Category: Dealing with People

Respect Your Audience: Reflections Triggered by Matthew Good’s Concert at Mercury Lounge


Images-1Let's face it – most of business professionals, including CFO's and controllers, like hearing themselves talk. Frequently, we cannot stop ourselves, going on and on about some business matter, or bitching about some subordinate, or superior, or peer. Presentations are too long to hold listeners' attention, pitches are unfocused, emails look like novellas, and meeting speeches are self-aggrandizing. There is no denying – that pervasive affliction of humanity, narcissism, is inescapable.

The sad truth is that by doing this we depreciate ourselves – people see it as overcompensation for hidden insecurities. Moreover, such behavioral tendencies give the listeners a good reason to be dismissive. They will feel disrespected and resist to be receptive.

However, even with that affliction sometimes obstructing our way to successful communications, most of us have enough common sense and professional experience not to offend our audience with outright insults. The nature of our positions forces us to be diplomatic. We are in the business of dealing with brash bosses, prima-donna sales people, sensitive customers, important bankers, strategic suppliers, valuable subordinates, and whoever else the job brings into our habitats. The words we use and thoughts we express have a potential of affecting our company's business in a positive or negative way. So, we'd better be respectful, and, most of the time, we are.

These thoughts kept popping into my head last week during Matthew Good's concert at Mercury Lounge. The whole experience was a bit strange. I've been listening to this Canadian rocker's beautiful music, channeled through his amazing vocal and guitar skills, since the 90s (God bless them!). Now, standing right in front of the tiny stage, I've observed a 40-year-old (looking over 50), kinda balding, kinda pudgy, unkempt man, who managed to down three large glasses of gin in a span of 90 minutes. 

It was unexpected, but I really-really don't care what people look like as long as they do their job well. And I've got to say, when Mr. Good sang, it made you forget everything: his age, your age, what he looks like, and what you look like now, and all the shit that happened in 20 years since you first heard him. The trouble was the man sang only half the time.

Dana Carvey once said that all comedians want to be rock stars; apparently, and vice versa. Matthew talked after every song (literally): SNL sketches, whooping cough epidemic in Vancouver, one of his kids being a bastard, postnasal drip, Lance (his guitar Dobby/drinks server/on-the-road chef), hot dogs – what have you. I was standing there thinking, "Dude, do your job, sing. Have some fucking respect – it's midnight on a Wednesday night, some of us worked all day and have to work tomorrow."

It got worse: as the blood alcohol level was rising, his widely known political side started coming out. When he began throwing accusations regarding American government's shadiness mixed with condescending remarks like, "You should know what your government is doing" into the audience (thanks, dude, without your Canadian ass I wouldn't know how to form political opinions!), someone else voiced, "What about your government?"

But at the end, it was an issue related to his own music, with which he hit the ultimate low of disrespect. The exhausted, but still forgiving fans started throwing song requests at him; some from The Matthew Good Band's first album "Last of the Ghetto Astronauts." "There is a better chance for my starting chewing crack than for your forcing me to sing anything from that album. Common, people, admit it – that was crap written by a 24-year-old." This is to those who bought the album and listened to it since 1995, plus many members of the audience who are in their 20s now, yet know every word of lyrics you wrote when they were wearing pampers? How offensive is that?

Essentially, touring musicians are in business of selling their albums and solidifying their fan base, thus making sure that people will buy tickets again and again. In that, they are not much different from other business professionals.  The way I see it, they should be afraid to lose their paying customers the same way we do. Alas, Matthew Good thinks differently. Well, I'm not buying next time.

Audit Season Woes


As a corporate controller, CFO, and consultant, I've been on auditees' side of the table for the past 20 years. Yet, I still remember the gratifying excitement of coming to a company as an auditor and testing the depth of my expert knowledge in an unfamiliar territory, quickly absorbing the business's specifics and immediately identifying the scope of testing. Well, Ok, I've been called a "show-off" and "know-it-all" many times, so forget me. Over the years, there were other public accounting professionals (not many, but some), who impressed me with their knowledge and sharpness, but it doesn't happen anymore.

I've been complaining about the decline of the quality of work across all jobs, from customer service representatives on the phone to the cardiologists in fancy hospitals, for years. But somehow I still get very frustrated when I encounter the same trend in my own profession. I cannot even explain why. After all, I am very conscious of the managerial accountants' limitations. The main reason for writing "CFO Techniques" was the desire to fill their knowledge gaps. Just a few weeks ago I wrote about The Unimaginable Abyss of Accounting Ignorance in the small-business environment. So, I should not be surprised when I am faced with the same situation while dealing with financial auditors. Nevertheless, it still gets me.

It's audit season, so in the past couple of weeks I've been helping my client (a young company) to go through their very first independent year-end examination of books and records. It's conducted by a small CPA firm hired before my consulting engagement commenced.

Under my guidance, the client's accountants did what I always advise to do in preparation for an audit (see Chapter 30, What Guarantees Fast and Painless Audit, in "CFO Techniques"), i.e. they loaded the appointed auditor in advance with statements and schedules of data required to make all testing decisions. He definitely had time to prepare well.

The client is an importer of raw materials. So, the revenue/cost recognition and cut-off tests are very important. Accordingly, the auditor gives a list of sales and purchases he wants to test. We provide all supporting documents to verify the propriety and accuracy of each transaction. After a little while the auditor knocks on my door with a bunch of papers in his hands. "How do I know," he asks timidly, "if these invoices have correct dates?"

Inside my head I scream, "Are you fucking kidding me?" But this is not about my frustration, this is about my client. So, I calmly explain that he needs to compare the recording dates with the source documents proving the product's ownership transfer as defined by Incoterms. I go further and demonstrate with one of the selected items: this sales order states CIF (cost, insurance, freight), which means that the customer owns the product as soon as it's loaded on the transport; hence, your source document is the Bill of Lading (BL) attached right here to the Commercial Invoice and the Packing List; the BL's date is the sale's date.

He soon comes back with another file and he is very apologetic, "I am sorry, could you explain this to me again? I never heard of those… terms… before. What did you call them?" I help him out, "Incoterms?"

Will somebody, please, explain to me, since when it's Ok for an auditor, who is responsible to lenders, investors, and other outside users to verify the correctness of books and records, to come to the client without the full knowledge required to perform his tasks? Why is he not even embarrassed to admit that? Why the hell in 2012 it did not occur to him to get his ass onto the world wide web, as soon as he heard the word "Incoterms" from me, and study them?

I guess, that would be too much to ask. Hey, he didn't even know what a "metric ton" was and asked me for the ton-to-pound conversion ratio instead of finding it by himself. He continued coming over, I continued providing him with definitions and rules. At some point he got so comfortable with this teacher-student setup, he even asked my advice on how to "test for prepaid expenses." Seriously? Did he forget that I was their from the client's side, essentially being audited?

And here I have to bring up my book again. There is Chapter 29 in "CFO Techniques" called Choose Your Auditors Wisely… Dear business owners, CEOs, CFOs, and controllers, please, read it if you want to avoid paying $25,000 – $100,000 (average range for small businesses) for low-quality accounting services.

What If You Don’t Look the Part?


ImagesAh, December!  The month of office parties and corporate gatherings.  Small or large, every company feels obligated to do something: sandwiches from a nearby deli with soda in plastic cups, or formal cocktails and fancy dinners – whatever fits the budget (frequently, way over budget).

On Monday I had to take part in my client's festivities.  The company is small, but has a lot of external relations (bankers, financiers, big-time suppliers, shippers, brokers, lawyers, consultants).  So, the gathering turned out to be pretty significant.  As their acting CFO I am viewed as an insider and, therefore, was placed at the head of the "finance and legal" table.  Funny!  Other tables – operations, logistics, etc. were vividly mixed-gendered.  At my table – I was the only woman.

"But no matter, no matter!"  As all of us – females of corporate finance, I've been working in the predominantly testosterone environment my entire career.  I know how men operate and expect them eventually, after obligatory discussions of each other's success, politics, economy, and the stock market, to fall into a football patter.  And even though I myself find basketball and tennis far more exciting (and, as my readers know, prefer arts altogether), I am ready.  It's not really that difficult – here, in NYC, they are predominantly Giants' fans.  All it takes is to remember few key names and events, and they feel like you are "one of the boys." 

So, here we are, in the third hour of the event, with enough liquor in all of them to knock a team of stevedores to the ground (ever since the martini lunches have become their industry's long-gone past, the thirsty bankers make up for them in the evenings), when the Giants sneak their way into the conversation.  Only this time around, there is a twist – a politely contained and quiet tiff erupts over Eli Manning. 

You see, there is this guy, second from me on the left, in his early sixties, who looks like the Nazi who got the scepter's head burnt into his palm in "Raiders of the Lost Ark."  Only 30 minutes ago he said that the best presidential candidate right now was Michele Bachmann, which made me bit my tongue so hard to prevent a spontaneous response, I bled a little in my mouth.  Now he is arguing with other neighboring boys, telling them how much he hates Eli, and the way he sits on the side, and his smile, and his hat, etc., etc.  The fact that he is one of the only three Giants' players ever to be named a Super Bowl MVP apparently means nothing.

Let me tell you, I don't really give a rat's ass about either of the Manning brothers.  It's the underlying principle that's important to me.  So, I look the man in the eyes through his round glasses and say, "Many conservative men don't like Eli Manning, because he looks like a goofy high-schooler."  "Yes, and that stupid grin of his," says the man.  And I say, "But that look, and that grin, and that hat – they have nothing to do with his performance on the field."  The conversation ended right then and there.

More than a year ago, I finished my post "He Looks Like an Accountant…" by saying that young crowd at rock concerts don't believe that I am a career CFO.  The truth is that, unless I am introduced as one, nobody ever guesses it.  Moreover, there is always an element of surprise in people's reaction, when they learn about my profession.  It doesn't matter that I am very good at it and have a book on the subject coming out, I don't come off as "corporate finance," at least not by American standards.  I am not tall, not skinny; I don't have the fake gloss all over me.  And that crazy hair I could never tame!  I am acutely aware of this discrepancy with people's expectations.  That's why "CFO Techniques" doesn't have my picture on the back cover – I don't want to confuse people.

HR Capitalist Believes That Operational Guidelines Are Optional


ScrewballLast week (Wednesday, January 26th, to be exact), my fellow Typepad blogger HR Capitalist (www.hrcapitalist.com) posted a short musing on the subject of what he calls "Rules Orientation." Not a very clear term, it basically attempts to encompass the process of introducing new hires to the way the business is done in the company, i.e. operational guidelines. And the thesis is that it's not always necessary and the choice depends on the propensity of the candidate: if he wants the structure, give it to him; but if he doesn't like to be restrained by the rules, let him figure out his own way. The latter apparently is especially "good" for the companies that operate without rules in the first place – the mayhem kind of businesses.

(Side note: I cannot suppress my high cultural standards and must make a note about the inappropriateness of the "Fight Club" reference. I just cannot stand the pretentiousness of people who don't even understand what they are watching, but try to appear deep. Let me tell you, it took a lot of discipline, military organization, and RULES to properly run Project Mayhem. Remember? "The first rule of Fight Club is…" and so on – rules 1 to 8. Even The Narrator's psyche was protected from Tyler Durden within as long as the rules were followed. Once they were violated, the spell was broken.)

These kind of ideas and recommendations are somewhat surprising, coming from a career HR guru. How narrow is the employment niche of, what he calls, "low rules" candidates? In my opinion, minuscule – maybe some small haphazard consulting company with no supporting staff and a life expectancy of a couple of years, or a startup based on an IPhone App that will be hot for a few months and then lost in the sea of 300,000+ solutions.

In any other type of business, or even in the same kind but with a little bit of structural complexity, project deadlines, customer base, etc., operational guidelines guarantee faster immersion into daily duties. The only employees that should not be bound by protocol are the creative staff (designers, architects, artists, etc.); and even those need to abide by the rules of conduct, employment agreements, client-time billing, etc.

The biggest question is, who the hell can afford nowadays the unstructured learning curves of people not powered by certain procedural standardization? Especially if they are very good – you don't really want them to waste time on "figuring out" their personal ways of going about the job.

Moreover, I guarantee you that no small or midsize business, with its flat organizational structure and intense concentration of responsibilities, can let a no-rules screwball (or rather cannonball) into its already vulnerable system. Just imagine for a second someone like Susan Vance (Katharine Hepburn) running around your workplace, releasing leopards, breaking all conventions, and eventually reducing the result of long-time effort to a pile of disconnected fossils.

But I shouldn't be really surprised that this post was written. This is a typical problem with many narrowly-focused specialists, including HR gurus. They lack the ability for systematic thinking, are not capable of viewing business as an integral organism, where everything contributes to the ultimate success, and, thus, rarely make good executive material.

I am all for matching employees abilities to their appropriately assigned tasks and specifically talk about it in the last section of "CFO Techniques", but I cannot imagine trying to fit into any organization those people who cannot follow any rules.

CFO Folklore: Audit Joke of the Month


Images-2It's time for CFOs to get in touch with their auditors and schedule preliminary work, field examinations, and so on and so forth.  Some diligently proactive CFOs send auditors estimates of their receivables, payables, and inventory balances even before the end of the year.

One such CFO receives a phone call from a middle-level auditor assigned by the CFO's primary contact John, the partner of the CPA firm, to do the preparatory legwork.

"Hi, my name is Luis, I work for John."

"Hi, Luis, nice to meet you over the phone."

"Based on your inventory levels John has decided that we must do a physical observation test at least at one location."

"That's fine.  Did you, guys, decide which one?"

"It's the one with the highest value of the stored product.  Hold on.  Let me see the name on your schedule…"

"Don't bother.  It's the Hudson Tank in Bayonne, New Jersey, near the port."

"That's right."

"Ok, I will make arrangements for the facility's management to escort you.  We have no activities scheduled for December 30th or 31st, so you can take the gauges' readings on the 30th as your year-end control."

"Well, will they be able to take the product out?"

CFO is silent for a few second, digesting the absurdity of the question and summoning her will power to prevent herself from laughing madly into the receiver.

"Luis, the product is a LIQUID chemical.  THAT'S WHY IT'S IN THE TANK.  The only way it can be taken out is if it's pumped out into another tank, or poured out onto the ground, or into the river, if you prefer that."

"So, I will not be able to actually see and count it?"

"Well, Luis, if you are really nice to the ladies who work there and bring them some Champagne for the New Year's celebration, they may let you climb onto the tank and dive in.  But I am warning you, Luis, it's over 40 feet tall.  Are you a good diver?"