Company Background
It was back in 1982 that Ari Weinzweig and his partner, Paul Saginaw, opened Zingerman’s Delicatessen in Ann Arbor, Michigan. The business has grown by leaps and bounds – particularly since 1992, when the partners began to expand their enterprise by creating the Zingerman’s Community of Businesses (ZCoB), a collection of what is now 11 ventures that include: the deli, a bakery, a mail-order house, a caterer, a training business, a coffee company, a creamery, a restaurant, a candy maker, an event space, and most recently, a Korean restaurant. ZCob also includes a separate business called Zingerman’s Service Network that provides administrative services to its sister companies. Zingerman’s was inducted into the Great Game of Business Hall of Fame in 2007.
Rapid Financial Results and Lasting Cultural Change™
It was Zingerman’s co-founder Ari Weinzweig who first pushed the business to open its books to its employees. He wanted to train them to understand the numbers and to feel empowered to make the kinds of decisions that could improve them. “You need to believe that your frontline people are as smart as you are and that you will get better decisions by taking the time to teach and share,” says Weinzweig. “We run the business by teaching them how to run the business, and the business runs better as a result.”
The results speak for themselves, as the company has opened up its diverse range of offerings while growing annual revenue some $39 million over the past decade. “We wanted as many people involved in running the business as possible and this was a system that allowed us to do that, says Weinzweig. “Open book is now just part of who we are, it’s part of our DNA. Our culture would be radically different without it.”
“I feel very lucky to have started in an open book company at just 19 years old....14 years later I can't imagine working for a company that wouldn't share the numbers. Sharing the numbers puts us all on the same team working towards the same goal and speaking the same language. I have learned how to run a business and I have been able to have conversations that have impressed my father (a business owner himself). I have been able to share the stress when my department wasn't meeting plan and celebrate with the team when we hit our goals. I could never work for a closed book company - it just doesn't make sense!” ~ Joanie Hales, ZingTrain
Playing the Game Together
Being open book really paid off for the ZCoB during the recession that began in 2008. “We had no panic, even in the parts of the organization where the numbers weren’t great,” says Weinzweig. “It’s like we were down a touchdown at the start of the fourth quarter and we knew what we needed to do to make up the deficit. That meant we didn’t have to cope with the fear of the unknown unlike most everyone else out there.” Rather than impose top-down decisions, Weinzweig watched as employees banded together to come up with solutions like reducing hours, taking short-term paycuts, or deferring their bonuses. “They were actively participating in designing the solutions,” says Weinzweig.
Another example of how open book management pays off involves a dishwasher at Zingerman’s Roadhouse who spoke up at a company huddle that he saw a lot of uneaten French fries coming back from customers. Acting on that information, the restaurant cut its portion size and offered free fry refills instead. That resulted in dramatically lower food costs and happier guests.
“Open book management makes it possible for us to support each other and succeed together. Knowing what net operating profit is and all the things that can affect it, helps us make the little changes that lead to big changes. By rewarding folks for working together and then showing them how they can contribute, everyone is happier and more productive. Now that I have been working this way, I never want to go back.” ~ Dana Laidlaw, Zingerman’s Bakehouse
What’s Next?
Weinzweig admits that some of the ZCoB’s departments and businesses are better at managing in an open book environment than others. But there is a commitment to constant education and practice on financial literacy, as well as on other management practices like servant leadership and visioning, to help cement open book management as a foundation for the ZCob into the future.
Succession planning is another area Weinzweig and his business partners continue to investigate. While they haven’t yet found a plan they can agree on, they know that their people will be prepared to take over when they get the chance. “In most businesses all the knowledge is in the heads of the owners,” says Weinzweig, “so when they leave the company, nobody has a clue. Our goal is to give everyone an understanding so they will be ready to go into the game.”
“I've been here long enough to have seen some really great financial times, and some less successful years. I love that the numbers are shared as it promotes an understanding of so many things. It allows me to see why my income is increased by a little or a lot. I understand why we're looking to cut some things, or have the budget to celebrate. Knowing the numbers helps me see where I can work to make improvements and how I can make a difference.” ~ Beth Holloway, Zingerman’s Mail Order
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