All Posts in Leadership

|In: Leadership|Last Updated:

You’re a total loss for your employer.

I’m psychic. I sense your thoughts. Without ever having met you, I know this fact: you are, in fact, a total loss.

Okay, I cheated. I don’t have to know anything about you, your work habits, your productivity or your employer’s SIC code. All I have to know are a few basics from the Generally Accepted Accounting Principles (GAAP), the rule book by which all accountants live.

When a company buys a computer, the accountants debit cash and credit tangible assets. The balance sheet doesn’t change at all. One kind of asset, money, has simply changed into another kind of asset, a computer.

When a company pays your salary, on the other hand, the accountants debit cash and credit expenses. Assets go down and expenses go up. You appear on the Loss side of the Profit and Loss statement.

Don’t blame your employer. Don’t blame the accountants. If you have to blame anyone, blame Pacioli, the Italian who invented modern accounting several hundred years ago.

After a brief flirtation with less tangible forms of management, much of American industry seems to have moved back to managing by the numbers. This has its good side, because companies really do have to turn a profit or they stop being employers except to attorneys specializing in Chapter 11 proceedings.

It has, of course, its downsize … uh, downside … well, I guess I was right the first time.

Accounting systems are an important tool for managing an organization, just as a hammer is an important tool in debugging a computer program (it may not be effective, but it can be very satisfying). Well-run organizations use their accounting systems to keep score. I grew up as a Chicago Cubs fan, so I know what happens when nobody really cares about the score. You have fun, but you never go to the World Series.

Accounting systems have two big drawbacks as guides for making critical strategic decisions. The first is pretty simple: they’re the map, not the country.

Everyone knows the map is not the country. This cliche points out an obvious characteristic of maps: they leave information out. If they didn’t, they wouldn’t be maps – they’d be countries.

Accounting systems leave out lots of information. They don’t track employee skills. They have nothing to say about customer loyalty. They’re mute on the quality of the latest advertising campaign, although they can report its cost to the penny.

Managing an organization using only the numbers generally leads to a lack of investment, because many critical investments, like employee training, preventive maintenance, and research and development (and yes, if you manage IS you need to fund some research and development) go by the wayside, victims of accounting’s lack of descriptive power.

Accounting systems have a second deficiency, too: they have no ability to reveal causal relationships. Preventive maintenance may lead to lower repair bills. You’ll never demonstrate this on a Profit-and-Loss Statement. Employee training may lead to more effective workers. Since the chart of accounts has no entry for employee effectiveness, the gains lack visibility.

Your new router may have forestalled a major outage. It doesn’t matter – your accounting system can’t book the value of events that never happened.

The moral of this little story: manage to the numbers, but never manage by the numbers.

Internet Update

In the Internet Collapse vs Free Enterprise match, the score is one to one. Bob Metcalfe gets a point from Sprint, which has started to kick some IP addresses off its network during periods of peak load. It beats collapse, I guess, but somehow, monitoring the on-ramp of a freeway, kicking off all the Fords doesn’t seem like brilliant engineering.
My point comes from MCI, which has announced a massive upgrade because it expects larger profits from the increased capacity.

The consensus of the InfoWorld Electric Forum on the subject (www.infoworld.com): traffic jams and outages yes, complete collapse no.

Comments

|In: Business Ethics|Last Updated:

I miss Sam Kinison.

Kinison was the comic, killed a few years ago by some drunks in a pickup truck, who fell into fits of screaming with the voice of a dull hacksaw attacking an I-beam.

Sam’s spirit occasionally invades my flesh, like the time I heard a consultant compare management to raising children. Sam came to me then, and I felt like Dr. Strangelove fighting his own hand. I wanted to jump up and scream like Sam, “NO IT’S NOT! IT’S NOTHING LIKE RAISING KIDS! I HAVE A SIXTY-YEAR-OLD MOTHER OF FIVE WORKING FOR ME! SHE’S AN ADULT! A GROWN-UP! AHHHH AHHHH AHHHHHHHHHH!!!!”

This all came back to me as I read the megabytes of responses to my column on the 70% solution — the arithmetic that says you’d better create 70% more value than your salary or your employer loses money on you.

I did get two flames (one reader misunderstood the point, agreeing with me after we exchanged messages), but most readers endorsed the point enthusiastically. In fact, I received the ultimate compliment from one, who tacked up my column in his cubicle right next to Dilbert.

And these weren’t only managers wanting a whip to flog the hapless analysts who work for them. As many hapless, and for that matter hapful (there must be such a word, don’t you think?) analysts, and programmers, and other people who have to produce Real Stuff (RS, to use the technical term) for a living, were at least as supportive.

Employees want to succeed. They want to produce real value for their employers. Along the way, they want to enjoy their jobs, but that’s no trouble at all: let them produce real value and they’ll enjoy themselves, because most people naturally want to do exactly that.

Don’t believe me? Next time you have some strange assignment or other, call five people in your organization you’ve never met before, tell them what you’re working on, and say, “I was told you may have some good insights on how to approach this problem. Can you spare an hour to help me get my thoughts together?”

I guarantee you, at least six of the five will offer more help than you have any right to expect. And when you’re done, they’ll thank you. People want to create value for other people — that’s where self-esteem comes from.

The whole idea of empowerment stems from this basic realization about human nature. Very few employees go to work just to get a paycheck. Yes, that’s a part of why they show up, but it’s not the whole taco.

Every survey ever done on this subject reveals the same result: employees rank money between 7th and 10th in what they find most important in their work environment. (There are some qualifications on this statistic … the employees have to be making enough to have some disposable income, for example.)

Want more proof? Listen to what people gripe about. IT’S NEVER THEIR SALARY!

Employees complain about office politics. They complain about too many meetings. They complain about the food in the cafeteria. They complain about the number of meetings they have to attend. They complain about ridiculous procedures and regulations. And of course, they complain about having to go to too many meetings.

Every … every complaint you’re likely to overhear has to do with distractions from producing value.

Want happy, motivated, high-morale, high-performing employees? View every distraction they have as leg irons and hand-cuffs. Get rid of all that stuff.

Most of all, treat employees as adults, not because it makes them more effective, but because that’s what they are. They may work for you. If you’re doing your job, they look to you for leadership. They don’t need you as a parent.

So watch out — if you treat your staff like children, Sam’s going to come back and visit your office.

* * *

I still miss Sam Kinison. And I still like this column, all these years later. My only regret, when re-reading it, is that I missed pointing out that when you treat adults as children they’re likely to start living down to your expectations.

– Bob, 3/7/2016

Comments