Remodeler Greg Antonioli ran "a country club for carpenters" until he embraced open-book management, a move that shored up his company’s profits, changed its culture for the better, attracted a higher caliber of employees, laid the groundwork for a company-wide bonus system, made him more accountable as the owner, and strengthened the cohesiveness of his team.
Not that the transition was easy. In the six ensuing months after going open book, four of Antonioli’s carpenters left his company, Out of the Woods Construction & Cabinetry, of Arlington, Mass. Working in a high-accountability, track-every-dollar environment isn’t for everyone, he learned, especially those accustomed to the luxury of working at their own pace, where their only metric for success was the smile on clients’ faces.
But for the 13-member team he has today, Antonioli explained in a seminar at The Remodeling Show in Baltimore, the commitment to the company's bottom line is resolute. "They understand what they need to produce, they understand the value of overhead expenses, and they take a close look at every last line item."
Being open-book is fair, logical, and smart, Antonioli said. "How can I ask them to show up for work every day and solve problems – how can I empower them to do that, without showing them the numbers?"
Six Not So Easy Pieces
"Open book management is not just a fluffy, feel-good, sit-around-the-campfire and sing Kumbaya kind of thing," Antonioli said. "It’s very, very serious."
Here are some of Antonioli’s tips for going open book.
- Decide if it’s for you. Open-book management happens to be a perfect fit for Antonioli’s vision of a team-based, problem-solving, growth-oriented company that is less dependent on him personally. Obviously, you’ll need to be comfortable with shared decision-making, as well as with staff holding one another accountable for their performances – and you for your performance.
- Know your numbers. Many remodelers object to open-book management because they don't fully understand their numbers themselves, or they fear that opening the books to the team will undermine their confidence in the company. If you must, work with a financial expert to develop a complete P&L statement, a budget, and a tracking system as a starting point for going open book.
- Decide how open-book you want to be. Antonioli is so open-book that he’s willing to share his markup and pricing structure with his clients, along with some information as to what drives those numbers. His staff knows how much he pays himself, but they also know how hard he works. Besides, he notes, without understanding issues like overhead and labor burden, "they probably assume you’re taking home a lot more," especially if they just compare their hourly rate with your billing rate. Antonioli’s staff do not know one another's compensation, though they know there are three general wage rates for field labor, and the P&L statement includes one line item for all salaries.
- Hold "the big meeting." At the prompting of a peer, Antonioli called a company-wide meeting to announce the shift to open-book management. He literally tore up money in front of them, and said the days of throwing away money were gone. "I said, 'We are going open-book. You are going to understand the numbers, and I will teach you. We are going to have a company-wide bonus system, and you will be accountable to each other.'"
- Develop an annual budgeting process. At Out of the Woods, the process starts with a line-by-line analysis of the previous year’s profit-and-loss statement. Antonioli and key staff review existing goals and accomplishments, and discuss plans going forward. The annual budgeting process also includes a close look at line items in weekly sales and managers' meetings (also attended by two lead carpenters), a monthly all-staff meeting, and job "autopsies" after projects have fully closed out. This close review of profit margins and other numbers helps employees understand why they are – or are not – eligible for more money, and induces them to make the most of the tools, trucks, and other materials they have.
- Sharpen your hiring process. "When you explain the open-book culture to the right kind of people, they’re not going to want to work for anyone else," Antonioli said. At Out of the Woods, the entire staff interviews strong job candidates before officially inviting them into the workplace they call "the island." Being open-book also makes it easier to fire people, or in the case of this company, to “vote them off the island.”
There’s much more to Antonioli’s open-book system, including a bonus program that hasn’t paid out every quarter, but “the key is that there’s no mystery behind the bonuses. The crew fully understands why and there’s no mistrust,” he explained. "I like my employees. I have a great deal of respect for them," Antonioli concluded. He can’t imagine keeping them in the dark on company finances again.