The Glass Pockets Strategy: Why Hiding Your Financials Is Keeping Your Employees Poorly Aligned

There is a folder on your computer. It is probably password protected. It contains the P&L statement, the cash flow forecast, and the real bank balance. You treat this folder like a state secret. You believe that if your employees saw what was inside, one of two things would happen.

• Scenario A: They see you are making money and they demand a raise immediately.
• Scenario B: They see you are losing money and they panic and quit.

So you keep the numbers to yourself. You carry the weight of the financial reality alone. When you tell the team “we need to cut costs,” they roll their eyes because they assume you just want to buy a nicer car. When you tell them “we need to hit this revenue target,” they shrug because it’s just an arbitrary number to them.

This secrecy is the single biggest barrier to true ownership in your business. You are asking your team to play a game where they cannot see the scoreboard.

We need to challenge the instinct to hide. We need to talk about Open-Book Management not as a radical experiment, but as a pragmatic strategy for survival and growth. We need to explore what happens when you treat your employees like adults who can handle the truth.

The Fantasy of Profit

The biggest reason owners hide numbers is the fear of resentment. You think your team will see the top-line revenue and think you are hoarding gold.

Here is the reality: In the absence of data, your employees are already making up numbers. And their imaginary numbers are almost always wrong in the worst way.

Studies show that the average employee believes a company makes a 36 percent profit margin. In reality, most businesses are lucky to make 10 percent. Your team thinks you are keeping 36 cents of every dollar, when you are actually fighting to keep a dime.

By hiding the P&L, you are allowing this fantasy to persist. They see the $10,000 check from the client and think it’s all profit. They don’t see the insurance, the rent, the software licenses, the taxes, or the cost of goods sold.

When you open the books, you burst the bubble. You show them the math. You show them that the margin is thin. This doesn’t create resentment; it creates alignment. It stops the eye-rolling when you ask them to save money on shipping costs because they finally understand that shipping costs come directly out of the profit pool that pays their bonuses.

Teaching the Language of Business

You cannot just email a spreadsheet to the team and expect magic. That is reckless. Financial data without financial literacy is dangerous.

Open-Book Management is primarily an educational initiative. You have to teach your team how business works. You have to explain the difference between revenue and profit. You have to explain cash flow versus accrual accounting.

This sounds tedious. But it is actually empowering. You are giving your employees a mini-MBA. You are teaching them skills that will help them in their own lives and careers.

Start simple. Pick one metric. Maybe it is “Cost of Goods Sold.” Explain every component of it. Show them how waste affects it. Show them how a 1 percent reduction in waste leads to a massive increase in the bottom line.

When people understand the mechanics, they change their behavior. The warehouse guy starts recycling pallets not because he was told to, but because he knows it saves $500 a month, which is $6,000 a year, which helps secure his job.

The Critical Number

You don’t need to share every single line item. You don’t need to share individual salaries (that is usually a distraction). You need to share the “Critical Number.”

The Critical Number is the one metric that defines winning or losing for this specific period. In a turnaround, it might be Cash on Hand. In a growth phase, it might be Gross Margin.

Every week, update the team on the Critical Number. Put it on a big scoreboard in the office or a digital dashboard. Make it red or green.

This gamifies the business. It gives everyone a shared focus. When the number is green, we celebrate. When the number is red, we huddle and ask, “What can we do differently this week?”

It turns the anxiety of the owner into the agency of the team.

Handling the Bad News

What about Scenario B? What if the numbers are bad?

Many owners hide losses to “protect” the team. They think they are being benevolent leaders by shielding their staff from stress.

But employees are not stupid. They know when business is slow. They see the empty calendar. They feel the tension in your voice. When you hide the reality, the rumor mill fills the void. And the rumors are usually worse than the truth.

When you share bad news honestly, you treat your team with dignity. You say, “Here is the situation. We lost a big client. We are down 15 percent. Here is my plan to fix it, but I need your help.”

This vulnerability recruits them into the fight. Instead of polishing their resumes, they start brainstorming ideas to save the ship. People want to be heroes. They want to help. But they can’t help if they don’t know the building is on fire.

I have seen companies where the owner shared a cash crunch reality, and the employees voluntarily offered to reduce hours or take unpaid leave to avoid layoffs. That level of loyalty only exists where there is absolute trust.

The Stake in the Outcome

Open-Book Management works best when there is a stake in the outcome. If you are asking them to think like owners, you should reward them like owners.

This doesn’t mean giving away equity. It can mean a profit-sharing plan. “If we hit this profit target, 10 percent of the surplus goes into a bonus pool for the team.”

This closes the loop. It connects the daily behavior (saving costs, increasing sales) to the Critical Number (profit) to the personal reward (bonus).

Suddenly, the P&L isn’t just your problem. It’s their opportunity.

The Release of Burden

Ultimately, transparency is a selfish act for the business owner. It releases you from the prison of secrets.

It is exhausting to pretend everything is perfect when it isn’t. It is exhausting to be the only person worrying about cash flow at 3 AM.

When you open the books, you distribute the worry. You distribute the responsibility. You build a team of partners rather than a team of hired hands.

It takes courage. It feels like getting naked in public. But once you do it, you will wonder how you ever ran a business any other way.

Your team can handle the truth. In fact, they are starving for it.