Open-Book Policy Clamps Down on Waste

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"Open-Book Policy Clamps Down on Waste"

To emphasize the importance of quality on the bottom line, residential remodeler Gerry Roth opens his financial books to employees.

The company's goal of 10% net profit may seem like a lot to some employees. "But when they see what comes out of the gross profit and where we really stand, they start to understand the numbers better," says Roth, president of GM Roth Design Remodeling Inc. in Holis, N.J., which generated $2 million in sales last year.

Employees get an eyeful: total produced sales volume for the month, total job costs, gross profit per job, overhead and net profit. Roth also compares current figures to the previous year. Remodeling tends to be a seasonal, ebb-and-flow business; putting things into an annual context makes an impression. Workers get a clearer idea of how extra trips to the site or wasted materials cut into profits.

Roth doesn't worry about employees using the numbers to ask for a raise or taking them to a competitor. "I wish my financials were that interesting," he says. "I think it's more important for the staff to have a vision of where the company makes its money and whether we're reaching our goals. Learning about the books makes them more connected to the business, which helps retain them and adds stability."

Writer: Craig A. Shutt

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