Final answer:
Open-book management refers to the sharing of strategic plans and financial details with employees to boost motivation and productivity. It helps align employee goals with those of the company and makes them feel more invested in the company's success.
Step-by-step explanation:
Sharing strategic plans and financial information with all employees in an effort to favorably impact motivation is known as open-book management. This approach encourages transparency within the organization and fosters a sense of inclusion and trust. By understanding the company's priorities and goals, employees are better equipped to contribute to the firm's success. With a more intimate knowledge of the company's direction and financial health, each team member can align their personal goals with that of the business, potentially leading to improved productivity.
As the firm grows and the strategy leads to profits, the importance of knowing managers personally diminishes due to the availability of wide-ranging information about the company's performance. This fosters an environment where outside investors, such as bondholders and shareholders, can confidently invest without personal connections to management. Additionally, when earnings are distributed among employees, it often results in a more productive and motivated workforce, as every employee shares in the success of the business.