Ross School professor studies how to drive numbers

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Is it possible to get your front-line staff to see every transaction like the CEO would?

It seems so, and it has huge benefits. Stephen M. Ross School of Business professor Wayne Baker has studied how employees at some top companies understand how their jobs drive the numbers — an awareness that brings a clear sense of mission and produces better results.

It’s a practice known as open-book finance and used by more than 4,000 companies around the world, including Southwest Airlines, Harley-Davidson, and Whole Foods. Baker has researched open-book finance at several organizations and published a related case study.

He will lead a session on the topic at the Positive Business Conference that’s scheduled for May 14-15 at the Ross School.

Wayne Baker will lead a session on open-book finance at the Positive Business Conference that’s scheduled for May 14-15 at the Ross School.

“There’s always this assumption that finance exists ‘out there,’ disconnected from operations and disconnected from sales and marketing,” says Baker, Robert P.Thome Professor of Management and Organizations.

“An interesting question to ask is: Who creates the financial numbers in your organization? The answer you usually get is the CFO or accountants. But the truth is that everyone is creating the numbers. Everyone takes action that affects those numbers.”

The National Center for Employee Ownership found in a study that companies using open-book finance grew faster than their competitors, and Denison Consulting found that open-book companies ranked in the 92nd percentile on 12 work culture indices.

Implementing open-book finance is more than letting employees see the financial statements. When done right, it links financial outcomes with the individual operations that create the numbers. It actively connects the macro to the micro, and anyone can learn it.

How does it work? Start small, Baker says. Get people thinking about business as a great game, where everyone knows the rules, has a stake in the outcome, and enjoys a collective reward if the game is won. Some companies enjoy success starting with mini-games to solve particular problems.

It’s also a good idea for a company considering open-book finance to visit or learn from companies that have run it.

“When an 18-year-old new employee knows all of the key metrics of the business as well as the CEO, you can expect an extraordinarily energized workplace and better results,” Baker says.

Q & A

What moment in the classroom or lab stands out as the most memorable?

The magic show and musical performances by the students in my MBA course!  This was their reward for achieving a high target we set for creating a positively deviant classroom environment.

What can’t you live without?

My family.

What is your favorite spot on campus?

The Cube — it brings back memories of my son when he was little and he would push and push until it spun.

What inspires you?

 My son growing up.

What are you currently reading?

David McCullough’s biography of Harry S. Truman.

Who had the greatest influence on your career path?

My college English teacher, who taught me about writing well.

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