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Lecture focuses on employees

Anna Gelhaus | Wednesday, September 22, 2004

Under president and CEO of SRC Holding Corp. Jack Stack’s style of management, it is not strange for the janitor to criticize the boss.In his “A Stake in the Game of Business” lecture at the Mendoza College of Business Tuesday night – second in the College’s annual Cardinal O’Hara business ethics series – Stack related one such story. “You’re an idiot. I was looking at the market report the other day, and you have 76 percent of receivables in the truck market,” Stack remembered an employee saying. “The truck market has a recession every seven years.”Stack pioneered the idea of open book management. In his businesses, every employee is shown the accounting records that most companies reserve only for top management. “I wanted to run a motivated company, for the employees to feel like winners. I wanted to do things differently,” he said. His ideas on management led to a promise to his employees.”I will teach you how to read the report cards [of the company.],” Stack said. “I didn’t want people to come to work and ask me ‘Should I get married? Should I have a kid?'” Too often, employees are unaware of the financial position of their companies, only causing confusion about whether they are safe to go on with life-changing events, Stack explained. “Why are they asking me these God-like questions?” Stack said. “I wanted them to think and act like owners. We begin to teach people how the ‘haves’ made it.” Each week, his company “huddles” with a blank income statement and discusses the company’s current position, he said. “Everyone, every week gets an idea of where we are going,” Stack said. “Everything goes from the down floor up. Nothing from the top down.”Essentially, every employee learns how to use the information on the company’s balance sheets, income statements and other financial records to direct them in their work. Stack’s businesses have been quite successful under this approach. SRC Holding’s stock started at 10 cents a share in 1983. Today it is at $98.70 a share. “[Employees] feel good about what they are doing. They feel good about their lives,” Stack said. This sense of accomplishment has also spilled over into the community. Since the company’s inception, over $40 million has been cashed out by employees. The community of the SRC headquarters, in Springfield, Miss, has only a 3.8 percent unemployment rate – which Stack also partially attributes to this management style. Stack started SRC Holdings with an $8.9 million loan on $100,000 of equity. The employees of the company became the stockholders and it has grown ever since. Employees are quick to accept this style, Stack said. Never before have they been allowed to look at what is normally private information. “People know how to get [what they want],” Stack said. “You make a difference when you teach people business; it changes lives.”According to Stack, companies such as Southwest Airlines and Harley-Davidson are adopting this approach. He has written two books on his method titled, “The Great Game of Business” and “The Stake in the Outcome.”

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