Life’s Mind Tricks


When I was a senior in high school and it became apparent that I will not be allowed to become a theater theorist, a cultural critic, or an art historian, and would have to settle for something more practical like finance or engineering, I went to see my history teacher to pour my frustration on her metaphorical shoulder.  And it was just that – a metaphor: I was upset, but I was not going to cry.  The roots of the tough Frustrated CFO that I am now were already forming then.  No, I was not planning on shedding a tear over it.

I wasn't, but the teacher cried.  This hard core, no bullshit lady couldn't stop crying.  I made tea, put it in front her, and asked, what made her so upset.  She replied that these were tears for my mind.  She got me slightly worried, not for my mind, but for hers.  What was she implying?  That the forced career choice will make me crazy?

When she calmed down, she explained her empirical theory that, regardless of your natural intellectual inclination, your occupation (note the key word – it occupies you!) little by little changes your brain; reshapes it comply with the job requirements.  She said, "If you are going to count money and look at numbers 60 hours a week, it will change you forever.  Your mind will never be able to respond to a movie, a play, a piece of music or art, the same way it can now."

"It will never happen to me!!!" – that was my answer.  And I can proudly say, it didn't.  Through MBA, PhD in Economics, and over 20 years in accounting and finance, somehow, I retained my ability of unadulterated absorption of any artistic expression.  Don't get me wrong – my profession affected many sides of my personality, and not in a good way, but somehow I retained the sensitivity to the arts.  Maybe I subconsciously resisted the alteration of the mind because I was warned?  Who knows?  But, I am a rare exception.  Years of observing other people proved to me that my old history teacher's theory was correct.  Life does play tricks with most people's intellect. 

A month or so ago I attended a philanthropic event headlined by Andrew Bird.  I really love his eclectic music that combines classical technique with rock-n-roll melodic structure and folky stylistics.  It always has a tremendous emotional impact on me.

I was there with a group of people, some of them big time art philanthropists, including one hedge-fund guy, who supports many art organizations in NYC and around the country.  In his youth he was a follower of the Great French Mime and a member of a street performing group, but then Life called him away to become a multi-millionaire.  He never saw Andrew Bird before and after the concert talked to me about him.

The first thing he said was, "What a technical range!"  Considering that my heart was just shredded into pieces by the beauty of the performance, I was secretly taken aback by such cold, mechanistic assessment.  Then he picked my brain about the artist's career, and I relayed how he was classically trained as a child, but lost all his fancy scholarships as soon as he made a shift to rock.  The response was, "I'd say, he's done well for himself, regardless."

And that's how I was reminded about my old history teacher's theory again.  Youthful artistic endeavours – that was all in the past.  Now, the cold mind of the big-money-maker cannot absorb the emotional outpouring of the musician he just heard!  He reacts with "Professional skills!  Career achievement!"  His mind is twisted towards that train of thought and there is nothing anybody can do about that.

A CFO and a Zoloft Pusher (Tragicomedy)


FADE IN

INT MANHATTAN'S FINANCIAL DISTRICT – DR. PUSHER'S OFFICE – 1 P.M.

MS. CFO, about 50, dressed in Navy silk business suit, accessorized with Salvatore Ferragamo scarf, shoes and bag, walks in.

DR. PUSHER, about 60, looks up from her desk, peers from behind large bifocals.

DR. PUSHER

Hello.  Ms. CFO?

Ms. CFO quickly glances at the impressively looking framed credentials lining up the wall, including the Psychiatric Board's certificate.

MS. CFO

Dr. Pusher! How nice to finally meet you!

Ms. CFO automatically extends her hand towards Dr. Pusher, who looks confused, seems not to know what to do with the hand in front of her face.  Ms. CFO snaps out of her business-meeting mode and starts withdrawing her hand just as Dr. Pusher decides to grab it.  Awkward handshaking occurs.

DR. PUSHER

Please, sit down.

Ms. CFO sits down in front of the desk.

MS. CFO

How was your time off?

DR. PUSHER (looking at her monitor)

Oh, how do you know?

MS. CFO

I've been waiting for this appointment for three month.

DR. PUSHER (still looking at her monitor)

Mmm.  Ok…  Well…

Dr. Pusher looks straight at Ms. CFO

MS. CFO

My anxiety is out of control.  I have panic attacks that feel like heart attacks – my heart start pounding and my entire left side hurts   It even resulted in some atypical EKG's.  So, my physician and the cardiologist, they both suggested…

DR. PUSHER

What do you do?

MS. CFO

I am a Chief Financial Officer.

DR. PUSHER

Is it a stressful job?

MS. CFO (with a bitter smirk)

Just a tad…  I need to manage this anxiety.  I cannot afford to spend energy on battling with it.

DR. PUSHER

What about depression?  Do you ever feel sad, low?

MS.CFO

Who doesn't?  Look what's going on around us?  But I can deal with it.  I can summon my will power for that – I grip myself by the hair and make myself function, no matter what.  It's the anxiety – it makes me feel like I cannot breath, and I want to be able to tame that.

DR. PUSHER

Will power – shmill power…  Do you ever think of killing yourself?

MS. CFO (sounding slightly agitated)

Hey, if this world goes into the shitters…  If there are no jobs for people like me anymore, nor for over-educated young ones like my son and his friends, and the government cannot even cut social security checks to my parents, and the savings disappear into paying insurance premiums, so that we could see doctors like you…  Of course I would consider it.  There are worst things that can happen to a person than dying.

DR. PUSHER

Good, very good.

Ms. CFO looks astonished, seems to be lost for words.

DR. PUSHER (CONT'D)

I am going to give you a prescription for Zoloft.

MS. CFO (shocked)

Zoloft?  Isn't it like a major antidepressant with a strong habit tendencies?  You are supposed to take it every day, and if you go off, you can experience terrible withdrawal symptoms?  Isn't its effect on panic disorder only secondary?  I don't really want to take something that heavy, and every day, and for… depression of all things!

DR. PUSHER

It's my favorite drug – I prescribe it to everyone.  And you are very talkative – maybe you should see a therapist, while taking Zoloft.  A therapist will help you to prioritize.

MS. CFO

I am famous for my prioritization skills.  What do you mean, "you prescribe it to everyone"?  What if it does not help with my anxiety, but I will be hooked and get sick if I stop using it?

DR. PUSHER

Oh, you should not stop.  I'd rather you being anxious than thinking about killing yourself all the time.  What's a little bit of heart pounding and left-side pain, ah?  Just take the prescription and I want to see you again in two weeks.  We may need to adjust the doze.  I have other patients waiting for their prescriptions.

Dr. Pusher hands Ms. CFO the prescription across the table.  Ms. CFO takes it, gets up and leaves the room, still holding the piece of paper in her hand.

INT RECEPTION AREA IN THE MEDICAL OFFICE – 1:15 P.M.

Ms. CFO determinedly walks towards the elevators.  As she reaches them and presses the button "Down,"

RECEPTIONIST (off site in a slightly raised voice, so that she can be heard)

Do you need an appointment for the next time?

MS. CFO (without turning her head, almost to herself)

No, I fucking don't.

She tears up the piece of rectangular paper and drops it into the garbage can between the elevator doors.

FADE OUT

Author's Note:  This little sketch is based on a true story related to me by one of my friends.

Tragicomedy – a work containing elements of both comedy and tragedy, or as I always say, "It would be funny, if it wasn't so sad."

250px-Vincent_Willem_van_Gogh_002 Vincent Van Gogh, At Eternity's Gate, 1890

CFO Folklore: Segmental Performance Analysis


SegRep #1 Regardless of whether your company is large or small, rich in cash or eke out its survival on a tight cash flow, operate with the most sophisticated custom-designed ERP fitted with Cognos or makes do with QuickBooks/Excel combo, if I ask you to pinpoint the exact segments where you lose or make money, most likely the answer is too broad, or intuitive, or incorrect.

Based on my experience, segmental performance is one of the most deficient areas of business analysis.  Ok, the larger are probably doing better than the small ones.  The latter, unfortunately, are clueless 99% of the time.

Then again, what is your segment?  Do we need the Large Hadron Collider to break the business matter into invisible particles?  Of course not, but a sensible breakdown can give an invaluable insight and bring about organizational changes.  And let me clarify that when I talk about "performance," I don't mean revenues, which are easy to track, I am talking about EBITDA – my favorite indicator.     

Familiar to everyone example – CBS Corporation.  Its portfolio consists of 23 separate brands (subsidiaries), including CBS Television, CBS News, CW, Showtime, Simon & Schuster, etc.  Of course, there are separate P&L's for each of these sub-entities. I am positive, Showtime Networks knows who does better Showtime or The Movie Channel.  I am pretty sure they are aware of how much "Dexter," or "Nurse Jackie" contribute to the bottom line.  Moreover, thanks to digital counting of viewers tuned in, they know for a fact how much Gross Revenue each episode generates.  As I said, that's easy – they know how much they get paid for each subscriber.  (Side Note: it's just as easy for the network television, where the revenue is calculated based on the commercial time).

But do they know how much profit (or loss) they make from each episode?  ALL costs allocated, including CBS Corporation CEO's salary?  What, it is not required by financial statements?  We are not talking about  them.  We are talking about magerial understanding of the business.  Is it important?  It's fundamentally important.  Each episode is written by different writers, directed by different directors, some use more effects and extras than others, etc., etc.  This is BUSINESS INTELLIGENCE and those are factors impacting this particular business.   

Here is promised CFO Folklore.  At some point in my career, I accepted a position in a company with national exposure – 14 operational facilities in different states.  They needed me because they couldn't understand why they experienced cash flow shoratges.  The first thing I did was the profitability analysis for each of the locations.  I uncovered that 9 out of 14, have been consistently loosing money for the past 18 months.  

There are, however, inherent difficulties that prevent most financial executives with limited human resources from undertaking this exercise.  First of all, it is not easy to properly define your segments.  It is pretty much a game of optimization between the level of details you would like to have and the resouces you need to achieve it.  The most intense part of the analysis, however, is the selection of proper principles of allocation for all shared costs and the allocation process itself.     

The spreadsheet image is courtersy of E&D CC, Inc.  If you are looking for help with segmental analysis, I recommend  contacting E&D CC – they specialize in assessing reporting needs and designing specific analytical tools related to profitability and costs, as well as budgetary, treasury, viability, forecasting and planning instruments: mzosya.edcc@gmai.com  

CFO Folklore: When Your Boss’s Secretary Becomes His Girlfriend


Here is a sensitive and complex topic – it involves people's personal lives and therefore should not be anybody else's business.  Yet it affects our work environment and impacts employees morale.  Always!  There are no exceptions.  

It is not a rare occurrence either.  In the past I had a boss who was seduced by his secretary and ended up leaving his family.  In another company I had to fire a general manger to avoid a possibility of sexual harassment law suit, while the company's owner was on his second marriage to a woman who was his former secretary.  And the list of stories I've heard from my colleagues, associates, subordinates and just friends is endless.

The nature of the boss/secretary professional relationship by itself has a somewhat intimate connotation.   They are near each other in the office space.  All day long the secretary attends to the boss's needs, frequently takes care of his personal matters, stays by his side when he works late.  Add to that the fact that most secretaries nowadays are younger women, as the class of "career personal assistant" is disappearing.   Plus, there is the appeal of power and a possibility of material benefits.  All this together creates an undeniably fruitful environment for trysts.  Hell, we have wonderful independent movies about it.



      

Unfortunately, it is not as much fun when you actually have to work with this in your face.

I frequently repeat in these posts that private businesses are absolute monarchies.  Historically, every single Royal figure had his or hers favorite,  i.e. an "intimate companion of a ruler," or, as OED defines it "one who stands unduly high in the favour of a prince."  The contemporary "rulers" are just upholding this "fine" historical tradition.

The key here is the unduly power bestowed on the favorite.  Again, I don't care about people's personal lives.  I really don't!  Moreover, if favorites were working ten times harder and their attitudes were twenty times nicer, I would consider that an improvement. 

However, that is not what usually happens.  In reality boss's secretarial lover stops working altogether.  I witnessed a hiring of an "assistant to personal assistant" to patch the hole in the workflow.  They become arrogant and acquire nasty disposition towards other people in the office.  Frequently they get promoted to managerial jobs they are not qualified to perform with salaries they didn't deserve.

In a small business, even with 500 employees, that's hard to hide.  Well, as a CFO or a Controller, you have your own powers and you don't really need to bother yourself with this unless she starts infringing on your scope of command (sadly, that happens too).  And yet your position exposes you to the unfairness of the situation in the most explicit way: you are the one who has to sign off her 50% raise; you are the one who has to approve her 12 weeks a year vacation time; those are your direct reports that get mistreated by her.  

Talking about terrible frustration!   

CFO Folklore: Dealing with F@&ing Lawyers


Blog image As CFOs and controllers, we are constantly exposed to a variety of legal documents: security and financing agreements, leases, employment contracts, NDAs, new ventures formation, demand letters, term sheets, etc., etc.  And even though most of the financial professionals I know, including myself, are well-versed in these matters and can write a decent legal document themselves (hey, you cannot even get an MBA without taking Contractual Law), or at the very least can fully understand them, we are forced to deal with attorneys: a CEO feels more comfortable if he gets a bill. 

Hello!  This is business law.  We are not talking about defending anybody in court on murder or ponzi scheme charges, or suing somebody for fraud!  So, here is what usually happens.

Scenario 1:  I compose a document or construct an agreement outline addressing all necessary points, and send it to the corporate attorney.  He comes back with either, "This looks good," or he takes my points and, without changing anything, puts it into the format that he didn't even create himself – nowadays they all download templates from Blumberg's Law Products, which anyone can do.  A couple of weeks later I get a $2,000 bill.

Scenario 2: We receive a contract (let's say a Credit Line Agreement), I read it, make a long list of all the points that I believe need to be further negotiated with the bank, and send the contract with my list to the corporate attorney.  He comes back with, "I agree.  Let me know when it's ready for my final approval."  A couple of weeks later I get a $2,000 bill.

Ahhhhhh! 

Of course, there are special occasions when the intricacy of legalese needs to be explored and attorneys must be involved.  But, why the hell it's so intricate, anyway?  Doesn't it seem like a conspiracy to justify $450+/hour rates?  In organizational management we are always taught that some employees deliberately confuse their records to make themselves indispensable: nobody else can figure out what's going on.  Sounds familiar?

And the arrogance!  I can only think of one other profession that can compete with lawyers on the level of insolence – doctors.  They have no respect for anyone expect themselves.  Well, I am willing to forgive a cardiologist who has a courage to hold a human heart in his hands, or a neurosurgeon who may need to drill into my brain one day. 

But these legal MoFos?  The complex of knowledge I possess is far greater than that of any specialized attorney I know.  I ask, for example, if there are grounds for fiduciary violation in a case, and he ($550/hour) responds, "I have to look it up."  Yet, they dare to be condescending nevertheless!  Just last week a lawyer sent me a retainer agreement and wrote in the cover note, "It's a bit formal, but I hope you will understand it."  Are you fucking kidding me?!  I have four academic degrees and 20 years of executive experience (and he knows), and my own retainer agreement for consulting services, which I wrote myself, has more substance than your copied bullshit.

The worst thing about them, though, is that fucking professional camaraderie.  Try to talk to an attorney about a harm caused to you by another lawyer.  You think you are going to see fairness so wonderfully shown on "The Good Wife", or any other of those TV court dramas?  Nope!  They stop listening – THEY DON'T WANT TO HEAR ANYTHING ABOUT IT!  That's why ABA had to create grievance committees and appoint people who are obligated to review the complains, because otherwise there wouldn't be anybody you could tell about lawyers' violations.  Why do you think legal profession is not regulated by any government agency?  Because the legislature consists mostly of legal professionals.  They will never do anything against one another.

In "Philadelphia", just before dying, Tom Hanks (a gay attorney) tells Denzel Washington (another attorney who just won a discrimination case for him) an old joke: "What do you call a thousand lawyers chained together at the bottom of the ocean?  A good start."  They both like the joke.  Denzel's character even repeats it to someone else right away.  A very hopeful movie in many respects: the case is won, a formerly homophobic Mr. Washington's character finds in himself to defend a gay guy, AIDS-ridden Mr. Hank's character dies knowing he won, and his partner (played by Antonio Banderas) is somehow is not infected.  And the lawyers like the joke!!!  Very hopeful, very far from reality.