When you started your landscaping business you did sales, marketing, labor in the field, etc. As you grew you delegated and hired employees to fill roles within your business, and eventually you may have built out your business into numerous divisions and locations. I talk a lot about separating financials based on serve-lines and locations, but this is just the start. The goal is to obtain this accounting data and financial KPI’s, and then use this information to hold your team accountable. The numbers are objective, so it becomes a great foundation for many forms of management methods. What I see work well is open-book management, and many of the businesses I work with use this method.
Open-book management is the business practice of creating transparency through sharing financial information with your team. This system gets the team communicating and the end result is that everyone in the company knows exactly what they need to do to hit their goals.
Open-book management doesn’t mean that you need to show all your financial data to employees, like specific salaries, net profits, etc. As the business owner you have the option to leave out any information that you don’t feel comfortable with sharing. For example, your operations manager may oversee 3 crews. It may not be relevant or necessary to share overhead expenses, or other expenses that are not related to productivity and efficiency related to the 3 crews. Sharing KPI’s like gross margin or labor to revenue ratio’s are great indicators to the performance of the 3 crews. Get specific into the metrics that show you the performance of the division, and pass on this data to your team.
This system becomes a game for employees, and can help to build a great company culture. Using open-book management combined with bonuses/incentives for great results, is a great way to motivate and retain employees. Open book management will empower your team to think and act in an ownership mindset. Every team member is personally invested to their part in staying on plan, whether its ways to cut costs or provide exceptional services.
Open-book management is a great system, but be sure to use the right KPI’s and accurate financial reports when following through with it!