery noted that when IRMCO, a closely held family business since 1914, decided to move to OBM, “It was difficult for the family to let go of that information.” One consideration at the time, he noted, was what the firm’s competitors would say about it. Still, IRMCO’s leadership thought that being open with its financials would motivate workers and help them understand why, for instance, a high-cost equipment purchase might trump paying for a shorter-term perk like a lavish staff retreat. The move paid off, Jeffery said: Employees started to think like owners, including using a cost-savings mindset in examining the budget.
Randazzo’s story concerning OBM is a little different. Although his experiential event marketing firm Pro Motion is only 12 years old, he started using it as an employee engagement and motivational tool almost from the inception. “It stemmed from wanting to educate all the employees on how we make money and how the company could be profitable,” Randazzo told attendees. He said OBM was a good decision for the firm to focus on from the outset because employees, especially those in the field in St. Louis and other cities across the country, could understand why spending varied on different campaigns as well as their stake in the outcome of those campaigns.
Tips and Strategies for Internal Leadership Development
“What you really want to do is develop individuals who can think, act, react and perform to get the results you need in your business. One of the principles that worked well for us to do this was to drive responsibility down to the lowest level.”
– Michael Mulqueen, Brigadier General, U.S. Marine Corps (Ret.)�
This session, one of the two final workshops of the 2006 Best Bosses Conference, was led by Joni Duncan, corporate manager of organizational development for Chicago’s Children’s Memorial Hospital; and Michael Mulqueen, former executive director of the Greater Chicago Food Depository (GCFD) and a retired brigadier general of the U.S. Marine Corps. Diane Stoneman, Winning Workplaces’ director of consulting and training, moderated the session.
Stoneman framed the discussion as an attempt to keep attendees from becoming part of a grim statistic cited by Harvard Business School Professor John Kotter. In one of his recent books, she said, Kotter wrote that there is a “serious leadership deficit” in organizations that reaches between 200 and 400 percent from the middle to top levels. Stoneman said this means that, despite the myriad books on the topic of leadership and countless consultants making money based on its implementation in companies, much more work remains to be done.
Duncan noted that her position and the hospital’s stance on leadership development are somewhat unique, as typically the topic is not a high priority in the health care setting. She thinks this is the case, in part, because the hospital’s president and CEO rose up through the ranks, starting as an administrative assistant 30 years ago. Therefore, she said, he understands the importance of setting aside meetings and other forums and measures for leaders to touch base with one another. “We work hard to promote [the idea] that the leader of your organization and your department really set the tone for the organization,” Duncan said.
Mulqueen offered his perspective as a 30-year veteran of the Marines Corps and 15-year chief executive of the GCFD – which, he said, boils down to people being your most important product. He argued that internal leadership development starts with hiring the right people. Mulqueen said determining who the right people are comes down to figuring out who will best execute the leader’s strategy and philosophy as well as fit in with the existing culture.
Once those people are in place and doing their jobs, Mulqueen said, it’s important to empower them as much as possible. For instance, if a client calls and an employee has the opportunity to make an on-the-spot judgment call to handle the inquiry or pass it up the chain, the employee should be given the tools, training and consent by leadership to make his or her call then and there. This not only saves time and resources, it motivates employees by giving them a sense of their value in the organization.