The Frustrated CFO

Executive Gender Equality: The Perversity of Admiration

Ever since this company made into a couple of 2013 national lists of the fastest growing entities, we have been accosted by a slew of various business services offering their assistance and support: insurance brokers, real estate brokers, HR management providers, marketing consultants, etc., and most notably for me - bankers. 

The troubles that befell the banking industry a few years back resulted in its consolidation.  The competition among the diminished number of the key players in the field of institutional finance has stiffened.  They are fighting for clients with proven records of steady profitability, growing equity, and assets with high market liquidity, which, of course, are not that easy to find in our "recovering" economy.  Hence, they are after our business.

All the better for us: We are approaching the expiration date of the credit agreement with our current lender and are looking for a relationship that would be a more suitable match to the fast-growing company.  So, I'm doing what I've done quite a few times throughout my career: I'm meeting with a lot of bankers - explaining the business, answering their drilling questions, providing them with extensive data, spinning the info in the most thrilling way. 

While all this is going on, I cannot help but notice the increased percentage of women in the banking mix.  Well, that shouldn't be surprising, actually: according to many statistical reviews, more than 50% of the corporate middle management in this country are presently females.  I hear from our own sales staff that purchase managers of our customers' (industrial sector, by the way) are predominately highly technical women in their 30s.

Of course, as we climb further up the ladder, the numbers diminish: men dominate upper management to the extend of 70-80%, and only 10% of the C-level executives are women.  Still, I used to be the only "skirt" in a room full of male execs and financiers.  Now, there is a female contingent on the opposite side of the table in 3 out of 4 meetings.  Hell, the founder/CEO of this company is a woman.  Hence, our board of directors is 50% female (her and I) - we are the tough side of the directorship.   

So, here I am in our conference room listening to two representatives from one of the 10 largest banks in the world, who are making a presentation of their proposal (aka a Term Sheet in business dealings).  One of them is a diminutive woman of Korean origin in her late 50s - she is the boss, the North-East Regional Director, a big gun brought on to get the deal closer to the finish line.  With her is one of her many subordinates - a young and ambitious man in his early 30s.  If I end up choosing this bank, I will get him as my Relationship Manager (RM).

The menagerie is balanced by a man at my side - COO/owner/our CEO's whity husband.  He has his full charm on: he cannot help it - he has a soft spot for Pacific-Asian women.  Now he admiringly "complements" the banker-lady for being deceptively tough, i.e. looking pretty and soft, while being steely behind her eyes.  I tense up: here goes seclusive male chauvinism, and you never know how a woman will react to it. 

She handles it beautifully, though:  "Well, you know how it is - brain and beauty combined are lethal."  She turns to me: "Right?"  Well, I wouldn't know - never got a chance to rely on no beauty, just my brain.  But I don't say that.  I just smile. 

I wish my COO would do the same, but he somehow takes it as an invitation for further "admiring."  "Yes, you are absolutely right.  I couldn't put it better myself," and he embarks on telling the bankers how his wife, our CEO, is especially successful in sales because she is a woman who can speak "sweetly on the phone."  He actually uses those words.  "It used to take me," he says, "four phone calls before Dow Chemical would call me back.  But she  sweetly leaves a voice mail and they return her call within 5 minutes!"

He is absolutely overjoyed with pride.  The Korean lady's mouth gets very thin and she looks at me again -we both know: this is how it is.  The men will always find the way to treat us as if we were inferior, whether through insults or with "compliments."

I am disgusted, but I'm willing to dismiss this on the principle "forgive them, for they know not what they do."  And right then he turns his head to me, looks straight into my eyes, and says, "You cannot repeat it outside of this room.  L. always gets very upset when I say this, even though I mean it as a good thing."

Seriously, dude?  You've been warned about it before?  By your wife, who is also your boss?  And what?  You cannot help yourself?  Of course, you cannot, because it's written into your genetic code, like a primal instinct.  And you are too insecure to consciously fight it off!  If it was me...  But she is not me, in many ways she is very different.  And that's why he'd financed this business for her.     

Boss Joke of the Month: Raises and Bonuses

Ah, January!  Traditionally, a month of raises and bonuses!  Or, at least it used to be.  You probably have read many an article and a blog post about the diminishing slew of companies still giving out performance bonuses and/or raises. 

I am not surprised - I am the one always going on and on about the illusional nature of the "economic recovery" tune so "earnestly" whistled by politicians and business media.  Companies, big and small, are struggling left and right.  In the absence of profits, merit is kicked off its, already pathetic, backseat all the way into the trunk: When a company experiences business losses you may need to work twice as hard as you did during more prosperous times, but it will not get you matching rewards.  In fact, big enterprises frequently present their employees with a more contemporary version of a performance reward: take a pay cut or a demotion for the sake of keeping your job.

But not the young company X! 

Company X had difficult 2011 and 2012, experiencing all sorts of growing pains and deformities, but 2013 was, if not a spectacular, but a pretty-pretty good year: the business outperformed its forecaststs both at the Gross and the Net Profit levels.  And so, in accordance with formal evaluations conducted at the end of the year, the Board of Directors decided that effort-based bonuses will be paid and raises will take effect as of January 2014.

Now, like many small and mid-size companies, X uses ADP as their payroll service provider.  So, in order to implement raises, an Administrator has to go into ADP's online system and change employees' pay rates.  X's CFO is very anal about being above suspicions: she has set up the payroll administrative functions in a way that allows her to change everybody's compensation items, except her own.  She left that prerogative to the owner/CEO.

Unfortunately that means getting the boss to do something outside of her comfort zone: Of course, she doesn't remember her login ID and password for the Payroll Administration portal.  Plus, any reminder of the compensation negotiations puts her in a vile mood.  Plus, a rate per pay periods, a special bonus batch...  It's all too much.  Never mind that she only needs to do that for ONE PERSON, her CFO! 

CFO is very aware, though.  She makes it as simple as possible, cutting the instructions for CEO into small pieces and chewing them into a pulp that can be fed through an IV.  She puts it in writing too, via email: 

"My base salary was $A per year.  You gave me a raise of Y%, which amounts to $B.  My new base salary, therefore, is $C per year ($A + $B).  Accordingly, please change my semi-monthly payroll rate from current $a ($A/24) to $c ($C/24).  Thank you."

In two hours our CFO receives CEO's response:

"Dear N,

Please double check your current pay and the number after raise.  Also, I will have to do it on Monday, because I need to leave now to pick up my son."

Really?!  CFO looks at the email and in her mind she imagines writing back something like: "Bitch, are you telling me that I don't know how much you underpay me?  Or that with an MS in Finance, MBA in Accounting, and a PhD in Economics I cannot do simple arithmetic?  And why the fuck I, of all people,  am supposed to wait for my fucking raise?  I just set you up with one, even though my daughter is waiting for me!  What the fuck?!"

But CFO is not writing anything: she knows only too well that CEO didn't mean malice - she is just that stupid, dense, and lazy.  It's insults CFO's intelligence to work for someone like that.  But what are you going do?  At least in this place they give out raises and bonuses. 

Tech-Savvy CFO vs. Technologically Inept Owners: A Boardroom Chronicle

Premise:  

Based on true facts, this present-day farce unfolded right after the company at the center of the story signed a new office lease.  The entity's CEO, an infamous procrastinator and a successful decision-dodger, has delayed the execution of the document to the point when only 60 days remained before the moving-in day.

Up until now, the fairly young business always occupied a full-service furnished office suite, where everything from pen holders to receptionists is supplied by the landlord, including all telecommunications and IT administration.  However, by this point the successful business outgrew the little rooms and the shared common space of the suites - it was time for the company to obtain its own residence.

As all logical people know, lease signing is only the beginning of a relocation process.  A lot of work needs to be done before a company can feel at home and be fully operational in its new place of business.  And nowadays, the IT infrastructure becomes a prerequisite to everything else.

This flat-structured small business has a misfortune of having a board of directors that consists of three technologically clueless owners (the type who cannot connect a printer to a PC) and a CFO.  The latter has been combining her financial and accounting responsibilities with those of a CTO throughout her entire career.  Needless to say, she understands what needs to be done, knows how to go about it (nobody else does in this company), and is more than qualified to make all necessary decisions.  Yet, the Board has a rule: anything that involves spending money must be approved by all four members.

So, here is the chronology of making a single decision under the described circumstances:

Motion 1 - 60 days till D-Day.  Upon receiving the fully executed lease from the lawyers, the CFO writes an eMemo to the owners requesting a Board meeting in order to develop an action plan that would ensure successful and painless relocation.  The plan should assign responsible parties and establish deadlines for each task.

The owners don't acknowledge that the issue was raised and two weeks pass in a complete silence regarding this matter.

(Side Note: All four executives are actually heavily involved in their day-to-day responsibilities.  They communicate extensively every day discussing various commercial concerns, while avoiding difficult extraordinary topics.)

Motion 2 - 46 days till D-Day.  Recognizing that the owners have fallen into their typical pattern of pretending that the problem doesn't exist (this happens every time an issue lies outside of their comfort zone), the CFO makes another attempt to mobilize the Board to set up an action plan.  This time she speaks to each of them in person.  They all nod in agreement - "Tomorrow," they say.  The CFO squeezes a two-hour time slot into her crazy schedule.

Three days pass without anything happening. 

Motion 3 - 43 days till D-Day.  The CFO feels the time pressure - at the very least she must start working on IT components, regardless of the owners' ostrich behavior.  The business will be simply paralyzed without an adequate infrastructure.  She really has no room in her schedule for all research, comparison, and optimization of  various ISPs, telecoms, and IT administrators...  But who else is going to do it?  So, instead of pestering the owners again about the "action plan," she writes a very specific inquiry:  "Please confirm your agreement with my taking charge of the groundwork for obtaining the Internet service, telephony, and IT administration support."  Without waiting for replies, the CFO starts working on the subject of the highest priority, i.e. the Internet connection, by reviewing nine ISPs whose services are available in the new building.    

Motion 4 - 41 days till D-Day.  At different hours, the CFO receives messages from the owners - all three are worded very similarly: "Thank you for asking and forward thinking.  Please go ahead with the projects." She can almost hear their sighs of relief - somebody else has made the decisions for them!!!  The CFO closes her eyes for a second and thinks, "The same shit every time.  I wish at least once I would let things run their course - just to see what would happen if I didn't worry about all of this, if I didn't jump in."

By carving little chunks of time in her schedule to deal with this shit, the CFO manages to come to her final ISP conclusion in 5 business days: to accommodate all of the  company's needs (including VoIP) she needs a reliable fiber-optics broadband.  She narrows down her choices to two ISPs - the award-winning Cogent with dedicated connectivity and Verizon's newest product FiOS Quantum ran through communal cables shared with all other users in the vicinity. 

Motion 5 - 36 days till D-Day.  She immediately gets quotes from both: Cogent values itself highly - $700/month with a three-year contract, plus $1,000 installation fees; Verizon's rate is only $129/month with a two-year contract.  Even with such a disparity in pricing, it's a simple choice as far as the CFO is concerned - she knows that Cogent will provide uber-fast, uninterrupted connection, and if something happens, she can be on the phone with an engineer within 30 seconds.  Verizon, on the other hand...  well, we all dealt with Verizon at one point or another.  Yet, for the owners all this technical staff is as difficult as Icelandic; the huge price difference, however, that's easy.   So, the CFO goes back to Cogent's salesperson and dangles FiOS Quantum at $129/month in front of his nose (virtually, of course).  He is taken aback - he had no clue that Verizon had started offering this brand new service in that building.  He cannot stop himself from uttering, "That's a compelling alternative."  The CFO doesn't dissuade him from this train of thought; she waits.  And he says that he would go to his director and try to get her a better deal.

Motion 6 - Same Day. Cogent wants the business - the salesperson reverts in two hours, dropping the price to $500/month with a three-year contract or $400/month with a four-year contract.  Both rates are exclusive of taxes and charges.  With this reduction in hand, the CFO immediately prepares a presentation for the Board, breaking down her selection process step-by-step and making a strong case for Cogent through detailed comparison and scoring of all providers.  She sends it out to the three owners and requests a board meeting to make the final decision.

Four days of silence passes.  The CFO understands: it's too fucking much for them, they don't want to deal with this, they are hiding.

Motion 7 - 32 days till D-Day. The CFO has no choice but to write to the owners again: "Let me remind you that installing the Internet connection must precede all other IT and telecommunication actions, including setting up the phone system, the computer network, etc. - basically everything that we need for the business's operations.  And it will not happen overnight!"  This gets CEO's attention.  She comes over to the CFO's office and says, "Let's decide by tomorrow the latest."

Two days passes.

Motion 8 - 30 days till D-Day.  One of the owners (already in possession of the previously distributed detailed presentation) sends an inquiry, "Can you make a comparison for me between Cogent and Verizon?" as if he just woke up to the issue. 

Motion 9 - Same Day.  The CFO prepares a simplified comparison chart intended for a 4-year-old audience.  Meanwhile, she tells Cogent that the decision is not settled yet and that she will appreciate if the provider gives up something else - like do away with the $1,000 installation fees and make rates flat, all-inclusive (taxes, charges, etc.)  The salesperson conferences in his Director and they yield.  The CFO simply cannot lose this deal: she goes around and collects the owners' consents in person. 

Motion 10 - 29 days till D-Day.  The CFO signs the contract with Cogent.

Curtains 

And this is just Act I.  Ahead, there are still decisions on a VoIP system, an IT Administration service, furniture, equipment... 

What Do Bosses Know About Their Employees?

Well, it varies from one boss to another, but one thing I can tell you for sure -nobody should ever expect a boss to bother learning who his subordinates are.  I mean as people. 

Yes, some overzealous HR pros in large companies paw through whatever material is made public by the social networking in pursuit of dirt, but  that's just "fact-finding" and gossip-mongering.  No, I am talking about a genuine human interest. 

In most cases there is none.  Watching all sorts of bosses interact with their employees I frequently wonder whether it registers in their heads that they deal with real people.  I think they subconsciously block this tiny detail out, so that they wouldn't feel guilty for being assholes.  So, how can you expect them to notice anything about your personality, if they see you as a cardboard cutout?  They are blind even to the most obvious manifestations of your existence outside of the workplace. 

You may belong to a weekend fight club and come to work every Monday with poorly covered bruises; or aspire to be the greatest drummer of all times and constantly bang your fingers on hard surfaces to some beats in your head; or know everything there is to know about existentialism and talk about it at length during office parties - none of it will be noticed: they see and hear it, but their minds reject it.  For them, you are still just Steve from Logistics, or Mike from Customer Service, or that girl from Accounting. 

Do I know for a fact that this sort of myopia exists?  Yes, I do.  My position as a financial executive and/or consultant allows me to observe various bosses in close proximity.  Over the years, I've collected a huge body of evidence to support my statements here.  But I can also vouch for their validity based on the incidents that involved me personally.  I'm not going to dwell here on the fact that none of my employers ever learned anything of my true motivations, ethical standards, or even why I work so hard and care so much.  Instead, let me share with you an instance of an inexplicable blindness.

I don't ever shove CFO Techniques into people's faces.  Being a book's author barely has any impact on consulting deals and it definitely has nothing to do with my CFO job.  But people do find out on their own: they connect with me on LinkedIn and see it on my profile, or they Google me, or whatever.  Normal people, not bosses.  A company's owner writes an email to one of his strategic financial partners with a copy to me: "Let me introduce our CFO M.G.  From now on, she is taking over all our M&A negotiations."  Apparently the fact that the three of us were at the same table during a corporate function has slipped his remembrance.  As per usual, I simply ignore it.  The external party doesn't:  "Not only that I've met Marina already, but I also keep her book on my desk."  The boss replies, "Oh yeah, I forgot, I introduced you, guys."  You may think that he deliberately ignored the part about the book, but I swear, he is not that devious - he simply blocked it out, didn't see it at all.    

And that's absolutely Ok.  Attentiveness is not a prerequisite to being a business leader and a jobs creator.  I'll take brilliance and perpetual drive to succeed over tact and personal involvement any day.  And I have to be honest - I'm not quite sure if I personally would've been as aware of people around me and familiar with some aspects of their lives if I weren't such an avid, life-long student of behavioral science.  At the end of the day, one can say that my interest is self-serving. 

Of course, sometimes it hurts just a bit that the people, for whom you work so hard, don't even care to learn who you are, but in the grander scheme of things we should not care - as I always say, every job is just another line on your resume.  Moreover, we should be grateful - we don't really want these people to know too much about us or our vulnerabilities.

That said, however, it is still pretty surprising when bosses are confused about most basic, most superficial facts about employees who worked for them for years.  Sometimes it brings about ludicrous, almost sketch-like dialogues.

A tragedy struck one of my subordinates: her Mom, only 55 years old,  died unexpectedly of a heart attack.  The girl has been with the company longer than me; she was originally hired by the CEO at the time when there were no other executive managers in the company at all - just owners and staffers.  The CEO shuffles into my office to reflect on the unfairness of life.

She said, "You know, it's so cruel: Shen's parents were the first-generation immigrants -  worked so hard to provide for the children!  And now, the kids are all grown up, married, educated - it was a time for her Mom to finally enjoy her life, and then this happened.  Just terrible!"

I listened to all that and agreed, "Yes, it's totally fucked up.  With respect to her Mom, it was Shen who was the first-generation immigrant.  Her parents got divorced when she was a little girl.  Shen came here 13 years ago with her farther and she didn't see her Mom for 8 years.  They missed each other terribly.  The girl was able to bring the mother here only after she herself came of age and became a US citizen.  They were together for only 5 years.  The Mom still worked 7 days a week to support herself, and now she is gone."

And here you have it, ladies and gentlemen: a boss's "reality" vs. truth.            

The Knee-Jerk Reaction to KPI's Showing a Loss

I fucking LOVE how every time you give small business owners, who are usually personally responsible for commercial side of the business, bad news about the company's performance (i.e. report losses), the first thing they do is start looking for faults in accounting instead of strategically correcting their own buying/selling practices.

"Are you sure no extra/double costs were somehow recorded by accident?"

What the fuck is that even supposed to mean?  And yes, I am fucking sure!  I've only been doing this shit for 25 years!!  You, on the other hand, found out that accounting exists only 2 years ago, and I was the one who told you!!!

The same shit - company, after company, after company...  It's like a fucking natural instinct - the goddamn knee jerk.   

CFO Folklore: Watch Out for Sudden Meetings Behind Closed Doors

If you are an executive employee (i.e. hired help, not an owner) in a small business,  you know what I'm talking about. 

Everything used to be pretty transparent: The owner(s) dropped by your office and discussed strategic issues sitting in front of your desk.  They ran their ideas by you, stealing yours in the process, which you didn't mind, because you've learned to think of it as a sign of their appreciation.  You were a mandatory participant in tactical meetings with various third-parties and considered a welcomed member of the Board of Directors.  You were copied on all email exchanges, etc.

Then, BLAM! All of a sudden everything is hush-hush.  And it's not like you did anything wrong or have been slacking.  No, you are still your highly professional and ingenious self.  Yet, when the owners meet (without you now), they close the doors.  You know that there are meetings going on without you.  You know that there are important matters that your general business acumen could've helped to resolve, but the owners don't seek your opinion anymore.  From what you can see (and if you are a CFO, you see more than anyone else)  they need your help, but they don't want it.  You are excluded from anything outside of your direct professional responsibilities. 

And this is unpleasant, to say the least, because, let's face it:

(a) It's a negative change - it would be better not to be included in the first place, then experience rejection for some unknown reason; one minute you were special, an equal, and another (this is how you feel) you are not different from the receptionist, and

(b) The whole damn thing forces you into a guessing mode, which is a direct way to anxiety and depression.

While this situation is definitely common, I will allow that reasons behind it could vary from business to business, and from one owner's personality to another.  Yet, I bet that the following four scenarios, crystallized from years of close observation of various business owners, are applicable to the majority of cases:

1.  The owner(s) feel intimidated by you. This happens very frequently.  Many businessmen have superiority complex and think that they are the smartest people in any room.  And then you enter the picture.  At some point the owner realizes that you know more, catch faster, and handle things better than him. 

Most hired execs (including yours truly) think it's unfair that We, the brilliant and the laudable, are forced to work for "some schmucks," but the person on the other side is hurting too.  No, no, no, I'm not going to feel sorry for the poor millionaire boss, but just think for a second - he is caught between the understanding how important you are for the company and his desire to stop feeling like an idiot in your presence. 

This sounds like a difficult situation, but rationally speaking this is the best case scenario.  IF the boss is a logical person, who cares for his company's (and his own) well being - he will come around; the doors will be opened again.  Of course, if he is a self-centered asshole on an ego trip and nothing else matters... see Scenario 4b. 

2.  The owners fucked something they are responsible for and the business is not doing well (you, the CFO, may not even know it, because the commercial errors didn't translate themselves into fiscal events  yet, but it's coming).  The last thing they need at this point is you judging them with your I-told-you-so eyes.  They feel so awkward that they'd rather hide away than use your help.

3.  The troubles are even worth - to the degree that makes them loose sleep and keeps them in a state of perpetual panic.  The problem may not even be caused by the business that employs you.  For example, one of the owners just got an audit notice from IRS; he knows that some shit could be found in his other businesses that will destroy everything.  Or an owner got busted with large quantities of cocaine on him.  Stuff like that.  Well, you should consider yourself lucky that you are not invited inside those conference rooms with closed doors - you are better off not knowing anything about it for the sake of plausible deniability.

4.  The worst case scenario - the meetings are specifically about getting rid of you, while minimizing the impact on the company. We can further subdivide this one according to the underlying causes:

(a)  You are too expensive and the owners, while knowing very well that you worth every penny they pay you, don't think the business can afford you anymore, not even with a 30% base reduction.

(b)  That owner in the first scenario simply cannot deal with your superiority any longer.  He doesn't care how good you are, you've got to go, so that he can forget about you (and he will) and start feeling good about himself again.  I have to say, this one is your own fault - if you needed that job, you should've curbed your attitude.  (Oh boy, don't I know how incredibly difficult that is!)       

Oh yeah, I almost forgot!  There is a possibility of a fifth scenario (also straight from my experience with rampant business owners): If the boss starts having frequent (and kind of longish) meetings behind closed doors not with other execs or third-party relations, but with his secretary, you probably need to read my post When Your Boss's Secretary Becomes His Girlfriend, written 2.5 years ago.  It is, by the way, one of The Frustrated CFO's Top 5 most popular posts to date.  So, I know that this particular scenario is very common. 

While the reasons for the closed doors vary, your course of action is limited two just two options: (a) suck it up and continue doing your job for the sake of your paycheck, or (b) look for another job and, if you get lucky (real tough for CFOs nowadays),  get out.  Take my advice: don't lower yourself to passive-aggressive stance, or seek an open confrontation with the owners, or attempt to "ask around."  You will not achieve anything this away and it will only make you feel worse.  

The American Revival of Failed Soviet Labor Constructs

Let me admit right off the bat that Matthew Shaer's article The Boss Stops Here in the June 24th issue of New York magazine has brought my already high level of agitation to a boiling point.  So, if some of my comments appear to be hostile, don't be surprised - you've been warned. 

The article takes up a subject unusual for a life/politics/culture publication - it ventures into the business discipline of organizational management; specifically, a post-modernist pseudo-innovative spectacle of a "non-hierarchical workplace."  Fancy verbage and incorrectly-used business terminology aside, Shaer focuses on a few companies, whose owners, to put it simply, replaced management leadership with the collective's (as in all employees) show of hands. 

At Menlo Innovations (one of the companies in focus, a software developer), for example, "there are no bosses ... and no middle managers."  Instead, "every morning, the entire staff circles up to discuss" the distribution of assignments." Valve Corporation (a video-game company) operates as a network of self-governing teams, with employees choosing at random which team to join and when to switch to a new one.  In all the companies mentioned in the articles, the projects' progress reviews are the collective exercises as well. Obscenely, personal achievement means nothing, because it's the whole team that gets evaluated: the brilliant guy who comes up with incredible solutions at lightning speed gets no recognition and his mediocre team members, who spend weeks gnawing at their portions of work, get to share in his professional triumphs. 

Now, get ready for it! At Menlo et al, hirings, promotions, layoffs, and firings are handled by a committee.  At W.L. Gore & Associates, once a year all (!!!) "employees gather to rank their colleagues based on their contributions to the overall success of the company.  Those rankings are used by a separate committee of associates to determine pay raises or cuts."  The article omits the exploration of how such committees are elected and/or appointed.     

As far as I am concerned, all of this is nothing if not yet more evidence of the incredible ignorance I bring up so frequently.  Most people learn so little about World History, they are not capable of recognizing that there is nothing new about these "experiments."  It has all been done before: In the Soviet Union and other countries of the former Eastern Bloc everything was decided by various committees, starting with the ones in every single place of work and residence through the different medium levels all the way up to the Central Committee of the Communist Party!

Moreover, all these team-work models have already been tested (and failed) in the Soviet Union.  Such groups were given a very special name - they called them Brigades of Communist Labor.  The main purpose of these constructs was to eradicate any form of individualism - intellectual, political, emotional, spiritual.      

Throughout the article, the author kept making an unfortunately confused mistake by calling these unformed socialistic blobs of companies "flat structures."  That just fucking hurt me!  A flat organizational structure is a typical attribute of a small business.  But instead of eliminating the leadership and reducing everyone to some equalizing average, it actually elevates each employee to the level of a multi-functional manager.  Every person handles a multitude of tasks covering entire sectors of the value chain.  Moreover, they do that with little supervision and only general guidelines from senior and executive management.  This is how they achieve, what I call, "career growth in the same chair," raising themselves from one level of expertise to another.  And I'm not talking about mom-and-pop candy shops here - this is how $50-$750 million companies are ran by 10-20 hard-working people.

I have been working in such environments my entire career.  So, it was laughable to me that the article made a big deal about companies with employees setting up their own schedules.  You must be kidding me! Who in a small, or even a mid-size company has got the time to set up their subordinates' schedules!

The author praises some Fortune 1000 companies for trying to fix their management problems through workplace decentralization.  Look, I don't give a flying fuck whether a Fortune 1000, or any large company, recognizes that there is something wrong with it and takes a stab at fixing itself through decentralization and "flattening."   It's not enough to make them more efficient, because, to paraphrase Woody Allen: You know what's wrong with them?  Everything.  Companies are not supposed to be that big - break them up into small entities and the flat structures will come naturally (see above).                

While reading the article I couldn't help but notice that in these companies only functions related to daily operations, general administration, and HR management (much despised and largely ignored by many entrepreneurs) get "delegated" to the workforce masses.  The labor is not actually involved in the decision-making responsible for the strategic development and the survival of the company: which commercial directions to pursue, which projects to undertake, which clients to accept, where to procure the financial resources, etc.  It is so evident that Matthew Shaer had to acknowledge that "overseeing strategy, the long-term vision of Menlo as a whole, still falls" to the two owners, who "also serve as representatives of Menlo at scads of management and business conferences," both in the US and overseas.  Nobody else gets to go.

What can I say?  This is the precise recipe of building the absolute power used by the Soviet leaders (and still employed by their contemporary successors): You let the hoi polloi pretend that they are the "power," delegate to the "collective" the most unpleasant tasks of dealing with each other, but leave yourself with the rights for the real leadership, for the ultimate decisions.  And guess what?  In that top-of-the-Olympus realm, there is nobody who can challenge you, because you got rid of all qualified personnel aka managerial talents.  In Russia, they first called them the enemies of the people and then "cleanse" them out, if you know what I mean.  

I found it very emblematic that the owners of Menlo Innovations consider Thomas Edison a "patron saint" of the company and keep his bust in the middle of their open-style working space.  That same Thomas Edison who hired a very talented engineer named Nicholai Tesla and stole all of Tesla's ideas, patenting them in his own name.  That Thomas Edison who later staged public electrocutions of puppies and other small animals in his attempt to discredit the viable Westinghouse/Tesla high-voltage system, in order to eliminate the competition. 

And "the lady doth protest too much": Menlo employees' readily provided self-convincing quotes insisting that their "self-management" meetings keep the morale high (What about that guy who donated his outstanding one-of-a-kind solution to his team?) and make them feel that they are working toward a common goal.  Oy! Hurts again!  I have always propagated that creating in employees the sense of being important, of being a part of the bigger picture is a key to the successful management of human assets.  But it's not achieved through making everyone into an unrecognizable little screw in a homogeneous pile.  It's done by raising the awareness of each and everyone's crucial value and singular necessity for the company's survival.  

In reality, just as it happened in the Soviet Union, all these collective decisions and committees' resolutions, usually lead to dilettantism.  These people may be great designers and coders, but what the fuck do they know about business administration and organizational development.  In fact, most of the high tech pros I've ever worked with were incredibly disorganized individuals, intellectually far removed from any administrative skills.

Another false agenda the poor schmucks who work for these "organizational innovators" subconsciously force themselves to accept is what I would define as the "evolution of rewards pretense."  Since pre-historic times to these sad days, only three main factors have been stimulating people to work hard: the adequate merit-based pay, the recognition of achievements through promotion (not just title-assignment, but the real elevation of responsibilities), and the self-realization aka pride in your own professionalism. 

When there is no middle or senior management, the promotions are out as well.  It's not like you are going to take over an Owner's position.  Turns out (here comes the funny part) that material stimuli are "irrelevant" as well.  There is a quote in the article from one of the developers at DreamHost, who explicitly says: "Twenty years ago, it was about higher pay.  Now it's more about finding your work meaningful and interesting."  Well now, is that why you are ogling Mark Zuckerberg's photos in Forbes and invest your 401k pennies into high-risk stocks?  And don't deny it, because I know you do.   But hell, of course money is "not important."  What else are they going to say?  The decent jobs are scarce and the candidates are a plenty.  So many young people went into coding and computer engineering; they are literally a dime a dozen.  Those who get employed consider themselves lucky, and if you tell them to drink that "teamwork" and "money's not important" Kool-Aid, they will.      

But the aspects that make this whole collective/committees bullshit especially inconceivable to me have to do with the very core of the business management, i.e. the behavioral science, the human nature itself.  Did these business owners somehow develop some sort of a new breed of people, the kind that's inherently free of the evolutionary pre-built competitive instincts?  Or maybe they psychoprofile every single employee and keep only those who are uncommonly fair and just, or, more likely, idiotically indifferent?  

Incredibly, like all fanatics, these commy-following bosses manage to fool not only their employees, but themselves as well.  Let me remind my readers that the greatest incentive for all organizational restructurings is profitability.  I have no doubt that the private owners of the businesses highlighted in the article are under the impression that by eliminating the key decision-makers they significantly increase their profits.  Let's face it: even in the current market, high-quality execs still make relatively decent salaries.  Unfortunately, these owners, marred by their own special brand of entrepreneurial ignorance, are unable to see the big picture: while their worker-bees spend unnecessary long hours on trying to inexpertly debate the organizational issues, they are not attending to their primary responsibilities, e.g. ACTUALLY WORKING!!!  Talking about real losses! 

The article's author describes one of these long meetings, which started at 11 am and went until 2 pm (!), "and by the midway mark, the proceedings were moving a little more slowly, with more exasperated sighs, or slight but conspicuous head shakes, and sometimes everyone seemed to be talking simultaneously, in one big warbly squawk."  But don't worry.  There is always the pressure-relieving tool introduced at Menlo a few years ago, "walkies" - ten-minute group walks around the block. 

As my readers know, I am a small-business crusader, who believes that giant corporations structured around towering hierarchies of management are cancerous.  At the same time, people of extremes and ideological fanatics (and don't be fooled: this is exactly what we are dealing with here) always terrify me, regardless of whether their views are "progressive" or "reactionary."  Why does everything always have to be so categorical: either a pyramid of useless bosses, or no bosses at all?  Why can't their be a middle ground: a handful of well-qualified key decision makers whose expertise allows them to make high-priority decisions quickly, without slowing the business down, while all functional decisions are left to the employees? 

I'll tell you why: Because that's a "small business" model.  Unfortunately, these "innovative" owners don't want to remain small and work hard to survive.  Notice that most of them are high-tech.  They want to grow big as fast as possible and sell themselves either to a larger competitor or a private equity firm, or (oh, the sweet dream!) make billions by going public.  Meanwhile, just like the Soviet Commies before them, they pretend to be "just and fair" by "empowering" their "collectives," only to completely abandon and betray them in that bright future.  I fucking hate this phony bullshit!                      

CFO Folklore: A Dumb Boss Can Ask Questions That Will Leave a Wise CFO Stunned

A Boss comes to his CFO.  In his hand he carries a report bound into a vinyl cover with a clear front.  The CFO recognizes the presentation booklet she prepared for prospective institutional lenders and private financiers (the company is in the process of restructuring its operating capital).  This particular one is the Boss's personal hard copy: the CFO notices his doodles, scribbles, and squiggles right there on the title page.

The Boss gives the booklet to the CFO, "I've met these two guys yesterday over drinks at the Harvard Club.  I didn't quite understand what they do, but I want to send them this.  They wanted it electronically.  Can we send it as a whole?  I forwarded you their email addresses."

"Of course," she replies, "It's been combined into one file."

"But I've added a few pages."

The CFO skims through the presentation and sees that amid her slick statements, tasteful tables, and vivid charts, there are three pages of text she's never seen before.  She feels the habitual wave of anger she has learned to hide deep inside a long time ago.  She bites her tongue and doesn't tell him that the unprofessional pale blue arial font he chose clashes with the aesthetics of her report and that his text is too verbose.  She just looks him in the eyes and says, "Just send me your Word file and I will incorporate the pages."

"Files," he corrects her.       

The CFO nods silently.  It's clear to her: a separate file for every page - three pages, three files.  If they were all in the same file, he wouldn't be able to print them separately.  It would be too difficult for him.

The Boss still lingers.  "But are the pages all going to be, like, that scanned type?" he grimaces.

"I'm not planning on scanning anything, but yes, I will convert the Word pages into the PDF and insert them into the presentation, which is a PDF file itself."

"But then I will not be able to edit my pages if I want to," the Boss's tone is a mix of whining and irritation, as if the CFO makes his life difficult.  (Which she does, by the way: He always thought of himself as a brilliant man, but this bitch knows too much, understands everything quicker, and her level of expertise and professional standards makes him feel inadequate in HIS OWN COMPANY, for crying out loud.)

"Well, technically if you have Adobe® Acrobat® XI you can edit any PDF file." She thinks for a split second whether she should go on, then continues: "We can also insert the PDF as an object into Word.  Then you can edit your pages.  However, it will most likely, screw up the entire layout of the presentation, which is not good in case someone decides to print it.  I really do not recommend this." 

It all sounds like Chinese to the Boss, who, shockingly, doesn't speak a word of it, even though he used to have a business and lived in Hong Kong - for 25 years, no less.

"I don't know how to use any of that," he says, "Can't you just insert my Word pages without converting them into your presentation?" (It almost sounds as if he is about to say, "Is that too much to ask?")

This is just too funny, but the CFO keeps her face in check.  She decides that she's had enough of this conversation and it's time to stop explaining: "No, even I cannot perform that sort of magic" she says, "It has to be either Word, or Excel, or PDF file.  And PDF is the format of preference in this case."

"Oh, Okay."  The Boss leaves.

Now, the CFO smiles to herself.  And at that moment she realizes the true cause of her dissatisfaction with this job.  It's not this heightened level of irritation.  It's not even the fact that she's undervalued and underpaid.  It's the unfairness of life that forces professionals like her to work for dilettantes like her boss.       

The Late Robb Stark, CEO of House Stark

Let me say first that I mourn the death of Robb and Catelyn Stark just like the rest of the Game of Thrones fandom.  Yet, the sadness doesn't cloud my judgement; it doesn't prevent me from fully grasping the ironclad logic of good storytelling.  I am fully aware that the tragic events of the Red Wedding were not written for the sake of shock and gore.  They were consequences of the characters' actions and motivations, consistent with the specific circumstances and forces at play.  They had a lot to do with matters of executive responsibility, obligations of power,  burdens of leadership, i.e. with the "weight of the crown."  As the Bard said, "Uneasy lies the head that wears a crown." (Henry IV, Part 2, Act 3, scene 1, 31).       

To those who read CFO Techniques I would like to offer my apologies for using the analogy from The King's Speech here again.  It's just that the Brits, who's been living under monarchy for over 1500 years, understand this royal-duty business better than anybody.  (Also, they seem to speak the same language as the Seven Kingdoms' folks.)  So, in the movie, Prince Albert (Colin Firth) tells King George V (Michael Gambon), "Father, we are not a family, we are a firm." And the king replies, "We are the oldest, most successful corporation in the world and sitting on thrones is our business."

Yes, ruling a nation is a family business, and that makes a king the Chief Executive Officer of his land and his people.  And in this position, just as it is in any company, he is responsible for

• strategic development - expansion, contraction, restructuring, hostile takeovers,
• foreign policies  - establishing or severing connections with external parties, forming partnerships and alliances,
  
• tactical decisions - laws, decrees, rules, governing appointments, organizational infrastructure,
  
• fiscal adequacy - financing day-to-day operations and all those strategic moves,
  
• economic balance - most important for prevention of revolts, backstabbing moves of dissatisfied courtiers, and the fleeting of labor,
  
• human relations - the adoration and support of one's subjects doesn't hurt.    

In fact, in George R. R. Martin's world, a king's enterprising is very entrepreneurial, very hands-on.  Nothing like the make-believe leadership we see in the dangerously large governing bodies of contemporary conglomerates/countries.  In the Seven Kingdoms, a true leader cannot be a mere token sitting on a throne (in King's Landing they have Joffrey for that, while Tywin rules).  A ruler's job requires a lot of personal involvement and micromanagement: from weaving intricate intrigues to beheading those you condemned; from charging in front of your troops to skinning a damn large deer - the one with the executive power cannot avoid rolling up the sleeves and getting his/her hands dirty.  

Most importantly, the king must take personal responsibility for doing the right thing by his nation.  He'd better have his priorities straight: the crown is so heavy because the burden of authority calls for selflessness and sacrifices.  Those few business owners that earned my personal respect over the years concentrated all their efforts on the prosperity and success of their companies.  They were acutely aware that business is nothing if not a continuous struggle for survival. 

So, what about Robb Stark?  How did he do as a CEO?  Not very well, I'm afraid.  He was like one of those young rich boys, who inherited his father's business too early due to an untimely death - full of great potential, brilliant ideas, and... illusions.  The childish sense of invincibility has not yet evaporated from his body.  He thought he could break and rebuild the word any way he wanted.  And so, he went and violated the millenia-old custom of building political alliances through marriages: he broke off his engagement with Lord Walder Frey's daughter.  His Love was above any rules.  How beautiful! 

How cheeky and irresponsible!  It was an unforgivable insult to House Frey.  It was disrespectful to the memory of his father who made an arrangement and himself inherited Catelyn as a bride after his older brother's death.  And, as far as the well-being of his land, his subjects, and his mission are concerned, it was plain reckless.  In the business environment, this would be the equivalent of breaking contractual obligations with your commercial partners or violating the terms of your financing agreements.  Actions of this kind result in companies loosing their reputation, market share, procurement resources, creditability, funding, and eventually going bankrupt, i.e. die.

As many young entrepreneurs, Robb Stark was a person of extremes: he was quick to break rules practically written in stone, yet many of his actions were marred by poor, hesitant decision-making.   Whether due to inexperience or a lack of talent for long-term strategic thinking (his military campaign proved him to be a good tactician), he was never quite sure what was the right thing to do.  It's bizarre, really: sometimes he neither followed the solid logic presented to him by his advisers, nor did he go with his own gut.  The foolish execution of Lord Rickard Karstark, which resulted in a loss of a huge chunk of allied troops is an obvious example.

I've been forever writing and talking about psycho-profiling as a key management skill.  One simply cannot succeed without it.  Robb's inability to read people and their motivations might be the main reason for his downfall.  What made him think that old Lord Frey will forgive the insult and tolerate Robb's wife being shoved into his face in his own home?  How could he forget that you cannot trust anybody and must always be on alert for betrayal?  If we think rationally about it, the probability of retaliation was very high.

In contrast, there is a reason why a few smart people reluctantly realize that Tyrion Lannister is King's Landing's only hope.  Not only that he is sharp, brave, incisive, and fair, but he also understands that if one wants that family business of ruling kingdoms to be successful, he must be ready to forsake a thing or two, including personal happiness.

It's great to find out that I'm not the only one who saw the parallels between the demise of Robb Stark and the small-business leadership.  The article below was prompted by TypePad as a related post.

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This Is What It Feels Like When the CFO Cries

When I was a little girl, a preteen, a teenager, my parents always teased me, "Why are you crying?  Feeling sorry for yourself?"  I could've been weeping about some really heart-breaking moment in my life or over a beautiful passage in a book - it didn't matter, their reaction was always the same.

Well, if that was their way of toughening me up, it worked.  But discouraging crying?  Nah, their badgering wasn't successful - I'm still a crier.  Blatant injustices, the disappearance of Earth's beauty, the unfairness of life; but also a goosebumpy music passage, a powerful piece of acting, an especially brilliant bit of storytelling, a rare instance of mesmerizing artistry - all are known to bring quick tears to my eyes.  

But all these occasions allow me to cry secretly - in a privacy of my home; in the darkness of a theater; sometimes in the middle of a crowded place, where nobody knows me (which is the same as being alone); or in front of a few people (can count them on one hand), who are so close to me, most of the time we cry about the same things.  To the rest of the world, however, I'm known as Marina of Steel, always composed and together.  In fact, most people think that I am a gruff bitch.  The mother-fuckers would probably have panic attacks if they saw me all snotty and whimpering - the way I get, when I fight with my daughter.

In my entire career there were only a few occasions, when, while in the office, I simply couldn't hold back tears - the ducts just acted on their own accord, the way they do when you get hit on the nose.  One time, during a meeting, my CEO threw some reports straight into one of my subordinate's face, and I couldn't do anything about it: couldn't protect the victim, couldn't say anything to the boss - just had to watch it happening.  I remember thinking, "God, if somebody else did that in front of me, I would've fucking slapped him.  But I have to pretend that I'm paralyzed, because I need my job!  It hurts!"  And the tears just rolled out involuntary.  

Nearly 20 years ago (God! I was still young then!), a different boss, always insecure about his origins and education, got angry with me, because he forgot to request some analysis he urgently needed, yet expected that I would telepathically infer his wishes.  I was already a Controller and have accomplished some pretty amazing stuff for the company (for which, truth be told, I was very well compensated).  So, I felt pretty secure to simply explain that he never asked for it.  To this he retorted: "You're probably lying that you were always a straight A student.  No doubt your mother bribed your teachers."  There were other people around too, listening...  The randomness and the absurdity of the insult hit me like a ton of bricks.  I was lost for words and my eyes just swelled with tears.  Nothing was to be done or said, of course - my family's well-being was much higher on my list of priorities than my self-esteem.

Just the other day, a business owner, who was my torturer-in-chief at that moment (he is the one who thinks himself a Good Boss), demanded some pretty serious piece of performance analytics to be delivered to him the next day, before his meeting with X.   Considering the available resources, this was impossible to accomplish.  So, I informed him accordingly.  And yes, I'm too fed up with all this bullshit now, so I let a bit of a sarcasm escape me: "How long have you known about this meeting anyway?" I asked him.  "Let me explained to you the idiocy (Miriam-Webster: extreme mental retardation) of this question," he replied and then embarked on a long-winded rant about...  Well, who cares?  And I wasn't listening anymore.  I wanted to laugh, but somehow sparse teardrops started falling down instead.  Thank God, I cried - at least it stopped his blabbering and he left the room.                    

Yeah, things like that...  So, it's true - I cry because I feel sorry for myself.  I'm sorry that my life is nothing what I hoped it would be.  I'm sorry that I don't have enough time to do things that I truly love.  I'm sorry that I always work harder than anybody else would in my place and the rewards never match my efforts.  I'm sorry that I always work for people who are not sophisticated enough to understand my value and appreciate my contribution.  I'm sorry that they always turn out to be insecure assholes.  I'm sorry that, even though I held them in my hands, I let all the means of my personal security slip away.  I'm sorry about so many of my choices that led me to where I am...    

...What is that you are saying?  A pity party? So what if it is?  Nobody else pities me - everyone thinks that I'm some fucking stone.   

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