How to get employees to behave like business owners

The quickest way for companies to improve profits and growth isn’t through innovation or acquisitions, according to ongoing research by Harvard Business School Professor Dennis Campbell. Rather, it’s through actively creating a culture where employees think, act and feel like owners.

“Most companies treat their employees like hired hands,” says Campbell in a recent Harvard Business School article. “They just pay them for a certain number of hours of work.” The ownership mindset, he explains, doesn’t have to happen only at the ownership level.

As we work with the CFOs and finance departments at community banks and credit unions, we can see that many are intentionally and methodically developing a culture where employees feel like they have a stake in the institution’s success. Whether they realize it or not, they are practicing a principle similar to open-book management.

What is “open-book” management?

According to John Case, who coined the phrase and wrote a book about it, open-book management is built upon a commitment to financial transparency. This transparency is more than just sharing top-down financial information with employees; it’s about giving employees access to bottom-up numbers, the authority to make decisions, and responsibility for achieving results.

Financial institutions with cloud-based performance-management systems like Banker’s Dashboard have a distinct advantage in creating this kind of culture. Unlike institutions that rely on spreadsheets for financial management, those with cloud-based systems can get all teams working from a central source of up-to-date financial information any time, from anywhere. Each individual can see how their efforts move the needle on KPIs.

In theory, open-book management means that all employees, from the C-suite to the teller line, would have access to performance data. The reality is that it takes some institutions time to get comfortable expanding access beyond the executive leadership team. 

Begin with branch managers

At a minimum, it makes good, strategic sense to ask branch managers to take ownership of their branches. Giving them accountability and authority increases engagement and results. But to be successful, branch managers must have access to the daily performance activities of the branch.

To enhance efficiency and profitability, branch managers should consider using the institution’s performance-management system to monitor and manage:

• Branch expenses: Are they booked in the correct cost center? Are they higher than expected? If so, why? Are the allocations correct?
• Branch deposits: What is the deposit mix and pricing? What will be the impact of rising rates? Which products are doing best (or worst), and why?
• Branch loans: What is maturing? What is the weighted average rate? How are loan officers performing? Which products are selling best right now?
• Comparison to other branches: Based on various metrics, how does our branch compare to others in the system? Are there best practices to share? How can our location become/stay the top performer?

Keep expanding the circle

In a perfect open-book management scenario, every employee would be logging in to the institution’s performance-management system (with the appropriate permissions, of course) and actively engaging in helping the institution make money.

If this approach isn’t realistic right now, start with your branch managers. Once you see what a positive impact this has, then think about granting access to all your loan officers, cost-center owners, and even your board members.

If you would like help getting additional users up and running on Banker’s Dashboard, please send us a note at performancemanagement@deluxe.com.