Monday, June 20, 2011

Playing Poker in the Dark

Suppose you're at a poker table, but it's set up quite a bit differently than what is normal. You can't see the other players. You're dealt cards. You bet on the best hand you can possibly make. Your chips go into a hole in the table. You can't see what anyone else has bet. You don't know how big the pot is. You don't know if the others think they have a great hand, or they've folded. You bet based on the two pair, three-of-a-kind or, much worse, the high card you're holding.

When the hand is over, your agent will smile or frown. This might be your only clue to whether you're doing okay or not. As you continue to play, the agent will feed your more chips to bet. He might give you a few or a lot. This might be another clue to how well you're doing. If he or she only gives you a few, you might think you haven't been winning and you should maybe wait till you have a really good hand before you bet more than the ante. If you're being fed quite a few chips, you might think you have been winning, even with a pair of queens or jacks.

However, you really don't know for sure. Maybe you're agent just mortgaged your house to get you more stakes money. In fact, your agent might be ready to fire you and represent another player.

This is a sorry way to play poker.

Unfortunately, this is the way it is for most employees. They're playing a game and don't know if they're winning or not. They know how good their hands are (productivity, customer satisfaction, etc.) but they don't know if they're winning. They know if the purse strings are a little looser for investments or not, but that doesn't necessarily indicate if they're winning or not either. It can be really confusing when mixed messages are given (smiles, good performance appraisals, efficiency increases yet the investment is stingy).

Most private businesses don't share any financial information out of a fear of questions or fear of saying that the business is succeeding (and the employees will want more), or that it's failing and people will leave.

For those companies that have practiced open book management, they've found that the business has grown. People want to know if they're contributing or not to success; they want to know that what they're doing is increasing job security and making a difference. They want to be associated with a winning company. Open book management is the way for them to know if they're contributing to a winning team or not.

A few companies that practice open book management have outgrown Berkshire Hathaway in share value. Others have left the Standard and Poor's 500 in the dust. Those that work on employee engagement but don't practice open book management have grown at similar rates to the stock market.

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