Great to Good
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8 August 2013 - 23:47, by , in Strategic Planning, No comments

“We have taller buildings but shorter tempers; we spend more but have less; we buy more but enjoy it less; we have bigger houses but smaller families; more conveniences, yet less time; we have more degrees but less sense; more knowledge but less judgment; more experts, yet more problems.

These are the days of two incomes, but more divorces; more kinds of food, but less nutrition; more acquaintances, but fewer friends; more effort, but less success. We spend too recklessly; laugh too little; drive too fast; get too angry quickly; stay up too late; get too tired; read too seldom; watch too much TV and pray too rarely.

We’ve multiplied our possessions, but reduced our values; we sign more contracts only to realize fewer profits; we’ve added years to life, not life to years. It is a time when there is much in the show window and nothing in the stock room. Indeed, these are the times.” (1)

Dr. Bob Moorehead’s commentary is a reminder that a great society can discard good things. In an attempt to become or remain a great company or a great person, it’s easy to overlook the importance of doing good.

Jim Collins’ recent book Good to Great has provided both inspiration and ideas to thousands of leaders.

hedgehog concept

(HEJ.hawg kon.sept)

n. An idea or concept that, if done extremely well and to the exclusion of almost everything else, can help a person’s career or a company’s business achieve their full potential.

 

Three circles of the hedgehog concept

It is a study of 28 good companies that became great as measured by their outperforming the stock market by at least seven times over a 15-year period. Companies are applying the hedgehog concept and other principles from the book, trying to become great.

What truly defines greatness is the good we do to become great. As author Don Gabor states, “Big things happen when you do the little things right.” (2) Greatness comes from, and is sustained by, doing lots of good things.

Good comes before Great
I assume from the book’s title…Good to Great… that we must first be good before we can achieve greatness. In today’s fast-paced, freewheeling business environment, the inclination is to skip good to get to great. Great big companies… Enron, WorldCom, and most recently HealthSouth… unsuccessfully attempted to skip good accounting practices to satisfy management’s greed.

Great accounting systems fail if there is not good accountability. Great payroll systems can record help’s time but be of little use if time spent helping the help is not good enough. Great accounting departments can close the books in one day. Good accounting departments take whatever time is necessary to develop trust, usefulness and dependability amongst its customers.

There is nothing wrong with striving to be great or being great. But we should not do it in a manner that eliminates the opportunity for doing good. As Bob Buford, author of Half Time, explains, “Many people discover they’ve built their lives around ‘success’ only to find it empty. So they reinvent themselves to build the second half of life around ‘significance’.”(3) Don’t repeat the great mistake of others. Don’t forsake good to be great, especially if you’re an accountant.


10 Characteristics
of a Second-Rate
Finance Department
•   Slow Closes

•   Outrageous Audit Fees

•   High DSO

•   Multiple Payments

•   Earnings Restatements

•   Manual Entries

•   Lack of Transparency

•   Dubious Structures

•   Overly Cozy with Sales

•   Staff Turnover

Read the entire article, Your Finance Department is Second-Rate, on CFO.com’s web site.

Good Accounting
Webster’s defines good as “honorable, as it should be, excellent, better than average, dependable, enjoyable, ample, and morally sound.” David Batsone comments in his new book, Saving the Corporate Soul & Who Knows, Maybe Your Own“How companies book their sales has never mattered so much to investors. Clearly, the system for financial reporting has broken, yet no one wants to take responsibility for the wonky numbers. Everyone points the finger at someone else.” (4)

Some people and organizations have become great at the expense of doing good. I am deeply saddened by the bad accounting practices performed by members of my profession in recent years. Something as simple and straightforward as recording sales revenue has become a twisted mess. A 20th century joke has become a 21st century reality:

Management’s Question: “How much does it cost?

Accountant’s Answer: “What do you want it to be?”

Great accounting firms and CFO’s of great companies discarded good accounting practices in recent years to satisfy their greed. The results were ruin for some and recession for the rest of us.

To restore trust and confidence in the stock market, great companies must prove themselves good. Management must confirm to all stakeholders that their company follows good accounting principles, supported by good accounting practices, performed by good accountants, monitored with good audit accountability.

What is “good” accounting? Does your company employ good accountants that practice good accounting principles? Here are five traits to look for:

  • Good accounting is relational, not circumstantial. 
In his new best seller The Purpose Driven Life, author Rick Warren says, “Relationships, not achievements or the acquisitions of things, are what matters most.”(5)
If you are a customer of accounting, do you have a good relationship with your CFO, finance department or accountant? Can you trust their numbers? Can you rely on your accountant or consultant to tell you what you need to know… non-value added costs, customer profitability, product-line profitability and process changes required… even if its not great news? If not, you don’t have the right relationship.
If you are an accountant, how do customers rate their relationship with you on a 1 to 10 scale? Ask them. If it’s not great, then define jointly with them three good steps to make the relationship a 10 this year.
  • Good accounting is about character, not achievement.
I once had a very knowledgeable bookkeeper with an accounting degree. She robbed my business of money and time. I now have a good, trusted, dedicated, hardworking, accurate bookkeeper named Debbi Cardwell who has no college degree. Guess which one I prefer?
  • Good accounting meets needs, not wants.
In every great company that Jim Collins researched, he found a humble leader. “Humility is not thinking less of yourself; it is thinking of yourself less.”(5) Good accountants for great companies focus on their internal and external customer’s needs, not the Accounting Department’s wants.
I recently took a call from the owner of a distribution company. Based on his business needs, we mutually determined that Activity Based Costing was the best tool to meet his need for Gross Margin Profiling, pricing, customer profitability analysis and process improvement.
He asked, “What type of person do I need to lead the Gross Margin Profiling project?”
I said, “Someone who is creative, willing to change and knowledgeable of your business.” 
The owner replied, “I’m glad you didn’t say that the project leader has to be an accountant. Every time I ask mine to help, they tell me they don’t have time!” Good accountants, good people and good organizations are servants. They help others before themselves.
  • Good accounting is both legal and ethical.
In high school math, I learned “multiplying positive times a negative always has a negative result”. That principle also applies to corporate math. A good tool in the hands of a person of bad intent gets negative results every time. As John Nofsinger and Kenneth Kim state in Infectious Greed“Enron was certainly pushing the envelope at every chance. The firm used sophisticated and very complicated methods to generate earnings out of thin air. It appears that Enron went over the line and committed fraud.” (6)Activity Based Costing (ABC) has been defined legal by all regulatory agencies (i.e., I.R.S., GAAP, and AICPA). But ABC will be only be good in the hands of an ethical person.
  • Good accounting is based on the “Good Book”.
One of my favorite sayings is, “Methods are many, principles are few. Methods may change, but principles rarely do.”A great, yet overlooked resource for good financial principles and practices is the “Good Book” … more commonly called The Bible. There are over 2,000 verses in the Bible regarding money, stewardship, taxes, business, debt, investments and risk taking. Jesus, for example, made the critical observation, “What shall it profit a man to gain the whole world, and forfeit his soul?” (Mark 8:36) Indeed.

As Good as it Gets
One of my favorite movies is As Good as it Gets. Helen Hunt is frustrated by Jack Nicholson. He is kind and generous to her and her sick son, but he is agoraphobic, obsessive-compulsive, and terminally offensive. In desperation, Helen cries to her mother, “I just want a normal boyfriend.”

“Oh”, her mother replies, “Everybody wants one of those. There’s no such thing dear.”

If you’re frustrated like Helen, thinking your current situation is “as good as it gets”, I have encouraging news. It can get better, even great, if you take time to do good things. Good acts lead to great results. Need ideas or help? Give me a call or drop an e-mail. I’m just a good consultant willing to help you be great.

E-mail your comments on this article to Tom Pryor at TomPryor@icms.net.

(1) Words Aptly Spoken, Dr. Bob Moorehead.
(2) Big Things Happen When You Do the Little Things Right, Don Gabor, MJF Books, 1998
(3) Halftime, Bob Buford, Zondervan Publishing House, 1994
(4) Saving the Corporate Soul & Who Knows, Maybe Your Own, David Batstone, Josey Bass, 2003
(5) The Purpose-Driven Life, Rick Warren, Zondervan, 2002
(6) Infectious Greed, John Nofsinger and Kenneth Kim, Financial Times Prentice Hall; January 2003

 

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Tom Pryor
TomPryor@ICMS.net
(817) 475-2945

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