Open-Book Management Principle

This is the unconventional idea carried in 'The Economist' that firms are most effective if their accounts are left open for all their employees to see as and when they wish, at the same time as the employees are taught to understand better the full financial picture. Traditionally, only a handful of senior executives are made to feel responsible for whether a business makes money or not. Open-book management attempts to extend this feeling of responsibility to everybody in the organisation.

It is described by John Case, the man who claims to have invented the expression, as the idea “that companies do better when employees care not just about quality, efficiency or any other single performance variable, but about the same thing that senior managers are supposed to care about: the success of the business”. It spread the burden of P&L responsibility—the responsibility for the profit and loss account of a business unit that is generally given as a reward to rising managers—to everyone in the organisation. With open-book management, the idea is that everyone has a certain amount of P&L responsibility.