Signs - in Retrospect

“If I knew then what I know now…” But that’s the way it always is. You are so busy in your day-to-day tasks at work that you don’t always pause to see the signs of mismanagement that may exist in your company.

Case in point, years ago I was attending one of our company’s many management meetings when one of my fellow managers leaned over and whispered the following in my ear (to paraphrase): “You can always spot the new managers. They are still under the delusion the top management wants to hear what they have to say.” He went on to say something along the lines of “our management meetings are not designed to discuss business – it’s a sales pitch, pure and simple.”

Now this manager had been at the company for several years whereas my tenure was measured in months. But as I thought about what he said, and observed who was actually trying to participate in that particular meeting and in the next several that followed, it was a true statement. Even with my relatively short tenure at the company, I too, had learned not to bother to try to participate.

It appeared that those of us with six months or more tenure at the company had learned to sit back and enjoy storytime (or, more often than not, we practiced selective listening while planning the rest of our day). Top management of our publicly traded company was disproportionately represented by former marketing executives – and boy could they tell a story. Unfortunately, they came to believe their own stories and neglected the reality of their own business. In fact, if you attempted to tell them how their own version of our company’s future did not mesh with the economic and business realities of the business your voice was silenced.

In retrospect, that should’ve been enough to prompt me to start sending my resume out. However it was not. I listened to my faulty logic which said the CEO and the CFO of a publicly traded company must know what they’re doing, I must be missing something. And so I stayed. Not until the end but well beyond when I should have.

After I left I stayed in contact with some of my former associates. Apparently, they came to work one day only to find that the doors had been literally chained shut. I don’t know the stories top management told after I left. But I can guarantee you that having the employees locked out of the business was never one of the ones they told while I was working there.

The take away: whether you’re talking about a specific boss, or a pervasive company culture where the upper echelons of management refuse to listen to issues or concerns expressed by lower-level management (and/or front-line employees) that is a sign that you should start paying attention.  It is a big bold flashing sign shouting "Pay attention NOW."  

Maybe you can fix the problem (it depends on how pervasive it is).  If not, then maybe you can take action to safeguard your income (if not your job) before you become collateral damage.  Business reality has a tendency to self-correct when top management lives in a world of make believe.

Delegation tips – #1 Think before you speak. The dangers of “ASAP”

In this day and age of multitasking the old adage “think before you speak” has fallen by the wayside. However, it’s the little details, those words and phrases that we snap out in a hurry, which can come back and haunt us. For example, complete the following multiple-choice question:

What does ASAP (“as soon as possible”) mean?

(A) Yesterday.

(B) By the end of the day.

(C) Drop everything and do it now.

(D) Within the hour.

(E) When you’re finished with the project you’re working on right now, make this the next priority.

In our hurry to delegate tasks and get back to the hundred and one things on our own to do list, it is tempting to simply tell the person we’re delegating the task to that you need it “ASAP.” If your interpretation of ASAP is (D) (Within the hour), and your team members’ interpretation of ASAP is (E) (When you’re finished with the project are working on right now, make this the next priority) we are likely to have two people who think they have a meeting of the minds when in reality we’ve just set our team member up for failure and, in all likelihood, increased the stress and frustration for both of us.

                If you have the luxury of working with a team with some history, then through trial and error, you have probably figured out each other’s definitions of ASAP. However, if you’re working with somebody new there is a pretty good chance that your definition of ASAP and their definition of ASAP are not the same.

                While I would like to delete the term ASAP from our vocabulary, I don’t have that power. So my delegation tip in a nutshell is:

                I)             If you’re a manager or supervisor – take an extra minute or two and give them a real deadline. If you need to build in extra time do so, but don’t use the term ASAP unless you go on to define what ASAP means to you.

                The benefits you will receive are going to be (i) increased trust from your team member and (ii) less stress for both of you because when your team member knows exactly what you mean it is far easier for them to manage their time, i.e. tasks are likely to be submitted when you want/need them.

II)            If you are a delegatee, and your manager or supervisor uses the term ASAP frequently never leave the conversation at that point. You need to find out what ASAP means to them. You can do this by asking a follow-up question or two. Here’s an example, “So is 5 o’clock okay?” (Your ASAP clock feeler question) If it is not you will know that immediately and they will more likely clarify by telling you something along the lines of “Absolutely not, I needed on my desk no later than 2 PM.” You will have your answer and you can plan your time accordingly.

There is no such thing as an inherently "good" or "bad" number...

One of the biggest misconceptions that I run across when training nonfinancial managers on finance and accounting is the perception that there is such a thing as a “good” number or a “bad” number.  To really understand the financial statements of any business, and especially your own business, you really need to be able to understand the story that your numbers are telling you - because that’s all financial statements are.  A set of financial statements is like a good book, it’s the story of your business.

Depending on the knowledge, skills, abilities (and ethics) of your finance and accounting personnel as well as top management your financial statements should be a work of nonfiction, a story about how well your business has performed during the past year, month, or other relevant time period.

It is critically important for us to be able to read the numbers to know when what we’re looking at is a good result versus a bad result. It is what we base our corrective action on. It is not accurate to look at a set of financial statements reporting net income and say the company is doing well any more so than it is to look at a company with a net loss and say that that company is not doing well.   The real story our financials tell us is context dependent.

To illustrate the importance of context in interpreting numbers in financial statements, I frequently start any finance and accounting training with the following illustration.

“Imagine I’m standing on a scale. I look down and I see a number. Am I happy or unhappy?”

Probably the funniest answer I ever received was the following: “you’re a woman so probably not.” But then I start receiving the right answer which is “it depends.” The bigger question is what does it depend on?

First, what did the scale read last week? This reflects a look at my history or my trend. In business we use trend analysis all of the time - especially during budget season. Where were sales last year at this time? What has the trend been in sales? A trend analysis is one key context factor that helps us interpret, or tell the story, of the numbers represented on our financial statements.

Second, what was my goal? What was my goal weight? In business we represent, or quantify, our goals in our budget.   Again, comparing actual performance to my goal/budget allows me to interpret our actual performance in context.

From the standpoint of the number I see on the scale I might want to compare that number to members of my gender, I might want to get even more specific and narrow that down and look at the average weights of women who are also approximately my height, and age. After all, my neighbor’s three-year-old daughter is the same gender but I definitely should not be comparing my weight with hers. With this additional detail I reach a more rational conclusion as to whether that number should make me happy or unhappy. The question then becomes, in business what are those equivalents?

Third, industry. To interpret my company’s performance it makes sense to interpret my performance metrics in light of other businesses in the same industry.

Fourth, competitors. While it does provide relevant context to compare my performance metrics with others in the same industry, it is even more relevant to compare my performance metrics to those members of my industry that are my specific competition.

So in summary, remember there is no such thing as a “good” or “bad” number. The story of your business as told by financial statements, and internal financial reports needs to be told in context. A net loss in the current period of $100,000 might be actually be a beautiful number, one that our business should celebrate, if during the same period our competitors lost significantly more. 

As we tell the story of our business, and evaluate the performance of each of our employees, it is in our best interest to have the most accurate picture of our economic reality. For with this basis, we stand a much better chance of making good business decisions moving forward.

So if we ever meet, remember it is never good enough to tell me that “that” number is good or bad without telling me why. I will want to hear how you reached your conclusion and that should be based on an analysis of as many of the following factors as you are able to obtain information on:

(1) History/trend,

(2) Budget/goal,

(3) Industry, and

(4) Competitors.

Now get out there and paint the true picture of your business.