Great Game reinvents employee mindsets

It's been 10 years since Juliet Mee first heard of SRC Holdings Corp. CEO Jack Stack's book, "The Great Game of Business." It was five more years before Mee really began to incorporate Stack's open-book management practices into her own business, Professional Massage Training Center Inc. She says playing the game has changed the way she and her employees work.

"We went from people thinking of themselves as educators who did a job, to realizing that what they did had an impact beyond the learning curve of the students," she said.

The playbook

Co-authored by Stack and Bo Burlingham and published in 1994, "The Great Game of Business" shares its name with a Springfield company dedicated to its concepts.

The Great Game of Business Inc. operates under the SRC Holdings umbrella, offering training, seminars and conferences, as well as publications aimed to help with open-book practices. These entail sharing company financial data with all employees and empowering them to affect those numbers.

As Mee found out, implementation isn't a quick and easy process. Early on, she ran into some roadblocks, including a financial administrator who was opposed to sharing financial information with employees. Once Mee brought on a financial director who was on board with the practice, the books needed to be set up differently for the game to work.

"We were figuring out what should be part of each category and ... what really, really drove the numbers," she said. "We thought we knew, but when you start getting into it, you start asking 'why' in a different way."

Open-book management involves a lot more than simply sharing financial information with employees, said Great Game President Rich Armstrong.

"With The Great Game of Business, employees are not handed the numbers; they help produce them," he said. "It's about fully engaging employees in the business by teaching them how the business works and what is critical to success."

At an open-book company, Armstrong said, all employees are taught to read profit-and-loss statements and to understand what drives profitability. They're also taught how assets are used, how cash is generated, and how their day-to-day actions contribute to the success of the business.

Mee's Great Game coach demonstrated how industry data can be used to weigh the success of a business, and that data also helped her realize the need to budget for marketing expenses.

"We were spending literally zero on marketing and we learned that we needed to spend a substantial amount or our good ride wasn't going to last," she said.

Track the financials

All but one of the 15 stockholders at Springfield-based International Division Inc., or InDiv, are employees, said President José Sala, but it wasn't until the company started playing Great Game six months ago that he noticed staff members thinking like business owners.

One of the first principles of the Great Game, Armstrong said, is for management to know the rules of business and teach them to all employees.

Mee's critical numbers include enrollment and retention numbers, while Sala's at InDiv are focused on sales and inventory.

Some training on financials is necessary.

Sala said he asked everyone to read Stack's book, and the staff also participated in a Great Game program called Yo-Yo Company.

"It takes employees through the process of making yo-yos, and gives them an understanding of terminology and how money flows through a business," Armstrong said.

Once employees understand how to read profit-and-loss statements, they have to see them regularly. They also have to see how their work affects those statements.

Every line item counts, and weekly employee gatherings - huddles - help keep everyone focused on the financials.

"Every Wednesday, we huddle, and the whole meeting is about numbers. ... If it's not a number, it doesn't go into the meeting," Mee said.

Employees also need the power to change the numbers they can control.

"The person that has to make the most copies is in charge of the copier lease, ordering paper, and anything else related to copying," she said.

Let the games begin

Critical numbers vary by company and are identified by looking at weaknesses, opportunities or threats, Armstrong said.

"The critical number defines winning," he added. "It rallies your people around a common goal and a focus on what's most important and critical to the success of your business - not for all time, but just for the next six to 12 months."

The critical number also is tied to a bonus program through which employees can receive quarterly bonuses based on meeting the statistical goals.

"That bonus can be as much as 1 (percent) to 20 percent of their annual salary," Armstrong said. "The important thing to think about is that the bonuses are self-funded, (and paid) out of the critical number."

Along with critical goals, there are short-term, minigames companies play.

Sala is still in the process of creating minigames, and they will have different objectives. He said one will be very simple, aimed at getting employees to show up on time, and another will encourage sales staff to be more accurate and consistent in forecasting.

Rewards for minigames can vary, and they don't have to be financial, Armstrong said.

"(They) can be as simple as lottery tickets, movie tickets, dinner out. We do a lot of cookouts," he said.

The scorecard

While InDiv and Professional Massage Training Center are at different stages of playing the Great Game, they have seen improvements.

InDiv's first critical number, Sala said, was based on liquidity, which the company measures through a cash conversion cycle that once averaged between 50 and 90 days. The goal was to average 30 days, and so far, Sala said, the average has been in the 20s. Mee said a "huge deal" for her company was being able to get payroll and benefits down to a target of 35 percent of gross income.

Mee believes the practice of open-book management helped her company to weather the recession.

"(Employees) know why we can't hire, why they can't get a raise, why we need more students or why expenses went up when we had a large class," she said.[[In-content Ad]]