Imagine you are playing in a championship basketball game. You’re sweating your tail off - running the full court, getting the ball to the open man and crashing the boards for rebounds. But you’re not sure if you are winning the game and neither are your teammates. The scoreboard has been blocked up and your coach won’t tell you the score.
Imagine you are playing in a championship basketball game. You’re
sweating your tail off - running the full court, getting the ball to the
open man and crashing the boards for rebounds. But you’re not sure if
you are winning the game and neither are your teammates. The scoreboard
has been blocked up and your coach won’t tell you the score.
Sadly, that’s the way most public relations agencies manage their
The agency’s financial numbers - how much was billed last month, what
the overall expenses were, is the agency making money - are all closely
guarded by the ’top dogs’ and kept hidden from the staff.
Three years ago, I read a book called The Great Game of Business by Jack
Stack. It described how he used ’open-book management’ to turn around
the Springfield ReManufacturing Corporation. Management shared all the
company’s numbers with all employees - from the janitors to top
management - and taught them to understand income statements, cash flow
analyses and balance sheets. And the company thrived!
Could ’open-book management’ work for a PR firm? Back in 1997, we
decided to give it a try. Briefly, here’s how it works:
- All our key financial numbers - retainer and project billings,
corporate expenses, non-reimbursable expenses by individual clients -
are shared in a four-page spreadsheet at our monthly staff meeting.
- A ’CFO for the Day’ presents the numbers and a short analysis of
People get creative. One account supervisor created a pie chart to
explain the expense picture - and she used a real pie. We rotate this
responsibility so everyone (from our EVP to the receptionist) gets a
chance to present and analyze the numbers.
- Finally, we want to make sure everyone has ’some skin in the game.’
When we reach a certain level of profit, we declare a win and 30% of the
profits are distributed across the company. Last year, the company’s
’wins’ put an additional five weeks of salary into everyone’s
You might say: ’Gee, this sounds like a lot of work. Is there really a
payoff at the end of the day?’ You bet there is. In an open-book company
every employee learns to understand the company’s financial numbers. The
staff learn that, whatever else they do, part of their job is to move
those numbers in the right direction. If the business is profitable,
they get a cut of the action.
The real benefit is a dramatic change in the agency’s culture. People
stop thinking of themselves as hired hands and start behaving like
business owners - which is exactly what they are.
- Andrew T. Levine is president of Development Counsellors