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A few years ago, I learned about Open Book Management and its wonderful benefits to organizations no matter the size, industry, and complexity.
If you google it, Wikipedia will say that the basis of open-book management is that the information received by employees should not only help them do their jobs effectively, but help them understand how the company is doing as a whole.
According to Case, "a company performs best when its people see themselves as partners in the business rather than as hired hands" (Case,1998 as cited in Pascarella, 1998). The technique is to give employees all relevant financial information about the company so they can make better decisions as workers. This information includes, but is not limited to, revenue, profit, cost of goods, cash flow and expenses.
In July, I had the pleasure of interviewing Shawn Plummer, the President/CEO of Food for the Hungry Canada based out of the Fraser Valley in British Columbia. FH Canada is one of the rare nonprofits that had tried and successfully benefited from the open book approach. It drove accountability, clarity, strategic focus, and innovation into their organization.
The transcript below is from Shawn’s own words describing their journey.
About FH Canada
FH Canada is a part of the global organization where the Canadian office is one of the affiliates. FH Canada operates in 8 countries: Cambodia, Bangladesh, Haiti, Guatemala, Ethiopia, Uganda, Burundi, and Rwanda.
FH Canada aims to graduate communities out of poverty one community at a time. We operate with an asset-based management approach, exploring what assets exist in the community and together, with local community leaders and families, determine where the gaps are. 95% are national staff with very few expats.
As for our strategy, community-owned development plans are set by local leaders. As for our exit strategy, within 10 years, if we collectively feel that the vision and targets have been reached and a sustainable plan is in place, we will exit from the community and celebrate together at the time of “graduation”. There is a commitment to mutual transformation between the communities being served and the Canadian partners (whether churches, investors, business partners, and other supporting partners).
I was hired in 2010 to work on partnership development, for 8 years in fundraising, donor relations, and child sponsor acquisition. I became the President/CEO in late 2017.
There were some issues in the organization back in 2010 that needed to be addressed.
We lacked a strong brand so the whole practice of evaluating who we are, who is our audience, who is our market in Canada was stemming from that weakness. Ben Hoogendorn, the former President thought of hiring an executive coach to help our senior leadership team implement the Rockefeller Habits and then his successor, Bernie Willock, initiated the open book management process. This was sold to the Board and then changes slowly happened.
Origins of Open Book Management for FH Canada
Before, our strategic plan was for 3 years and 15 pages long that no one read. The coach guided us through a process that proved to be beneficial. There were two books that provided the inspiration: 1) Scaling up: practicing the Rockefeller Habits by Vernie Harnish, and 2) The Great Game of Business by Jack Stack. Scaling Up provided the 4 strategic elements: people, strategy, execution, and cash.
The result was a one-page Strategic Plan. It has driven clarity, focus and being able to say No! to a lot of things that do not align with the plan.
Bernie took on and implemented the open data management process because he had been doing that in his company before joining FH Canada. Before, only a few people were looking at the numbers. The rest of our leadership team weren’t always clear as to our annual targets, how to effectively monitor/track them, and that included cash management.
Our meeting rhythms have changed too. At the start of each month we set monthly projections for revenue and expenses. Each member of our team has a budget and expense line to watch. We analyze our Profit & Loss (P&L) weekly so we have a good idea where our cash is at when we look at our month end actuals.
The cultural shift was having a staff name beside each revenue and expense line and adding a layer of accountability. Being responsible for monitoring the numbers and knowing why those numbers rise or fall is another thing so we look at trends. Now, staff have a voice at the table and can challenge the expenses or challenge the return on investment when we’re considering new opportunities.
We started having fun keeping score and we’ve made huge progress as a team over the past 3 years.!
Results /impact in the field and your partners/stakeholders
the results are clear: One of our big goals is to always increase the % that we can get to the field in the 8 countries that we partner with.
There is a huge improvement in knowing where our cash is going and watching the number closely, anticipating needs and planning for contingencies.
This involves greater clarity, focus, and has improved our communication and service to our partners. Our partners are very involved in the process. There are more frank discussions about monitoring and evaluation because we know where we are at.
I thought we could roll out open book management much quicker than we did but we needed training in the beginning and it took us over a year to get things integrated.
It was a big cultural shift-having your name with a revenue target + expense line and it was daunting in the beginning. First, it felt like a competition but later one, it drove us to be better teammates. It made us look to where the growth opportunities are.
FH Canada have brought more partnerships-more accountability, greater clarity and focus and a clear BHAG (Big, Hairy, Audacious Goal) of graduating 150 communities out of poverty by 2029.
How can you encourage other nonprofits to be more open and accountable?
I would encourage them to read the two books that influenced our current business practices.
Consider using an executive coach to help build a strategic plan for your organization.
They need to operate as a business - people, strategy, execution, cash. There is reason enough to do this because of the distrust between nonprofits and business.
It was painful in the beginning but it reaped many dividends. Once employees understood, they can make predictions and they can bring questions and answers to the management team. Other nonprofits can see this as an investment worth their time and energy.
Nonprofits have to have a motivated CEO and management team plus a supportive board that encourages this type of intentional strategic planning. There has to be a deep desire for change within the organization and a willingness to do the hard work to get to a place of sustainability
If you're interested to deep dive into your strategy, change, and engagement issues, reach out to me at email@example.com. Don't wait for the perfect time, situation, or budget.
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