Springfield ReManufacturing Corp.'s President and CEO Jack Stack had his hands full. Of the seven divisions in the company's Melrose Park, Mo., plant, he was assigned the one ranked dead last in productivity. He had an idea for turning it around: Give each foreman daily productivity statistics for his or her division, and then compare the results to those of the other plant divisions. Three months after Stack opened the books to his foremen, the division went from last place to first place in the plant's productivity rankings.
Cause to Celebrate Impressed by Stack's results, International Harvester, then the parent company of SRC, assigned him to its Springfield ReManufacturing division, a plant that had lost $2 million in the previous fiscal year. Harvester gave Stack six months to turn around or shut down the plant. To get things back on track, Stack chose three goals (or "accountabilities," as he called them): product quality, housekeeping, and safety. Then, he got the employees involved.
When the plant went 100,000 hours without an accident, Stack closed it for a day and held a monumental beer bust, complete with a parade of forklifts trailing crepe paper and fire extinguisher-toting employees marching to the theme song from Rocky. Departments exceeded their production goals time and time again, and within nine months, SRC had made a $250,000 profit.
In the more than five years since Stack's arrival at SRC, sales have grown by leaps and bounds. In the company's first fiscal year (1984), revenues were $16 million; 10 years later, they were $83 million. By the mid-1990s, revenues exceeded $100 million. And SRC employees own 80 percent of the company stock.
Open-Book Success Story Much of the company's success is due to the three tenets of open-book management that Stack introduced. First, every employee sees--and learns to understand--the company's financials, along with all the other numbers critical to tracking business performance. Numbers, ratios, charts, and graphs are distributed and posted to ensure that employees have full access to them. The company then trains its employees to compare projections against actual results and to understand whether that means the company is making money, losing money, or just doing OK.
Next, SRC employees learn that part of their job is to move the numbers in the right direction. Every employee has a part in helping the company make its numbers. In other words, people understand how their performance affects the company's goals.
Third, employees have a direct stake in the company's success through profit sharing. If the company makes no profit, employees not only feel the pinch, they have to take part of the responsibility.
"People ... talk about trying to create job security," says Stack. "But the only measurement of job security is in the balance sheet."
1. Information is power-Teach all your employees how the business works, and you'll get them focused on making it a success.
2. Encourage people to act on their ideas-Give them the authority and resources to pursue their ideas and support them, even when they make mistakes.
3. Share the wealth when you have it--The more you reward employees financially for acting in the company's best interests, the better results you will get.