The Open Book CEO
Louis Stanasolovich LEGEND FINANCIAL ADVISORS, Pittsburgh
By Ellyn Spragins

(FORTUNE Small Business) – Lou Stanasolovich sounds like many employees' worst nightmare. The 47-year-old CEO and founder of Legend Financial Advisors requires his 29 staff members to fill out a daily time log, itemize how they helped the financial planning firm run more efficiently each week, and devote 150 hours a year to training. But Stanasolovich earned a spot on our Best Bosses list because, despite having a micromanager's penchant for forms and procedures, he inspires uncommon devotion. "I would do anything for him," says receptionist Lillian King, 61, who has worked at the Pittsburgh company since 1999.

The secret of Stanasolovich's appeal is that he skillfully applies a time-tested tool called open-book management. Sharing the data he gathers with his employees, he lets them use it to make important decisions. Not only do they know one another's salaries, but they vote on one another's raises and weigh in on major spending. "Put any of my employees in another company, and they'd be among the top performers," says Stanasolovich, a soft-spoken introvert who has forced himself to become a public figure by speaking at industry events on what his employees have learned from his system.

A one-time cost analyst for U.S. Steel, Stanasolovich learned about open-book management a decade ago when he picked up The Great Game of Business by Jack Stack and Bo Burlingham. The idea behind the book: If you give employees the information that they need to think like managers, they will make better choices and ultimately help you boost profits. Today Stanasolovich has evidence to prove that the theory works. His business's productivity has grown 15% annually for the past three years, as assets under his management have nearly tripled, to $200 million.

The CEO dedicates a huge amount of time to developing and sharing detailed information on how his business is running. Every morning there is a company meeting at 8:15, followed by a department meeting. Employees gather once a month for an all-day discussion of everything from finances to strategic direction. Once a quarter they compare actual revenue and expenses with their forecast numbers.

The cumulative effect of understanding the details of the business encourages employees to think like owners. Last fall, for example, Legend's employees needed to establish a salary for a new director of public relations they wanted to hire. To get a sense of what was fair pay, they looked at what they were paying their director of marketing, who had comparable responsibility. In a series of meetings, with the marketing manager out of the room, everyone agreed that he was underpaid relative to his value to the company and granted him a 52% pay raise.

In another case, an influx of clients in 2002 caused employees to forgo raises altogether. They instead hired four more employees, costing a total of $160,000, to keep their work load under control. "In ten years I've never had anybody ask me for a raise," says Stanasolovich. "They know the firm's situation, and they know they have an influence over it."

With revenues expected to rise 25%, to $1.6 million, this year, Stanasolovich is taking the idea of sharing power a step further. He is offering employees who have been with the firm for three years the chance to buy up to 3% of the company for $82,500. If they don't have the cash, Legend will loan it to them. Explains Stanasolovich: "It's no fun for me to get rich and have everyone else feel pressed to pay their bills." —E.S.