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Open-Book Management at Albums, Inc.

One of the lessons of open-book management is the importance of small games. These games set objectives within work areas. Employees track and post progress towards the objectives, getting some kind of reward--usually something fun--if the goals are met. These small games accomplish a number of purposes. Obviously, they help the company to make more money, but they also make work more fun for people, help teach people business and team skills, and provide a starting point for understanding more complex company financials. One of the more creative practitioners of the art of the small game is Albums, Inc., a distributor of photographic supplies based in Brookpark, Ohio, a Cleveland suburb. The company set up an ESOP in 1989 to provide a market for family owners. It employs 152 people in five locations around the country. Most employees are high-school educated and in their 20s. The company was started in a garage in 1975 and grew very quickly. In 1993, Peter Cardello was promoted from the general manager’s position in Atlanta to CEO. Cardello faced some major challenges. The recession had hit the company hard, causing its first loss ever. Cardello also believed the new ESOP required a different and much more participative management style than was the case under the founder.

The Beginning

Cardello started making changes, leading to a more formal conversion to open-book management in 1996. Monthly financial statements are shared at meetings in each location every month. Only salaries are kept private. To make the meetings more fun, there is a $25 reward for people who can answer financial questions at the meeting. People can either "pass" or "play" in the game. At first, most people passed, but now most play. The monthly meetings, however, are just the start. Employees can also design small games. They submit a plan to management, justifying the need for the game and how playing it can help improve company performance. Cardello says the results have been impressive. Turnover has been reduced dramatically, employee trust (as measured by surveys) is up, and profits are strong. In fact, the company made $1 million in 1997, and distributed $250,000 of it in bonuses.

The Sales Game

The sales department plays Gilbert's Gas-n-Go Station. At the unleaded pump, total sales for the month are divided by the number of orders ("gallons") for the month, resulting in a monthly average number ("price per gallon"). The super-unleaded pump computes the daily orders divided by the number of sales to compute the average daily sale (the "price per gallon" for daily sales). The goal is to keep the daily average per unit sale price higher than the monthly average. If the number of days the goal is met in the current month exceeds the number of days this was accomplished in the prior month, the entire department gets a free lunch.

The Receiving Game

This game aims to help keep shelves stocked properly so orders can be filled promptly and efficiently. So the receiving department created a game in which a climber has to climb a 31-step mountain. A piece of paper next to the climber posts supplies that order fillers did not have available for that day. Every day the sheet is blank, the climber moves up a step; every day something is written, the climber stays in place. If something is in the warehouse but not on the shelf, the climber steps down a step. As soon as the climber climbs the 31 steps, the department gets to leave two hours early.

The Branch Shipping Department Game

To help improve shipping efficiency to branches, a game was created to measure shipping errors, billing errors, damaged goods, and short shipments. Each branch location is considered a player in a golf game, with each hole representing a week of the month. The percentage of errors translates into a score for the hole (4% to 6% is par). The overall goal is 96% error free. The goal was attained twice in a recent six-month period. When it is met, people get to leave an hour early, get a pizza party, or have a cookout for the department. Games help the company make more money, make work more fun, help teach people business and team skills, and provide a starting point for understanding more complex company financials.

The Recycling Game

To cut down on the cost of new boxes, boxes that are sent to the company are reused whenever possible for outgoing shipments. In this game, each person keeps track of the recycled boxes they use. Departmental totals are calculated daily, summed for the month, and measured against the previous month. Each time the goal is reached, employees get a free lunch or cookout.

Lessons

The way the games are played at Albums, Inc., are simple, but involve some very important lessons. First, all the games material consistently talks about creating "friendly competition." The games are always structured so that if goals are met, everyone in the department wins, not just one person or team. Second, employees actually design the games, vastly improving the likelihood that they will take them seriously and enjoy them. Finally, the rewards, and the game structures themselves, are designed to add an element of fun to work. They are, after all, games.

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