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Open-Book Management

Open-book management (OBM) refers to a system in which a company fully shares its financial status with its employees, who then become active partners in a synchronized effort to optimize future financial performance. OBM offers informational transparency and facilitates employee voice.

The origins of OBM can be traced to Springfield ReManufacturing Corporation (SRC). Formerly a failing division of International Harvester, SRC was purchased in 1983 by its plant manager, Jack Stack, and 13 other executives. They paid $9 million for the plant, depositing $100,000 as a down payment and amassing a debt-to-equity ratio of 89:1. Recognizing that any financial error would cause bankruptcy, Stack decided to keep all employees informed about the company’s ongoing financial status. John Case subsequently termed this approach open-book management. Now a ...

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