Open-Book Management, Motivation, and Progress

For the last three months I’ve really been focused on motivation in the workplace. I’ve settled on a few main themes with particular emphasis on the ability to make progress. When people are committed to a goal, every step toward that goal is rewarding. It’s kinda like football. For every offensive possession the goal is to score a touchdown. Those six points are an emotional revelation.

However, the path to a touchdown is rarely one play. Usually, the score is a series of plays, gobbling up portions of the field chunks at a time resulting in first downs. It could be a running play, a pass play, or a creative trick play. These first down benchmarks are rewarding as well. They show progress to the overall goal of a touchdown.

On is a blog in the entrepreneur blog called You’re the Boss. Today I read an entry by Jack Stack titled Starting Over in Lexington: Turning the Plant on Its Head which describes the success of an implementation of something called Open-Book Management. I probably should have heard about it prior to now, but I’m fascinated by the idea, especially as it pertains to motivation.

Open-Book Management is a management style where the financial aspects of the company – costs of good sold, revenue, profit, cash flow, and so on – are made available to the employees of a company for consideration as they perform their tasks. The theory is that when people know how what they are doing affects the bottom line of a company, they will become more invested in changing the bottom line: they won’t be simple hired hands. The referenced blog post provides some great anecdotal evidence of this.

As Rob and I walked the shop floor, he told me story after story of how people in the plant — not the management team – were making the biggest difference. Because managing the cost of parts and materials is so central to the success of a re-manufacturing business, the associates were completely rethinking how they went about their jobs on a daily basis. They kept coming up with new ways to save and reuse materials – a savings that goes right to their bottom line.

Tony Johnson, a machinist, after learning how much it cost to outsource the machining of engine blocks, found a way to do it himself. Rick Draper, another machinist, figured out a way to use scrap material from used engine cylinder liners to make sleeves used in repairing transmission parts — rather than buying new sleeves.

In fact, the employees figured out so many ways to avoid using new parts that they created a whole new problem: They were buying and returning too many new parts, which was becoming a big hassle for the planners and parts-handling team. Through the efforts of assemblers like Paul Carrico, who cut his returns down to two or fewer per job, overall returns have now been cut by 70 percent over the last three months – reducing costs, increasing efficiency and improving cash flow.


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