The shift to open-book management.

• Position: Financial Executives Research Foundation study titled 'Open-Book Management: Creating an Ownership Culture'

"Take the padlocks off your financial data," says open-book management, an innovative strategy that advocates sharing financial information with employees to teach them to think and act like businessowners.

Sounds good, but what's it like to actually function as an open-book company? Find out in Open-Book Management: Creating an Ownership Culture, a new Financial Executives Research Foundation study by Thomas L. Barton, William G. Shenkir and Thomas N. Tyson. The study details how and why seven companies - ComSonics, GE Fanuc, Mid-States Technical Staffing Services, North American Signs, Physician Sales & Service, Plow & Hearth and Springfield ReManufacturing decided to adopt open-book management and obstacles they encountered along the way.

The first thing to know is that the philosophy is "nothing less than a seismic shift in a company's culture - a fundamental change in the relationship between a company and its employees," declares Shenkir. That's why, he adds, "There is no such thing as 'open-book management lite.' A company is either open book or it's not."

This is because open-book management requires a corporate culture of trust - trust that employees will use formerly classified financial information to do their jobs better. In return, they can expect financial rewards when the company is successful. For employees, it's a major shift in perspective from "hired hand" to "business owner." The challenge for senior management is to begin thinking of employees as partners rather than the "rank and file."

For that to happen, the CEO must champion open-book management and help create the open culture it requires. With the CEO's leadership, open-book management can work in every organization, according to Jay Burchfield, former president of The Great Game of Business, a division of Springfield ReManufacturing in Springfield, Mo. Burchfield believes the major tasks for the top management of an open-book organization are to be creative and to keep evolving. Adds Jack Stack, president of Springfield ReManufacturing and an early pioneer of open-book management, "The message the CEO sends when he gets involved in training is to tell the organization that things are constantly changing."

Loosening Up the CFO

But the CFO is no less important, the researchers stress, because he or she typically must become the coach and chief financial educator who helps employees make the transition. For example, Dawn Mahoney Cottrell, vice president of finance...