Maverick by Ricardo Semler was an eye-opening read for me a while back. It is a detailed account of his (highly profitable) company which is a radical departure from the traditional workplace. Rework (published over 20 years later) reads like an illustrated summary of many of Semler’s ideas.
One of the most radical ideas in the book is that every employee has full access to the company’s financial records. Nothing is sacred, not how much the owner takes from the company or how much money your boss makes. This sort of information is carefully guarded at most companies. At Lincoln Loop, it’s different.
Shortly after reading Maverick, I asked everyone for permission to open our books (including their pay history) within the company. After a brief discussion, we unanimously decided to try it out. I migrated everything to Xero and setup everyone as a user in the system.
One of my biggest goals with opening the books was to prove that every dollar was accounted for in a fair and equitable manner and cut-off any doubts to the contrary. It’s far too common to hear people gripe about what a killing the company’s owners must be making while they are only left with peanuts. In reality, the economics of a consulting company are far less glamorous. With open books, there’s no hiding anything and we have no secrets.
Opening the books resulted in a few other benefits as well. For one, I’m no longer the gatekeeper on that data. Folks that are really interested in the numbers can check them regularly without having to ask for permission. Children need to ask for permission. When adults need to ask for permission to see how the company’s doing, it’s a sign something is wrong.
In addition, people are far more comfortable with their salaries when they can see how the sausage is made. The discussions have shifted from, “I need to be making more money.” to the more apropos, “How do we increase profits so I can make more money?” The first question is hard to answer when the employee has no clue about the company’s finances. The second question starts a thoughtful discussion that helps everyone in the end.
Open books are just one way we make sure we’re all in this together instead of setting up a stingy owner vs. greedy employee situation.
My second takeaway from Maverick was letting everyone set their own salaries, but I’ll leave that for another post…