I
worked for a multi-national consumer goods company for the bulk of my
career. For two thirds of that career I worked in a particular business
unit. Our CFO in that business unit was what they used to “one tough
cookie.” I am not sure what they might call him today but SOB popped
into my mind when I tried to conjure the right word. SOB is probably
too severe though he could definitely become one when it suited him.
In
working with the CFO our relationship evolved. I do not think he
thought much of at all the first few years I worked for the business
unit. By getting things I was able to get him to a bit north of
neutral. By the time I left, I think he might have now and then had a
positive image of me.
This
CFO staffed the subsidiaries in our business units with finance VPs and
Directors that were what we called in that era of Austin Powers movies: mini-mes. In other words, the
finance team in our business unit were people that thought and acted the
way the CFO did. They were all tough cookies.
The
tough cookie view was my first impression. As with most observational
viewpoints of mine, I changed and refined it with time. This, of
course, is the mark of a world class dilettante. I developed a theory
that I believe is spot on. The CFO and by default his minions believed
that:
- They were smarter than everyone else.
- If left unchecked, everyone else was lazy.
- Everyone else was potentially corrupt.
These
points helped me develop an operational working relationship with the
finance folks. It was all business and no nonsense. There was little
likelihood that I could ever be more than acquaintances with them. The
best I could ever be was neutral. I also decided to involve them as
much as possible in efforts and initiatives in my area which was
Logistics and Customer Service. I do believe the above points defined them
perfectly.
Now,
I had moderate success as a businessman. I really never ever took
business courses so everything I learned was on the job in the school of
the real world. I learned somethings but never the accounting of
business or how accountants and finance people see the world. I am just
now taking my first Accounting Course. One of the benefits of being an
adjunct professor at the College of Lake County is that I can take a
free class each semester. I am taking advantage of that this Spring
Term for the first time. I am taking Financial Accounting.
I
never took Accounting before because I thought I would hate it. I love
it. I find it eye opening and fascinating. I am gaining the language
and perspective of the Finance arm of enterprises. I should have taken
this years ago. I maybe should have even majored in the stuff. I
wonder how my career might have progressed if I had done this.
In
the Accounting course, we just covered the section of Internal
Controls. This was also eye opening. Here is purpose of Internal
Control:
- Protect company assets
- Ensure reliable accounting
- Promote efficient operations
- Urge adherence to company policies
The intent and purpose of Internal Control is achieved by adopting and living the following principles:
- Establish responsibilities
- Maintain adequate records (documentation)
- Insure assets and bond key employees
- Separate record-keeping from custody of assets
- Divide responsibility for related transactions
- Apply technological controls
- Perform regular and independent reviews
Well
this certainly explained a large part of what motivated my Finance
colleagues. But, it only partially explains their attitude and
behavior. On one hand they have their duties and responsibilities.
They should communicate these responsibilities and their methods for
managing them to the organization. In a sense, this Internal Control
part of their role puts them on par with Internal Affairs of the police
dramas on TV and in the movies. They are a necessary part of the
organization but not fondly thought of. These responsibilities make
them the police of the company.
We
all know there are a few kinds of police officers. There are the kind
the love the power they have over Joe Average Citizen. There are the
kind that take the Serve and Protect tenet to heart and separate the
good guys from the bad ones... not always as black and white as the
aforementioned TV dramas make it seem. There is no question that the
Serve and Protect officer can and should be one tough cookie, however,
when the opportunity calls for it.
I wonder how I would do with this responsibility? How would I treat people?
Based
on my past record, I would probably trust people until proven otherwise
i.e. innocent until there is enough evidence to conclude guilt. Upon
learning of malfeasance, theft, or other criminal/unethical activities, I
would discipline, dismiss, or prosecute the offenders as company policy
and the law dictates. I would also work to put in the controls and
rules according to the above mentioned seven principles, to make a bad
leaning individual stay on the right and lawful side of thing i.e. to
minimize temptation.
I
am not suggesting that in trusting people I do not keep my eyes and
ears open. I should be attuned to things that do not seem right or by
actions that seem illogical. I should question why things do not seem
right. What is the logic, really, behind actions that seem illogical?
I have learned in my career in logistics that if there is a little
whiff of smoke, there may well be a fire blazing behind the wall. A
little whiff of smoke raises all my senses and attention toward the
person or activity to determine if there is or is not a fire blazing.
The
question remaining is which approach works better the CFO who does not
trust anyone or my approach in which I trust people until there is
evidence not to? I would contend, no surprise since I am asking the
question, that my way is better. I do not believe the I am smarter than
everyone and everyone is a potential thief method actually helps
uncover immoral and illegal activities any faster. My old CFO did not
uncover bad deeds quicker but when he learned about them, it just
confirmed his view of humanity is all. In fact most of the uncovering,
came at the hands of others and often by accident. Things smelled funny
for a long while. I knew that and voiced my concern but none of us had
the evidence to do anything. We put in better controls and that either
made the bad smell go away or to uncover the evidence needed to take
action.
The
other negative side of believing that you are smarter than everyone
else and that you believe that everyone else is lazy and potentially
corrupt is that everyone will know this what you believe. Once people
sense that you have this awful view of them, their natural reaction is
to avoid dealing with whenever possible and, when forced to deal with
you, provide the minimal amount of information necessary to get through
the meeting or review. This natural and predictable reaction only
reinforced the CFOs view of people. This dynamic often made the CFO be
the last person to learn of bad news... at which point he would react
swiftly and very strongly.
One
the other hand, people were more willing to share more information with
me. I encouraged the open exchange of good and bad news. Certainly,
information was withheld from me too. After all I was from the division
office and the functional leader of the people I dealt with, but I am
convinced the information and details withheld were less than that
withheld from the CFO.
I
just think it is much better to go through life believing that the
majority of folks are decent and honest. In doing so, it is easier to
create a culture of trust and openness which is the right way to run any
organization (perhaps even a prison?). This doesn’t mean you can
ignore the
Principles of Internal Control. If you do this, you are trusting and naive. You will eventually be fleeced.
As
for the tough cookie part? This is a skill every leader needs. I
simply you do not have to be a tough cookie all the time but just when
the situation call for it. If there is a whiff of smoke, investigate,
review the controls, gather evidence, and if there is a fire... it is
tough cookie time... baby.
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