What is Open Book Management and How Do You Apply It To Your Dental Practice?

by Dr. Ron Arndt

What is Open-Book Management? How do you apply it to your strategy? It’s a system of educating your employees on the basics of business income and expenses, like how to read a financial statement and understand profit and loss, and then applying that knowledge to your practice. It means teaching your employees to think like business owners and giving them a personal financial stake in the profitability of your practice by utilizing a profit-sharing benefit.

In my book, Killing the Practice Before It Kills You: How Throwing Out My Business Model Saved My Life – I discuss the methods I used to create a more motivated staff, better profitability, happier patients and less stress.

1)    Coach your employees – Teach them the WHY, as well as the HOW. Sit down with them and ensure that they understand: Why the practice is in its current position, why they need to know how the back-end of the business is run, why you are sharing this information with them and why this will benefit them. Provide these lessons consistently and provide regular feedback.

2)    Teach Business 101 – Many believe the word “business” equals success and money.  They have little or no idea about routine business expenses, what percentage of profit is healthy, or the distinction between profit and income.  Develop a program in-house that teaches business basics.  Start with employees’ personal finances and apply their new understanding to your business.  Compare personal income statements and balance sheets with those of the business to get them to start speaking the language of business and deepen their understanding of business basics.

3)    Teach the hygienist to think like an owner:

Money is the ultimate motivator, whether you like it or not. Make sure every employee shares directly in the business success and in the risk of failure.  When employees trust and understand management, profit and loss will motivate employees to get clear on what they are working for each year. When they have the opportunity to be rewarded like an owner, the will think like owners.

Running your dental practice like a business is fun –  when everyone understands the game!

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