Open book management, or OBM, is a management style that gives employees access to all the company's financial numbers. When coupled with profit-based bonuses, it's supposed to make everyone more invested in the company's success.

Remodelers come to OBM for different reasons, but they all agree on a key point: When employees understand how their day-to-day decisions affect their wallets, they start to think like managers and are more willing to work together to make the business more profitable.

Talent Builder Ben Crawford, founder and president of Crawford Renovation, a luxury remodeler in Houston, sees OBM as crucial to a growing business. Crawford is a former executive with GE who left to start his own remodeling company. His success has been impressive: After just five years in business, Crawford Renovation has grown to $10 million in sales and has won several industry awards. But Crawford says that's just the beginning. When he opens a second operating unit this year (the new unit will specialize in kitchens and baths), it will be the first step of an ambitious expansion plan. “Our goal is to become a regional and then a national brand,” Crawford says.

Maintaining such growth requires, among other things, capable leaders. Crawford calls his company “an incubator to develop talent,” and spends one-third of his time training and coaching his staff of 12. He says that he couldn't develop these leaders without OBM. “The only way you can develop leaders is if you teach them to understand financial metrics,” he says.

Crawford teaches everyone on his staff to understand the cause-and-effect relationships between the financial and the production sides of the business. The staff meets every two weeks to review key numbers, such as cash on hand, job costs, overhead, expenses, and profits. He has analyzed the company cost structure so closely that everyone now knows it costs $12 per minute to stay in operation. That's $1 per minute, per employee.

Because the bonus plan is based on companywide profitability, everyone has a stake in reducing those costs, Crawford says. “It helps get our people emotionally, professionally, and personally invested in the company.”

Playing Together Getting everyone invested was also what attracted Jason Asmar to OBM. Asmar is a partner in The Burke Co., a Dallas remodeler with $1.7 million in annual revenues. When he took over the 46-year-old company a few years ago, his vision was to have everyone, from people in design all the way through construction, present a unified front to clients. But for this to happen, he realized that “everyone needs to know where the business is today, and where it's going.”

Much like Crawford, Asmar posts the company's financial goals, along with its annual revenue, cost of goods sold, gross profit, expenses, and net profit at monthly staff meetings. He treats the numbers as a scorecard: If the numbers show that Burke is meeting the goals it has set, then 20% of net profits get divided among employees; if not, then nobody gets a bonus. He says that it's a powerful motivator: “Everyone's feet are held to the fire by the other team members.”

You Decide Of course, if everyone in the boat is pulling in the same direction, there's less need to micromanage each crew member. For some remodelers this is the main attraction of OBM. It certainly was for Charlie Gallick, president of The Gallick Corp., a $1.6 million remodeler based near Washington, D.C., in Sterling, Va. Gallick likes to delegate as much of the day-to-day operations as possible so he can focus on estimating and selling, and he says that doing so has become a lot easier since he decided to go open book five years ago. “Before then, I had to do everything, whether it was ordering materials or calling the utility. I felt like a baby sitter,” he says. Now his work ends when he brings in a contract and turns the job over to the production people. With all financial information at their disposal, lead carpenters have the authority to make any decisions affecting their jobs, including what to charge for change orders.

In Gallick's case, delegation of authority also includes letting lead carpenters decide how to distribute the bonus money. He doesn't worry about fairness: with all employees able to see the numbers, leads have incentive to be evenhanded. “Not only can the lead reward good work, but [if he treats his employees right] they will want to work with him again,” Gallick says.