WHEN LOVE GOES WRONG & other personnel issues

No, this article is not about office romance.  It’s about when managers and their direct reports come into conflict.  With respect to Full Disclosure, I follow a newspaper column ‘Your Office Coach’ that appears every Sunday in our paper’s ‘Money’ section.  The writer is Marie McIntyre.  Marie writes the business version of ‘Dear Abby’ .

In her Sunday column, a lady writes in that she and her manager had gotten along very well and that her manager ‘was the best boss I have ever had’.  But now the relationship is broken and the employee feels as if her manager hates her.

What happened?  The employee’s company had a policy that no vacation was allowed in December.  I think we can all agree that this is not an unusual or particularly abusive policy.  I’m sure the company had  very good reason for it.  However, the employee had some family visiting over the holidays and wanted to spend time with them so she asked her manager to make an exception and allow her three days of time off.  What we know is that the manager granted her request but when the employee returned her manager seemed angry with her.

Ms. McIntyre’s response is an attempt to try to figure out what happened during the time the employee was off.  Having been in this position as Controller, on more than one occasion, I can understand what happened.

There are two types of managers/controllers………….the ones who like to say ‘yes’ and the ones who like to say ‘no’.  Obviously, it’s better for everybody when they have a manager that likes to say ‘yes’.

I suppose we could describe the manager’s behavior as passive/aggressive.  She said yes but didn’t really want to, so now she is taking it out on her employee.  The employee sees herself as a victim of unfair treatment.  These types of interactions are becoming more and more common as employees demand more flexibility in their work schedules.

Obviously, the manager granted the request but did not feel it was justified.  What if an employee says they need to be off on Friday for a doctor’s appointment that was difficult to schedule.  You would obviously grant this request.  But what happens when you find out they really went to the beach?  (Really – you should know most doctors don’t work on Friday!)

In my world what would have happened is this.  I would have agreed to give her the time off because I want my employees to think I am fair and the employee rarely asked for time off (let’s assume that).  During the time she was out, I discover a project she was working on is not finished as I would have thought it would be.  I have to assign someone else to pick up the project and finish it.  That employee would have to put in some overtime thus eating in to the time she needs for Christmas shopping (it is December).  The others in that department are resentful anytime I ask them to do something that would have been done by the absent employee.  Two of my direct reports come to my office to point out that it was a mistake to let her off and the consensus that it is very unfair to everyone else, especially since they have families too and would have liked to spend more time with them.

Does this sound familiar?  No wonder her manager seemed angry and resentful.  As they say, ‘no good deed goes unpunished’!.

How would you have handled this?  My only suggestion is to rewind this tape and go back to the beginning.

Did the manager remind the employee about the December policy?  Did this employee plan for company based on the assumption she would get the time off? Are you being taken advantage of?  How will her absence affect the company and its ability to do business during such an important time?  How will it affect her co-workers?  Will they have to work more and thus spend less time with their families over the holidays?

If the employee had come to you and said she needed three days off because her husband was coming home from a war zone for a brief holiday, you would have said yes and everyone would probably pitch in to help.  It’s when people feel taken advantage of, or the recipients of unfair treatment, that’s where problems arise.

In this case, both the manager and the employee were at fault.  What do you think?

Why Cash is always King – Part I

ProfitHaving worked most of my career in the agribusiness field, I have found the ‘Limiting Factor’ theory applicable to many areas of business.  The ‘Limiting Factor’ is a simple concept.  A plant needs many different types of nutrients (food) to grow.  You can supply all the nutrients it needs, except one.  Without that one, the plant cannot grow, in spite of everything else having been done correctly.  So all the other things you did right, they do not count!  The same with cash.  No money, nothing else really matters.

Even large businesses struggle with Working Capital needs

If the entrepreneur is the heart of the business, cash is the blood.   Lack of working capital is not just a start-up issue.  It confronts owners everyday, in spite of our low interest rate environment.  Where are the money ‘pits’ that working capital is usually trapped?

  • Inventory
  • Accounts Receivable
  • Fixed Assets

The pits mentioned above are, by no means, all of them but are generally the largest ones.  In future posts, I’ll talk about how a business can do a better job of managing their liquidity.  Ask yourself, is your banking arrangement facilitating your ability to grow your business, meet payment deadlines and invest in the future?  Just because you’ve done business with them for the last ten or twenty years does not mean you should be comfortable.  Do you have just one lender?  Should you?

The Cash Conversion Cycle

Simply put, the Cash Conversion Cycle is a measurement of how long it takes to convert the dollar invested into inventory back into cash.  Accounts payables affects the ratio as well.  You can probably find a more detailed explanation by googling it.  Many business owners understand that money tied up in Accounts receivables and inventory must be freed up as quickly as possible to continue financing the business.  Obsolete or damaged inventory takes up space and is no longer worth its original cost.  Accounts Receivables moving well past terms are problematic and may indicate you won’t be turning the receivable into cash as soon as you had expected.  A/R and Inventory are areas that owners and managers must be vigilant about.  Fixed Assets present a somewhat different issue.  There are really two types of assets – those that can directly produce income and those that do not.  For instance, a new (or used) delivery truck in addition to the one you have is an expansion.  If the truck has been added to service new accounts, and generate new or additional business, then that asset has income producing properties.  However,a fancier car for a manager or owner rarely translates into additional, measurable  income for the company.  Unless the company can clearly afford such a fixed asset investment, non-income producing asset expenditures should be avoided.

Unless your company is rolling in money, paying attention to cash flow should be a top priority.  More on this subject in future posts.

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