Too many cooks spoil the books.

• Author: Falconi, Robert R.
• Position: Open-book management - Says Who?

Eight months ago, one of our newly "empowered" cost-center managers, who happens to also be an engineer, informed me he was leasing a new color copier for three years and he'd pay for it by charging internal users for every copy made. He envisioned selling the service to outside users and had even made revenue projections. "Does the government have any rules against making too much money?" he asked me with a big grin.

I told him it was my experience that such projections are rarely met, especially when you introduce something new into an established company. I suggested that, if he insisted on going ahead with the project, we buy the copier outright since the financing costs on a lease like this are very high. But he was adamant that we charge ahead, especially since the salesman said we had to act now to get the deal we were getting. (I swear this is true.)

Normally at this point I would have spoken to my boss about the project before the manager went any further, but he irritated me - and I had to write this article - so I let the chips fall where they may. What followed was a lesson in one of the latest business fads - open-book management.

The premise behind open-book management is relatively simple: Make the pursuit of profits the responsibility of all employees, not just senior management, and do it by sharing the company's financial information with every person on your staff, explaining how each can contribute to making the company more profitable.

It sounds like a great idea, so what could be wrong with it? Plenty.

For starters, have you ever tried to explain financial and accounting reports to the nonfinancial executives in your organization? Throw in enough terms like overhead, G&A, marginal costing, contribution to indirects, idle capacity, capital leases vs. operating leases and depreciation, and you lose them very quickly. If you believe the old adage that cream rises to the top, then imagine explaining these concepts several layers down. For that matter, imagine the other executives explaining their jobs to you. Our company is in the anti-submarine warfare business. We help the Navy track enemy subs. I wouldn't even pretend to understand how our engineers do this.

These days, most jobs - including finance and accounting - require specialized training or education. It's not something people can just "pick up," regardless of how much they want to. The point is it would be very difficult and time-consuming, if not impossible, to...