How Team 1 Plastics Got Its Team in the Same Boat
For almost 20 years, Team 1 Plastics, a plastic injection molding company for the transportation industry, has utilized an Open-Book management philosophy with its workers.
In the Plastics Pipeline blog, “Ensure Your Team is Rowing in the Same Direction” (December 15, 2015), Craig Carrel, President and Co-Owner of Team 1 Plastics, shared about how Open-Book management worked at Team 1 Plastics. In this follow-up blog, Carrel shares the history of how the Open Book policy became a critical part of Team 1’s culture.
The Open-Book policy began at Team 1 in 1999. What were the circumstances that prompted you to begin this style of management? I had read Jack Stack’s book, “The Great Game of Business,” years earlier and had heard him speak at a business conference so we were familiar with the concept of Open-Book management. The key driver for us to begin implementation was the year that we paid out more in annual performance bonuses than we made in profit. The Open-Book philosophy was a perfect vehicle to tie everyone’s bonus to whether or not Team 1 achieved a minimum profit.
How were you introduced to Jack Stack’s book, “The Great Game of Business”? What specific sections of the book captivated your interests and imagination? I learned about the book from reading articles in Inc. magazine. As I mentioned previously, I had read the book first, then heard Jack Stack speak at a business conference about the idea. I really liked how everyone knew the financials of the business and that it helped people to understand how their personal decisions helped a company make money. I also liked how it was based on a full-year performance but was paid out over the year with small bonuses at the beginning of the year – even when the profit was only a projection.
Besides Jack Stack’s book, what other tools (people, advice, articles, etc.) helped you form the Open-Book policy? Jack Stack’s book formed the key foundation for our program, and we borrowed many of his features. We did read some other books on open-book management, but the core of our program comes from his book.
How has the business changed since the Open-Book policy was implemented? We think it has helped Team Members understand how Team 1 makes money – in particular, understanding how difficult it is at times and that mistakes can add up to erode our profit. When we started, we thought it would only benefit us when the company was very profitable and paying out Open-Book bonuses. But, we were very surprised when it helped us during the 2008-09 recession. It allowed everyone to see that the hard decisions of layoffs, pay cuts, cost cutting, etc. were needed to keep the company afloat. We told our team that our goal was to breakeven, and we would have to continue to make cuts until we reached this goal. Once we did reach breakeven, then we would be secure in our ability to maintain our business for as long as the recession lasted. Since we share the financials monthly, this allowed people to feel a little more comfortable about their jobs once we did reach breakeven. We tell everyone that we need to work together to be very profitable. It is the only job security we can offer. Profitable companies do not go out of business.
What would you say to small, private companies who are resistant to sharing their financials with their employees? I believe most owners are worried that their employees will see how much money they are making and be jealous, and it will cause them problems. In fact, most employees have no problem with business owners making a profit as long as they are fairly compensated. I would tell them that the Open-Book Bonus plan also allows you to share the profit with the people who help make it happen – your employees. I think business owners also think that most people will not understand the financials. It does take some training of the employees, but the basics are pretty simple: Revenue – Expenses = Profit/Loss.
To your knowledge, has Team 1’s adaptation to Open-Book Management been an example used by another company? I have talked with a lot of business owners about our plan and given them our plan outline. In addition, I have sent out many copies of “The Great Game of Business” to interested business people. However, I do not know of a specific example of someone who has used us to start their own Open-Book plan.
What else do you want to share? The Open-Book policy is a critical part of our culture and reinforces our commitment to “Team Member Success” in our Championship Dream. We share our most sensitive and private information, our company financials, with our Team Members monthly. And, we all share in the profit when the company meets its minimum profit targets.