You want owners. You’re treating people like renters.

On the day I took over at IT Lab, the company was losing £65,000 a month. I got everyone in a room and told them.

Two people walked out. They thought we were going bust.

Which is a fairly good illustration of why founders don’t like doing this. You tell people the truth about the business, and some of them decide they would rather work somewhere else.

But consider the alternative. The company would still have been losing £65,000 a month. The difference is that I would have been trying to fix it with a room full of people who didn’t know what needed fixing.

Ninety days later we were at cash-flow break even. The team had built the plan and executed it themselves. Telling them hadn’t solved the problem. It had made it possible for them to help.

That distinction matters, because when a founder says they want people to “think like owners”, this is usually the bit they’ve left out.

Why does “think like an owner” fail?

Think about what you know as the owner. You know which customers make money, how much cash is in the bank, and what happens if next month’s sales don’t arrive. That knowledge affects the decisions you make all day.

Now imagine trying to make those decisions without it.

You might work very hard. You might care enormously. But you would still be guessing about things the owner takes for granted. And if working out how to improve profit brought you no benefit, why would that become your particular obsession?

Kaihan Krippendorff makes this point in his account of the Great Game of Business conference: companies ask people to play like owners while treating them like renters.

When people don’t act like owners, it is tempting to question their attitude. But look at the arrangement you’ve offered them first.

Are you asking them to take responsibility, or giving them the means to take it?

At Rackspace and Peer 1, I shared the profit and loss and the balance sheet with staff as part of the monthly management meeting. We went through the accounts, line by line. I did the same at IT Lab.

Did sharing the financials bring awkward questions? Of course it did. People were seeing things they hadn’t previously been able to ask about. If you want them to understand the business, those questions are the work, not an unfortunate side effect.

That gives employee engagement a practical meaning. People can see a problem, understand why it matters, and do something about it. You are no longer simply asking them to care more.

What is open book management?

There is a name for running a business this way: open book management. John Case coined the term in 1993, although Jack Stack had been putting it into practice at Springfield Remanufacturing since the early 1980s. I’ve had Stack on the podcast to talk about how he did it.

The name makes it sound like an exercise in disclosure. Open the accounts, show everyone the spreadsheet, job done.

It isn’t. There are three parts, and showing the numbers is only useful if you do the other two.

Part	What it does	What it costs you
Education	People learn how revenue, margin and cash work, and which decisions affect them.	Time spent explaining things you already understand.
Empowerment	They see the results in time to do something about them.	Letting people question the figures and act on what they learn.
A stake	Improving the result benefits them as well as you.	Agreeing the reward before you know how much it will cost.

The third part is worth dwelling on. A founder can look at a better margin and see more profit, a more valuable business, perhaps a different retirement. An employee on a fixed salary may see exactly the same pay for rather more effort.

That doesn’t make them disloyal. It means the improvement has a different value to each of you. A bonus or profit share gives them a reason to pursue it too.

Nor does “open book” mean every personal financial detail becomes public. James Ashford draws a useful line in Grow Fast Exit Big: share revenue, profit, margins, costs, trends and targets. Keep individual salaries and the owner’s drawings private.

Is sharing the numbers enough?

Suppose you put the profit and loss in front of the team tomorrow. What would you expect them to do differently?

If people don’t know the difference between profit and cash, handing them another spreadsheet changes nothing.

Start with one number they can understand and influence. Verne Harnish’s critical number is the one that, if you hit it, will have the biggest impact on the year. For a services firm, that might be cash collected. For a product firm, gross margin per unit.

Then work backwards. What changes that figure? Which of those things can the people in this room change? For many firms I coach, the useful starting point is cash, which is why I’ve set out the seven cash levers separately.

A team that understands the gap between sending an invoice and receiving the money has something to work on. A team told to “be more commercial” has to work out what you mean first.

There is a wider case for taking this seriously. Gallup’s State of the Global Workplace 2024 report estimates that low engagement costs the global economy $8.9 trillion a year. Its Q12 meta-analysis finds 23% higher profitability and 18% higher sales productivity in top-quartile engagement business units, with 21% lower turnover in high-turnover organisations.

What happens when people can see the score?

In 1983, International Harvester was closing a factory in Springfield, Missouri. Jack Stack and twelve other managers put in $100,000 of their own money, borrowed $8.9 million, and bought it, saving 119 jobs.

With that much debt, understanding the finances was hardly an optional extra. Stack made learning how the business worked part of working there.

That business became SRC Holdings: roughly 2,000 people, about $400 million in revenue, and 100% employee owned. Its share value gives some sense of what happened over time:

Now, SRC is an employee-owned business, so you might reasonably wonder whether this applies to a firm where the founder still owns the shares.

The National Center for Employee Ownership reports sales growth 2.21% a year above expectation in employee-owned companies practising open book management, and 1.66% where the companies weren’t employee owned. An earlier NCEO study, from 1986, found that highly participative companies grew 8 to 11% faster than expected.

The distinction matters: employee ownership and open book management aren’t the same thing. You don’t need a complicated share scheme to start teaching the numbers and paying people when the score moves.

You do have to track the right numbers, though. Profit can look encouraging while cash runs out. Getting cash flow right still matters, however openly you discuss the accounts.

What does open book management cost you?

The obvious cost is the bonus. The less obvious one is having to explain yourself.

Once people can see the accounts, they can ask why you spent that money, why a target was missed, or why the priorities have changed. Some questions will reveal that they don’t understand the figures. Others may reveal that you haven’t explained a decision very well.

Neither is a reason to stop showing them.

I would allow for three slow monthly meetings while people learn the vocabulary. If you expect a team to read a profit and loss fluently in week two, you may decide the method doesn’t work before you’ve actually taught it.

There is a more uncomfortable possibility too: people may understand you perfectly and dislike what they hear. That happened at IT Lab. Openness doesn’t guarantee that everyone will stay. It does let them decide with the facts in front of them.

You can ask finance to prepare the pack. You can’t ask them to establish, on your behalf, that difficult questions are welcome. That comes from how you respond when someone asks one. It belongs with the founder-CEO’s own responsibility for setting the standard.

How do you start open book management in 90 days?

You don’t need a new reporting system to begin. You need to decide what people will learn, what they can influence, and how they will benefit. I’d use the first ninety days to establish five things:

1. Choose the critical number. Cash collected, pipeline created or gross margin might be right for you. Explain why you’ve chosen it, who is responsible for it, and what the rest of the team can do to affect it.
2. Teach the accounts. Use three short sessions to explain how revenue becomes margin, how profit differs from cash, and where your critical number fits. Ask people to explain it back. Nodding is not much of a test.
3. Make room in the monthly meeting. Give the numbers twenty minutes, using the same pack in the same order. People should be able to compare this month with last month without learning a new presentation.
4. Agree the reward in advance. For example, a defined bonus could pay when the critical number beats an agreed quarterly target. Set the rules before the quarter begins, while neither side knows the result.
5. Keep discussing it. Sending the slides isn’t a substitute for the meeting. Ask what changed, why it changed, and what people think you should do next. That’s where you find out whether the teaching is working.

If designing the meeting and the reward is where you need help, here’s what business coaching actually involves. For the broader work around it, these eight ways to improve staff engagement cover more than the financial discussion.

Ninety days is enough to begin doing this regularly. It is not a sensible deadline for reproducing what Stack built over decades.

What will open book management not fix?

There are limits, of course. Giving people more information won’t help if the way you run the business prevents them from using it.

• A bad business model still needs fixing. If you lose money on what you sell, understanding the loss doesn’t make it profitable. It helps you see which problem needs solving.
• People still need permission to question you. You can invite them to challenge the accounts, but if you snap at the first person who does, they have learnt which instruction to believe.
• You still have to pay the promised reward. If the team meets the target and you find a reason not to pay, the next scheme starts with that experience, whatever the new rules say.

None of this replaces the other work of running a company. It changes who can take part in it. Before you conclude that people don’t want responsibility, it is worth asking how much room your arrangements have given them to take any.

Frequently asked questions

What does open book management mean?

Open book management is a way of running a company in which employees learn how its finances work, see the results regularly, and receive a reward for improving them. John Case named it in 1993; Jack Stack had been practising it at SRC since 1983. Disclosure alone is only one part of it.

In practice, the whole company might use one monthly meeting to look at cash collected, pipeline and a critical number against plan. The pack stays consistent, questions are welcome, and people discuss what to do next. Unlike an open-door policy, employees don’t have to ask for access. Unlike an annual presentation, the discussion happens while there is still time to affect the result.

Should I share salaries with my team?

No. You can share the profit and loss, balance sheet, margins, costs, trends and targets while keeping individual salaries and the owner’s drawings private. James Ashford makes that distinction in Grow Fast Exit Big, and it matches how I ran the monthly meeting. People need to see how the business makes money, not what their colleagues are paid.

The useful test is whether the information helps someone understand the business and make a better decision. It isn’t whether every private detail has been disclosed.

Does open book management work without employee ownership?

Yes. The NCEO reports sales growth 1.66% a year above expectation in companies using open book management without employee ownership, compared with 2.21% where the two were combined. You can give employees a financial stake through a bonus or profit share without giving them shares. Agree the reward before the year starts and pay it when the score moves.

If you later consider employee ownership, you will at least be having that conversation with people who already understand the accounts.

What is the first number I should share?

Choose a number that matters to the business and that the team can influence. Verne Harnish calls this the critical number: the one that, if you hit it, will have the biggest impact on the year. For many founder-led firms between a few million and fifty million in revenue, I’d start with cash collected.

Then ask someone outside finance to explain what would improve it. Their answer will tell you more about the teaching than asking whether everyone understood.

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If you want to choose the critical number, teach the accounts and agree a reward people can trust, book a call and bring last quarter’s numbers.

But you can answer the first question without me. If someone in your team wanted to make a better commercial decision tomorrow, would they have what they needed? Or would they still have to ask you?