6-14-10 What is Your Budget?

Every executive has a budget. And every executive knows exactly where he/she stands on spending the budget. No matter what level of executive you are, you will have budget constraints. Which leads me to one of the comments made by my survey participants. Remember I asked each participant what one thing that they wished they had known when they became an executive.

We know from the execution function of the executive skills and traits model that financial acumen is an important skill for the new and/or aspiring executive (1-13-10 Execution Skills -- Now go DO something!). This comment is an interesting twist on that financial acumen skill.

One particular executive said, “I discovered there was a tremendous amount of money needlessly tied up in reserve accounts and a lot of energy wasted hiding/holding on to those reserves”.

Okay, quit shaking your head. We all do it. Somewhere, buried deep in your budget is a slush fund. You “grew up” learning that reserves were required. If you didn’t have some extra funds in your back pocket, how could you possibly survive and pay for any unk-unks? Or how would you fund any unexpected opportunities?

So now you are asking… “are we all wrong? Should we not have reserves?” Well, yes and no. Unfortunately, there isn’t a straight answer on this one.

When is it appropriate? Perhaps when times are good because then the impact of reserves isn’t felt too keenly. Or perhaps when you are introducing a new product, when you can’t possibly have identified all of the problems and hitches that you will encounter. Or, as irritating as it is, when you know that your following year’s budget will be dependent on this year’s budget, including reserves.

You can tell that my survey participant didn’t think reserves were such a good idea. And there are times when he is right. How much time do you spend concealing or defending your reserves? Is it really worth the time and effort you put into it? I’ve seen some executives spend more man-hours defending a slush fund than the fund was actually worth. I just wanted to tell him that he wasn’t being very smart in choosing his battle.

Or have you checked into the overall financial health of the company lately? If your company is one of the companies that is laying off, I would suggest that you pony up your reserve immediately. There isn’t any reserve that compares to saving jobs. Or if your company is borrowing heavily just to stay afloat, then again, cough up the reserves.

Be smart about your slush fund and you won’t damage your company or your ability to survive and prosper.

Cheers!

2-1-10 Salute Smartly

I’ve always been a pretty aggressive person. I get an idea or a bee in my bonnet and I go for it. Generally, that has served me well in the work environment. But not always…….

Back when I was a first level manager, I had responsibility for the financial systems in the company. I remember one time where we had an upgrade to one of the systems that the team was proposing. We had done our research and come up with what I considered to be a very elegant solution. We went to the bosses and made our case. I thought it went very well.

What I didn’t realize was the full scope of the available support and funding for the opportunity.

As a result, we were told “no”. Instead, we were told to go do a smaller, less elegant solution. My team and I didn’t agree with this solution. So I went back to make our case again, and again, and again….. Well you get the idea. I was working hard to get approval for something that my team and I thought was the absolute right way to go. I guess that I was more than a little vocal about the situation.

Finally, my boss took me aside. He said, “Look, I really appreciate your passion for this and I really appreciate how you are supporting your team”. But then he went on to say, “Now knock it the hell off”. He wanted me to understand that having passion about your work is a good thing. However, I REALLY needed to learn that once the decision has been made, to quit arguing. That I needed to step back, salute smartly, and support the company line.

He went on to explain that by continuing to argue, I was giving my people false hope that the decision would be reversed. And I was subtlety encouraging them to rebel against what had been decided. Further, there would be times in my work life that I wouldn’t agree with the company position. But that until I was the CEO, I would have to swallow my arguments and support the company decision.

Frankly, that was a difficult lesson to learn. We all like to think that we are right in every situation. And maybe we are. But being right doesn’t trump supporting your company‘s tactics and direction. When it comes right down to it, there are times when you will have to internalize your disagreement and get on with business.

Cheers!

Work for Free??

I once had the opportunity to speak to a group of 11 - 15 year olds. What an experience! The requesting organization ask that I talk about my education, career, and why I do what I do.

Reflecting on the time I spent with those teens, I realize that I didn’t tell them the whole story. Yes, I talked about finding your passion. And I told them about the motivation of greed for my bachelors degree. But I didn’t tie the two topics together. I missed the boat there. They deserve to know that you can and should combine your passion with making money.

I’ve been fortunate over the years to have multiple jobs in several functions --- most of which, I’ve loved. Having that variety is good for me as I seem to have a “job attention span” problem. Leaving me in a job longer than 2 or 3 years tends to be dangerous --- as I will likely start launching some turds into the punch bowl just to stir things up and keep myself amused and engaged.

I started out in Finance. That was my passion. I loved the variety of challenges I faced. And I was rewarded with merit increases and promotions. I knew, early on in my career, that I wanted to take the management career path. Had I not gotten the promotions on a regular basis, my passion would have faded quickly.

However, after a creative stint in a company development program, I was exposed to Operations (manufacturing). What an intriguing area of business! I learned several important things upon my move to Operations. I learned that I love the manufacturing side of the organization. Watching the airplane go from sheets or blocks of metal to a finished aircraft is a fascinating process. (As an aside, if you ever have the chance to watch what the industry calls a PTQ, or put-together-quick, video of aircraft manufacture, take the time to watch it.) I loved the organization and the work (although it was HARD work!). I was rewarded, both monetarily and with promotions. But as with Finance, I wouldn’t have stayed engaged and enthused had the money not followed my passion. I’m only human, I wouldn’t have done it for free.

In today’s environment, many people are forgoing pay raises or even taking pay cuts just to keep their jobs. While I understand the necessity of cutting costs, that can’t be sustained in the long term. Mostly because, sooner or later, employees will tie together their passion with their pay. And if both aren’t there, really good people will move on to other opportunities.

What I should have told those kids is ….. While it is important to love what you do, it is okay to realize that you wouldn’t do it for free. One of the best things any person can do is to combine their passion with making money.