Making Years End

The arc of this past year has given me dozens of business parables and aphorisms. This spring I will be sharing some of the recent ones as well as many from field experience over the past twenty years.

Decisions in business are based upon the perceptual skills of those deciding. Most of these “deciders” have a high opinion of themselves, coming as they do with more that just a good degree, many think they have the right “DNA” to run their, albeit tiny, world.

This particular story begins with the downward spiral of a company without a strong goal. Oh, it has goals, but they are the very dilute, generic goals of staying alive. Hardly much more elevated nor grander than the goals of a lizard running across a silicon valley parking lot. This tale is about decisions and consequences. About finance and cost.

In moving my office this past summer, I noticed that the picture hooks and nails left a pattern of their own. With the pictures, diplomas, certifications and awards gone, what remained was the point upon which they hung. As a collection those empty nails raised a couple questions. What had been there? How did they relate? Would it matter if they were changed? Did they have an ordered relationship? What were the decisions made when they had been put up?

Small Talk

You don’t have to put nails in your wall, but like so many times, it may be helpful to get to a whiteboard. Put three big dots on the board. Next, think of them as a line, or a sequence of decisions. Not the decision, rather the series of times that the decision is asked and decided. Frequently the same problem, particularly if it seems a small one, is asked within the C-Circle.

Yep, small points come up often. Probably because the big decisions are remembered, while the small ones aren’t. They have to be renegotiated. That is the valley way.

Small things trip you more often than big things.

Over 70% of the valley altered course if not state this past year. Most of this was in the small enterprise sector, those companies doing less than $200MM. These organizations had little reserve, so they resorted to the first reaction of lizards and the frightened. They flinched and sought out salvation by saving. They cut. They cut costs, people, compensation. Sadly, they also cut concepts. Every decade the US does this same thing. Every decade the US slips into the arms of the waiting accountants. We cower over credit. We dither over debits. And we lose our way in the rearview mirror that is the map drawn by the CFO.

If you can’t go forward, call upon the CFO and go backwards.

Enter the problem, nope, we simplify the problem and call it financial. We aren’t making money, so we must cut costs again. Pick the first of those ‘dots’ and mark it P1. At this date, a decision is made on financial basis. We will cut “B” next year. Time moves on until we reach date P2. The decision is affirmed. Finally date P3 arrives and it is time to roll out the planned cutback. The revenue isn’t flowing, the company remains in a revenue doldrum, yet the decision is rescinded. What has happened to this finance first C-Team?

How Doubt Decides

What happened to the financial decision? Was it ever a matter of finance? Not purely, not only, so therefore what was the basis of the decision. What was Epsilon in this equation? How does this model of choice diverge from field facts. Finance decided to drop the reduction because they couldn’t figure out how to sell the change. They didn’t want to answer questions from the employees because they don’t have the skill, nor the experience to talk to them. To finance the employee is a cost, no way will they ever become an asset. So when the time comes to announce, they will demur. The decision was never about money, it was about how easily the CFO’s team could get beyond a date uncertain. How safe they felt. Since the clamor would be certain they finance team was threatened by the only the prospect of forced interaction with the below decks crew.

Finance doesn’t decide by financial standards. They decide on friendship, trifles and piffles.

If money matters, let HR do the thinking.

What This Was About

This was about a small policy change at a client of mine. It was over a change in PTO days. My big solution wasn’t used, neither was my small one. Instead they backed away from employee engagement and so chose to make it a finance only decision. They decide to continue the cost. In their answer to the question it cost them money they didn’t have to spend. My big solution would have increased employee engagement while saving them money and management hassle.

If you care to hear my idea contact me, or come see me at the SHRM 2010 conference.