Chapter 4

Corporate Culture

Why you should fear your Accounts Department

I know of a company that made use of a lot of small independent consultants, including one consultant whose ideas had contributed millions of dollars to the companys bottom line. Then the consultants were all called to a meeting.

The accounts payables department, in an effort to streamline the bill paying process had decided to implement a preferred vendor list. The list consisted of just three consulting companies, none of which had ever worked at the company before, and one of which was on several managers do not call list due to bad experiences with them at previous assignments.

The line managers had not been consulted about the list but the accounts department had the backing of senior management and rammed through their policy.

The result was that several collective years of experience was lost, the potential for making millions was lost, the new consultants bought in were not familiar with the processes, users and systems, and because they enjoyed a preferred vendor system, the new consultants could charge higher rates than their predecessors. Several managers, unhappy at having their authority undermined, resigned.

How much this bureaucratic nightmare cost the company is anyones guess. The accounts department, however, did get their streamlined payables system, so they were happy.

This is not an attack on accountants. Its an example of what can happen when a company loses sight of the bigger picture.

The lunatics have taken over the asylum

So how do you control the control freaks? First, dont let them gather power to themselves unchecked. No one division in your organization should be subservient to the others.

There is a cycle of corporate growth. In the beginning, the company is small but focused on delivery. The product or the service is all important, peripheral functions such as accounting or payroll are necessary evils.

As the company grows, you realize that those peripheral functions are eating into your time. The more time you spend on those functions, the less time for your core business, the less productive you become. But paradoxically, the more you grow, the more you need these peripheral services, so you hire help, administrative, legal, etc. for a while, this helps as your core people can now concentrate on the business.

But what happens in the peripherals? These people want to be productive too, but that does not necessarily result in greater productivity for the company, as my accounting example shows. They end up doing what is more productive for their own departments. They start to pass on thing like documentation back onto the core.

Pretty soon your core people are spending more time filing the paperwork than they are doing the jobs called for by their job description. Paperwork becomes policy, policy become practice, sometime with detrimental effect.

This is not necessarily a vindictive or premeditated process. In fact it becomes an inevitable consequence of people trying to do their jobs as well as they can. Its just that sometimes the whole is less than the sum of its parts.

Should policy makers control the process?

Im not recommending anarchy here. Some level of standard, practices and policy have to be in place. In fact that is what a continuity strategy will help you define, but be careful of putting the policy makers in charge of either implementing or managing the policy detail. And also be careful of not setting policy in a vacuum. If your expertise is accounting, for example, you cannot expect to impose any kind of technical policy on your IT people without some level of umbrage.

There are two reasons for not doing so. One is ignorance yours. A little knowledge is a dangerous thing. If you think that you know your IT peoples job better than they do then why did you hire them? It shows an arrogance and disdain for their abilities that can only lead to resentment.

The second reason is empowerment. When you tell people, Im not the expert here, you are, I need your input, and you are much more likely to come up with a policy that is enforceable.

Make policy, yes, demand policy be followed, absolutely, but never impose policy from without, draw it up from within, allow procedures for exceptions to the policy, and it is more workable.

Corporate ethics

In the wake of recent corporate scandals, Enron, Tyco, World-Com and others, it has become apparent to me that these companies downfall was in large part because they failed to realize the role that corporate ethics has to play in business continuity. Its one thing to blame a rogue or dishonest employee for a corporations failures, but when those employees operate in an atmosphere that eschews traditional corporate ethics in favor of the quick buck or the quarterly balance sheet, then you are just asking for trouble.

I know that corporate ethics is an old fashioned idea, out of favor at the moment and secondary to the new idea that equates legality with ethics. If it is legal, it must be OK goes the argument.

Forgetting the moral argument for a moment, it is still not OK. Forget the slippery path from legal to illegal. When a company puts aside its ethical compass, it is adrift, at the mercy of pirates and heading for the rocks. If you disdain the value of ethics, it shows in your business dealings, it reflects in less loyalty and trust from your customers and more contempt from your vendors. Those that live by the sword shall perish by the sword.