January 2010 | dentalproductsreport.com Think like a CEO Should you open that door? The pros and cons of open book management. by Amy Morgan, CEO of the Pride Institute Amy Morgan is CEO of the Pride Institute. With Pride since 1993, she is a sought-after educator who still consults one-on-one with practices.
January 2010 | dentalproductsreport.com
Think like a CEO
Should you open that door?
The pros and cons of open book management.
by Amy Morgan, CEO of the Pride Institute
Amy Morgan is CEO of the Pride Institute. With Pride since 1993, she is a sought-after educator who still consults one-on-one with practices.
You can’t talk strategic planning without talking statistical interpretation of success, and you can’t talk statistics all by yourself. In the small business of dentistry, it is essential to keep the staff educated and engaged in your vision, values and strategies. That requires forwarding the concept of open book management as a key practice management tool.
An open book?
Open book management is when businesses share key financial and strategic details with employees.
If you are like most leaders, you probably have some concerns about this method. At best, employees rarely find numbers compelling (unless they’re accountants). At worst, poorly executed numbers-sharing can result in competitiveness, frustration and mistrust. So why try?
We know that numbers by themselves, when not tied to the bigger picture of accomplishment of goals, can feel empty. The numbers lack purpose and therefore passion. When done well, the numbers can create a self-motivated, inspired team engaged in the practice because they feel informed and in control. Jack Welch, former General Electric CEO, said it this way, “Workers in an open book setting feel a greater sense of ownership and urgency, often sparking improvements in processes and productivity, because they are all in the business effort together.”
That alone makes this worth rising above the concerns.
Helpful Hint No. 1
Teach the business of dentistry (not accounting)
This is not prep for a CPA test. You are inviting them to learn about where the practice is going so they can contribute in significant ways and be acknowledged for their efforts.
Team training can simply mean sitting down with your staff to identify the key statistics that need to be tracked and their relevance as compared to the practice’s vision and goals for productivity, viability and quality of experience. In an article in Inc. magazine, CEO Jay Goltz described how he introduced his team to the concept of expense management by leading a role play. His VP posed as a customer and, using a fist full of over-sized bills, handed a volunteer employee $100 to make a purchase. Goltz then began to lead a brainstorm with his team, asking questions like, “What do you think our ads in the Yellow Pages cost? Rent? Health insurance?” They would then break it down to guesstimates on how each cost related to the individual $100 purchase, and take the appropriate amount of dollar bills back. In the end, the volunteer was left with a paltry $5. Per Goltz, “It was easy for employees to see that the difference between making money and losing money is sliver thin.”
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What an elegant way to introduce a team to what can be a complex topic! Imagine doing the same with a crown prep or an implant. That would be a tremendous learning opportunity for both the dentist and the team.
Helpful Hint No. 2
Give your team the freedom to act
Your team doesn’t worry about expense management, because they haven’t made the connection between the statistics and what they can do to react and create positive change.
If your goal is to keep total employee expense at less than 30% of total office production and the staff is asking for a benefits increase, what average monthly production figure would support the increase? Once you have the new goal broken down to production per hour, brainstorm with team members about what they can do from their job description to help get there. Check for follow-through to ensure success.
A team that feels empowered to act on behalf of the strategic plan is a team that takes action.
Helpful Hint No. 3
Share the wealth
For open book management to work, each employee must have a financial stake in how the business performs. This isn’t a hostage situation, where every time the practice profits by a dollar, the team demands two. Self-directed team members who respect and honor their leaders, want them to benefit and to re-invest in the practice as well.
For an open book compensation model to be effective, all wage, benefit and potential rewards must be tied to increases in profitability and individual demonstrated skill (merit). This can only be monitored through statistical interpretations of success, which bring us back to why team members should participate in statistical analysis.
If you want an inspired team willing to take creative risks and work collaboratively to achieve consensus for practice improvements, there must be the potential for personal reward.