Jun 04 2018

The Practitioners of Open-Book Management

The final in a trio of reports, The Practitioners of Open-Book Management delivers insights gathered from a series of focus groups with credit union executives who have successfully applied methods of open-book mangement (OBM) within their credit unions. The report provides practical stories of how OBM is adapted to work within the credit union sphere, as well as some of the challenges specific to credit unions.

In addition to the full report, be sure to download the associated infographic on open-book management in credit unions.

Dennis Campbell
Dennis Campbell
Dwight P. Robinson, Jr. Professor of Business Administration, Harvard Business School
Bill Fotsch
Bill Fotsch
Founder and President of Open-Book Coaching
John Case
John Case
Co-Author of Open-Book Management and Equity
Report Number 451
The Practitioners of Open-Book Management

Executive Summary

Credit unions are unusual organizations. They are cooperatives designed to serve their members, and, although they are not-for-profit, they are expected to be profitable. They are also regulated financial institutions, which means that they must operate within closely defined parameters. So can a credit union ever hope to stand out from the pack by adopting new methods of management—methods that entrust employees with greater responsibilities for serving members and delivering exceptional financial results?

We believe they can, and indeed, some financial organizations have already done so, as we describe later in this report. The most powerful approach we have seen is known as open-book management (OBM). The research analyzed in our second report, The Practice of OpenBook Management in Credit Unions, showed that the more open-book characteristics a credit union exhibits, the better its performance is likely to be.

In the current report, we asked executives from high-performing credit unions to describe and evaluate open-book practices in their own organizations. The responses, described in depth and with remarkable candor, indicate where these executives feel their organizations are strongest and where they are still facing challenges.

What Is the Research About?

This report adds a qualitative human dimension to the two previous reports on open-book management. We asked four respondents from high-scoring credit unions—those that seemed to rely the most on open-book practices— to join us in a series of three focus-group discussions. One respondent came from a large credit union based in Long Island (New York), two from midsize credit unions (one each in Maine and Kentucky), and one from a small credit union in Utah. The three discussions focused sequentially on (1) performance metrics and definitions of success; (2) communication of these metrics and employee involvement in driving results; and (3) the use of incentive and bonus systems to reinforce “ownership” thinking and action. We asked participants in each case not only to describe their organizations’ practices but to evaluate the effectiveness of these practices.

As one would expect, the participants provide varied insights on the use of OBM principles in their organizations and real-life examples of successes and challenges as credit unions strive to apply this management model.

What Are the Credit Union Implications?

Filene devoted energy to producing not one or two but three reports on open-book management for a reason: When employees think and act like owners, the organization’s performance improves.

  • Because of their unique cooperative structures, missions, and values, credit unions are strong candidates for utilizing open-book management in their organizations.
  • The principles of transparency, trust, and fair treatment resonate with credit union values and norms, making open-book management a well-aligned management program for credit unions.
  • As with a game or a sport, open-book management requires a clear definition of winning. The organization agrees on a goal, and every employee needs to be actively involved in driving results toward the goal. If the goal is attained, incentives allow everyone in the game to share in the rewards

We hope that credit unions are able to apply the principles of open-book management to help their organizations deliver not only improved member service but also exceptional financial results for their members.