Give them the facts

Open-book management is key to building accountability in your organization


As a longtime sales and marketing consultant to roofing contractors, I always have advocated open-book management. To me, that means sharing financial statements and the financial condition of your company with your employees.

Obviously, not all contractors practice open-book management. I sometimes get pushback from contractors who tell me they don't want employees knowing how much the owner makes or how profitable a company is because then employees may expect raises.

But every time someone moves to open-book management, the same thing happens: Employees are shocked at how little the owner makes because usually they believe it's two or three times the actual amount. Employees are equally surprised to learn net profit is 5 or 10 percent. Many employees believe once materials and labor are paid, the rest of the price of the job goes in the boss's pocket.

If you think about it, this makes sense. If you're not practicing open-book management, how would employees know what your company's costs are? They know what direct costs are—materials and labor—but they often don't account for fixed and variable costs, payroll taxes, FICA, unemployment insurance, workers' compensation or liability insurance. And they don't factor in rent, equipment, office supplies or cell phone costs when considering a job's total price.

WEB
EXCLUSIVE