The Corporate Arena: No Place for Faintness of Heart or Naïveté
The Impromptu Meeting
Stefan walked in my office and gently closed the door behind him. He approached my desk, cautiously rolled back one visitor’s chair and sat down. For the year-and-a-half since he promoted me to assistant-controller, I could not recall a single instance when he had done that. Typically, he would stop at the door to exchange greetings or make a request, and leave shortly thereafter. “Something must have gone awry,” I thought, struggling to keep my composure amidst the heavy thumping of my chest. I stared at him intently, anticipating some unpleasant news. He responded with a facial expression that looked like a cross between a grimace and a smile–yet not a word. I managed to crack a smile so as to reassure him. It must have come across as contrived, judging by his puzzled look. He pulled up closer, laid his wrists on the desk, and reverted to a grave expression–speechless, still. “Words are not easy to come by in situations like this; they always fall short, never sound right,” I reasoned. I tried to scrutinize his demeanor for clues. Nothing much, save for a hardly discernible frown… “Get on with it, Pal,” I urged him on from within, a bit annoyed by what I perceived to be theatrics to drive the drama to its climax—as was often the case before the “executioner” swooshed down the axe of unemployment. Truth be told, Stefan never struck me as the type to indulge in such theatrics. But that he would not utter a word left me no choice but to entertain those unsavory thoughts. I surveyed my desk and its perimeter for a sense of what I would leave behind. Quite a mess: ledger printout binders strewn on the floor; in-and-out tray reeling under correspondence of all sorts; stacks of checks and purchase orders awaiting signature amidst bulky file folders claiming the lion’s share of desk space; and at the upper right corner of this cramped real estate, insulated from that insanity, my family picture–“the first family” as one of my colleagues dubbed it—looked on. I took an oblique peek at the jolly faces, as a sort of reality check. I visualized their incredulous reactions. This thought, in itself, sent a chill down my spine. With this in mind, I summoned a resolute gaze and directed it at Stefan. His face took on a somber expression as if some ailment was gnawing at him. This awkward moment was in sharp contrastHHhHhhhhhhhhhhhhjjjj with an encounter we had a couple of hours earlier, when we bantered about the weather, sports, and the like. Nothing prepared me for this drastic change, for this silence—a silence that felt an eternity long and a ton heavy. Well, enough of the drama! I scratched my throat. Stefan heeded the cue. As if he finally came to terms with himself, he raised his head, looked me straight in the eye, and decided to cut to the chase.
“Well, I came in to let you know that today is my last day with the company.”
“What!” I exclaimed.
“I think it’s fair that you hear it from me,” he said.
“You mean, you…” He did not give me a chance to finish my thought.
“Well, things haven’t been working out lately.”
“Suffice to say we’ve had differences about the direction we are going in, about some strategic issues, you know,” he said hesitantly, in an obvious effort not to divulge any sensitive information.
“Well, I was sort of riding against the tide. You know, I thought certain things could have been done differently,” he continues, still carefully choosing his words. “Obviously, it didn’t work out… Anyway, I had to let you know because you report to me and, as you know, I have a great deal of respect for you.”
“Well, thank you for that. And I want you to know that I truly appreciate the opportunities you gave me and the doors you opened for me.” Another awkward silence fell between us. I felt some guilt for having misjudged him. I had it so wrong that I felt ashamed of my characterization of his visit.
“Sorry, Stefan,” I muttered. Clutching the arms of the chair, he slowly rose. “What are you going to do?” I inquired.
“I don’t know yet,” he replied. “For sure I’ve got to look for another job. It does feel awkward; I’ve never been in this situation before,” he added “The toughest thing for me is…”
As Stefan let out his concerns, I could not help looking back at our itinerary over the past four years.
Back to the Beginning
I preceded Stefan at the company by about six months. I was brought in by his predecessor as a temporary financial analyst/accountant. At that time, I was working for a New York placement firm, whose clientele figured among the prestigious Fortune 500. Due to my track record, the firm considered me a good candidate for long-term assignments. So, when this second-tiered affiliate of a powerful leverage buyout company was in need of an accountant to help with a variety of tasks ranging from account reconciliations to systems conversion, the agency
deemed that my skill set matched up well with the assignment and recommended me.
On a September Monday morning, I showed up at the direct marketing professional book club company and met Bobby W.–a red-haired, medium-built middle-aged man with a
small hunch. He greeted me with a wide but short-lived grin and walked me to his office, palming en route his fancy sax-shaped pipe in his left hand. His mahogany-stained desk was clean and hosted a folder facing his chair. We sat for the opening conversation. He lit his pipe (we were then light-years away from the smoking ban); he dragged the folder closer and opened it. It was empty. He apologized for not finding the resume that the placement firm had faxed him. I tendered him the extra one I was advised to bring with me, just in case… This event, coupled with his tiny eyes shielded by silver-rimmed spectacles, conveyed the image of an absent-minded professor more than that of a controller. For about half-an-hour, he discussed the nature of the assignment and what he expected of me. To start with, he tasked me with the reconciliation of payroll accounts, which had been a conundrum for his office. He did not have a payroll subsidiary system that could interface with the general ledger. Payroll entries were processed manually and posted to the mainframe system. These entries were input pell-mell into the general ledger visibly by an inept or a hasty hand, and caused the financial statements to be misstated. My task was to help the payroll manager, Rosalind H., analyze the entries and make remedial adjustments. Bobbie W. wanted the clean-up done by year-end so that the financials would not be skewed and the new financial systems could start off with a clean slate.
When I was one month into the project, Bobby W. hired Enrique R. to oversee the implementation of the new financial systems. Till then, the company’s systems of record consisted of a mainframe computer named Cullinet. Mainframe computers by the early 1990’s were falling out of fashion, for they were bulky, slow, and had many limited functionalities. Cullinet had run its course. It was time for an upgrade and an opportunity to cash in on the promises of the new computer age, characterized by smaller and more efficient operating systems, more flexible
software applications. The company elected to migrate from Cullinet to MAS90, a new wave Windows-based financial application. Enrique was to ensure the migration. For some reason, that news was never made public. More out of absent-mindedness than malice, I surmised, Bobby failed to fulfill the formality of introducing the new hire to the staff. Regardless of the motive, this breach of decorum did not sit well with Enrique. After all, he needed an introduction. Standing four-foot-something, the baby-faced Napoleon-like Enrique looked more like an intern on a filing assignment than the project manager whose mission was to usher in a new technological era in the company, to transition the office to Windows-based operating systems, and to efficiently manage the month-end close and reporting processes—an enormous undertaking. He was not ready to discard the thought that Bobby intentionally down-played his coming on board. As he recalled, Bobby seemed the least impressed, among the interviewers, with his credentials. True, he would not bring in heavy hands-on experience in systems implementation; he never pretended so. He had a knack for systems, kept abreast of the rapid development in that area, and had enough theoretical and hands-on knowledge to hold his own in dealing with experts in the field. Rather, he was trained as an accountant at some small publishing firm he had been with since high school. There he grew under the tutelage of an experienced accountant, whom he credited with instilling in him a keen interest in accounting, with sharpening his skills at balancing books and reconciling accounts—which, ultimately, influenced his decision to seek an accounting major
in college. He was an accountant who dreamt of becoming someday a certified systems engineer. As noble a pursuit as it sounded, this was not about to make Bobby W. swoon. A certified public accountant (CPA) with many years of experience, he has seen better credentialed candidates in his career. So, from that point on, Enrique figured that he has to prove his worth to his new boss.
It took me about six weeks to help straighten out the payroll project. Bobby assigned me next to the Royalties section to lend Irina E. a hand with the reconciliation of the royalty accounts. Royalties played an important role in the book club line of business. At its core were intricate contractual and accounting issues between authors and publishing companies, made even more challenging by advance payments to authors. On a quarterly basis, the accounts had to be reconciled so that the company’s liabilities could be assessed and royalty statements and payments issued accordingly. Yet again, there was no subsidiary software to feed the data to the general ledger or to the accounts payable module. Suffice to say that it was another laborious process, which resulted in stacks of written up journal entries to be keyed into Cullinet. Irina, who was still quite young and enrolled part-time in a Bachelor’s program at the City University of New York, had been entrusted with this important job for a number of years, with temporary help at peak times. Before I could put a dent into this project, Bobby directed me to assist Enrique with the systems conversion, as year-end was approaching.
When I joined Enrique, two consultants from the software company were on hand to support his endeavor: the portly and bushy-mustachioed Andy G.—the bon vivant type; and the younger, slender and relatively tall Andy S.—the all-business type. They complemented each other, in that one concentrated on the mechanics of the conversion, while the other dealt mostly
with security and server issues. This collaboration, which started under the best auspices judging by the chemistry that was developing among the three, was suddenly curtailed when Andy G. succumbed to a heart attack after tennis practice. He was forty-three. He would not be replaced. Enrique lobbied for support staff to help him with some of the menial tasks. Bobby assigned Christie T., a secretary/clerk who had been supporting the accounting office for the past decade or so. She was the uninhibited type, whose specialty was to shoot off her mouth—which brought her a large share of trouble. However, her undiplomatic style was the least of Enrique’s concerns; they bonded instantly.
Good Bye, Bobby W.
Early on, signs of malaise between Bobby W. and Enrique surfaced. The latter did not feel that his boss understood the intricacies of the task at hand, while at the same time he was trying to
micromanage him. Politically astute for his young age, Enrique managed to have the ears of the vice-president of Operations, Den C., the brain trust of the company, and of the CFO, Sammie B.,
a mild-mannered and very affable man with a ready smile. He interviewed with them as well for his position and left an indelible impression on them. When he came onboard, his ability to shine in meetings had further won them over. He judiciously leveraged this relationship to navigate the political waters in the firm… Bobby, however, could not parallel such success. In fact, Den and Sammy grew disenchanted with him. This association abruptly ended when a month-end close went awry. At this point, I will open a parenthesis to explain some accounting terms, such as accruals, month cut-off, late bills, and month-end close. Accruals are transactions–e.g., supplies purchased, professional services rendered, salaries due– that have been incurred for a particular period, but not paid by the end of that period. Under the accrual basis accounting method, a company recognizes such expenses in the accounting period in which they are incurred so as not to overstate its net income. (Most corporations elect to use the accrual basis accounting method as opposed to the cash basis, under which transactions are recognized when cash actually changes hands.) Secondly, month cut-off is a mechanism that large corporations use to facilitate timely completion of their consolidated financial statements; the cut-off is a few days shy of the end of the month. For instance, the cut-off for the month of January could be January 24th because January 31st would make it impossible for the parent company to close its books in a timely manner and publish its consolidated financial statements on time for the month of January. In that light, the month of January would run from December 25th to January 24th. The cut-off would apply
to revenues as well. Under the matching principle, all expenses applicable to a period must be recognized against the revenues earned for that period. Thirdly, late bills–a terminology peculiar to this company– consisted of vendor invoices the dates of which fell within the reporting period, and which were received after the cut-off. For instance, January late bills would be made of invoices dated December 25th through January 24th and received after the cut-off. The Accounts Payable department was to total the amounts due for these invoices and communicate the total to the
Accounting department. The total was then recognized (accrued) as January “late bills” accrual via manual journal entries, otherwise January expenses would be understated and income overstated. The intent was to reverse the “late bills” in February, via another manual journal entry, otherwise February’s expenses would be overstated and net income understated. Lastly, month-end close is the process involved in ensuring that the various accounting books (ledgers) are properly closed out, i.e., reflect all transactions pertinent to a period. This background having been set, let’s go back to Bobby W.’s dismissal. It happened during an October month-end close. The September late bill journal entry was not manually reversed in October. As those late invoices were actually keyed into the Cullinet during the month of October (September 25th-October 24th), it was important that the reversing journal entry, likewise, take place in October to avoid duplication of these expenses: through the September manual journal entry, those bills were recognized in September; then, through the system, they were recognized a second time in October. Late bills were a burden to contend with month in month out, especially in an environment where system limitations could not help with an automated reversal process. And Bobby W. did not have a
fail-safe procedure to deal with them; apparently, he did not even have a month-end close checklist. As the bills tended to be of material size, net income for October plunged against all expectations. This was a big deal. This could not have come at a more inopportune time, precisely when the parent company was trying to establish a solid track record in preparation for “going public.” Thankfully, the 250-pound Den C., posing as a quality control linebacker, spotted the error. He was skeptical of the “worse-than-expected” results and sifted through the records. He saved the firm the embarrassment of having to revise incorrect financial statements submitted to the headquarters. That this error slipped by, unnoticed by Bobby W., smacked of
incompetence in the eyes of senior management. He was summarily sacked.
Bobby W.’s dismissal did not trigger widespread consternation. He did not have an army of backers ready to come to his rescue. In fact, one would be hard-pressed to find anybody sympathetic to him or chagrined by his departure. The ladies were the most ardent cheerleaders of his demise. Stories abounded about how uncomfortable he had made them feel. He was rumored to display lewd behaviors in their presence or around their cubicles. Some insinuated that, when he had his hand in his pant pockets, his fingers were not actually counting his change; rather they were roaming his sub-abdominal ravines and valleys, toying with his precious limb. One who deemed this depiction a bit exaggerated and found Bobby some attenuating circumstances was harshly rebuked.
“Well, if he’s not comfortable in his briefs, why doesn’t he wear boxers then?” thundered loud-mouth Christie indignantly, visibly annoyed by that lone dissenting view.
Suffice to say that Bobby W.’s journey was an uphill battle on many fronts. But one could never tell from his demeanor the storms he was faced with. Though his empty gaze at times
suggested something was eating at him, he strove to dispel any notion that things were not going well for him. To the usual “How are you?” he invariably responded “Never better!”—which came out like a well-rehearsed refrain.
Systems Parallel—A Daunting Task
When the news of Bobby W.’s dismissal reached him, Enrique was not the least surprised. He saw it coming, he said. He could not help feeling somewhat validated. He had called Bobby W. out on a number of occasions and felt he was not up to the task. Despite his experience as a CPA, Bobby W. could never reach cruise speed at the company; the publishing/direct mail
industry tested his ability to adapt to a new industry and served him what amounted to be an insurmountable challenge. Now that his boss was gone, Enrique could strengthen his position. Now
was the time to back up his astute political maneuvering with palpable deliverables. His challenge was to transition seamlessly from Cullinet to MAS-90. He figured that the two of us, with the technical help of the consultant, Andy S., and Christie, should be able to establish the structures and procedures to run a successful parallel between the two systems and charter a new technological course for the company.
Enrique charted out the project schedule with target dates and milestones. My initial assignment was to set up the chart of accounts, define rule codes for the types of accounts, and enter the budget data. Then, I had to create the financial reporting package, which consisted of dozens of reports from profit and loss (P&L) statements and cash flow to balance sheet and supporting schedules, and an array of departmental reports for the major product lines. Enrique was to design the account structure, set up the security features, parameters and attributes, and uploaded the
reconciled account balances and cumulative activity. He insisted on personally taking care of the accounts payable (A/P) conversion. (He always had a soft spot for A/P; I supposed it reminded him of his days at the small publishing company.) The two of us occupied an office and spent a great deal of time pouring over the systems manuals to make headway with our respective tasks, meet milestones, deliverables, deadlines, what have you. It all had to be done in time for submission of the first quarter financial statements to the parent company, in just about three months’ time. Above all, the systems’ parallel presented a most serious challenge. On the one hand, it meant duplicate tasks for the staff, as they had to process the same transactions separately on the two systems. This created a sort of malaise, a suspicion that all this was not just a makeover of the financial systems but part of a strategy to achieve economies, which eventually would cost them their jobs. How cynical of Management, they must have thought. Yet, as unpopular as the conversion could be, the staff felt it was unwise to antagonize Enrique, whose star was rising. On the second hand, we had to produce MAS-90 financial statements that tied into Cullinet.
Senior management gave Enrique the free hand he longed for. They had no choice. Except Den C., they were not versed in, nor did they care about, the intricate world of systems parameters, identifiers, attributes, etc. They cared about results. Enrique knew it as well and made sure he kept them abreast of the developments via regular meetings or briefings. We achieved some notable progress along the way, such as a trial balance that tied into Cullinet’s. It was all well and good but, to senior management, it was still a long way from the more palpable and palatable profit and loss statement (P&L), the ultimate avatar of success by which they could gauge the bottom line. This was the thrust of my assignment: designing the company’s financial statement package starting with the P&L. Such a task was all the more challenging that there was no canned report that we could customize. We had to create a template from scratch and model
it upon the Cullinet P&L. Two months into the conversion, the parallel was a painstakingly slow-moving, elusive and frustrating process. Two weeks from the deadline, the P&L was still in an embryonic stage. I did manage to bring some data into specific lines of the statement, but the challenge was to make formulas, such as gross and net margins, percent-of-sales calculations, and variances versus budget and prior period, work and print out. Down to the final week, I worked on the template with much frenzy and excitement–frenzy caused by the pressure to deliver and excitement brought by the creation process. Yet, the excitement was tempered by the realization that a lot was riding on the success of the conversion and that not delivering it would be a death sentence for many people, including Enrique and myself. D-day was a Friday. The night before, I broke through with the formulas, safe for the variances, which calculated backwards. It was late into the evening; we decided to call it a day. We had one more day to get it right. We came in early that Friday. Enrique reviewed his project management checklist; everything was pretty much on schedule. Andy S., the consultant, had been on hand all week long, making sure all security features were in place, that the server was running as it should, that the data on the test company sustained all checks and balances, back-up procedures set. Everything was fine… except for that darned P&L, the ultimate test that would give comfort to upper management. The Cullinet P&L was run. And waiting… Would MAS-90 match up? The stakeholders were waiting with great anticipation. We noticed more traffic around our office with occasional furtive glimpses inside as if to gauge the mood in there or catch vibes or clues on how things were proceeding. The mood inside was indeed intense, but not panicky. Enrique was not the type to easily depart from his composure. As striking as his physical resemblance with Napoleon was, he did not share his petulance. He did share his intensity and pugnacity; however, he did not wear his feelings on his sleeves, as it were. So, as much as others tried to read him that morning from afar, he did not give them much to walk away with. We kept our cool; at least from our perspective, there was light at the end of the tunnel. And, indeed, around midday, Eureka! I broke through with the variance formulas using a small scale of dummy figures: an increase in expenses over budget returned a negative variance, while an increase in sales showed a positive one. With this step, I sensed victory finally in sight. After successfully rerunning the statement with a larger set of dummy figures, I let Enrique know of the breakthrough and signaled we were ready to run a test… This was the true test, this time against live paralleled data. Right around lunchtime, I ran the MAS90 P&L, still with a knot in my chest and hoping it would work out. Enrique and I poured over the report, eye-balled the bottom line and scrutinized the variance columns. We pulled the Cullinet control report. Hurrah! We had successfully crossed a major hurdle in the parallel process. Enrique picked up the two reports and paraded them within the corridors of power. He had achieved legitimacy.
Stefan E. in the Mix
The success of the systems conversion added wind to Enrique’s sail. His plan was to leverage this success toward a bigger stake in the organization. He let it adroitly be known that he was not going to be content to be a middle manager position on par with the other two or three managers who were already on board. He thought of himself of a different caliber that brought to the
organization a multi-dimensionality the other managers did not possess. In addition, he did not feel bound to comply with the status quo, with which the other managers had grown comfortable. Meanwhile, between us a bond was burgeoning. For years to come, Enrique was going to be an advocate for me in terms of my professional growth. Our relationship was one of mutual respect and camaraderie. We shared stories, cracked jokes. The offspring of an American Indian father and of a Jewish mother of Russian descent, he had an older sister and a nephew to whom he was a father figure and felt like an older brother. Of his grandmother he painted the portrait of an austere lady whose favorite word in the English language, “Ingrate” or “Ungrateful”, continued to fondly resonate with him and trigger many a chuckle due her heavy Russian accent. He disclosed his penchant for fast cars—Mustang in particular, his infatuation with the Rock group Guns and Roses. He confessed his agnosticism, revealed his fascination by the poetry of Edgar Allan Poe and his depiction of human nature under the guise of dark stories. He could speak as a connoisseur of French impressionism, particularly of Degas’ painting. I found all that quite impressive, as I encountered that breadth and depth of knowledge only among the top layer of the corporate world, not at staff or mid-management levels.
The search for Bobby W’s replacement culminated in the hiring of Stefan, a CPA with years of publishing experience and auditing background. Stefan, Enrique’s new boss was a mild-mannered man with a singular timber which conferred a funny tone to his conversations—kind of a soprano tremolo mix. His redundant derriere reposed on short legs, one of which had a noticeable limp. This tableau made him an interesting figure. He did not come across as having joined the company with an agenda. Surely, the firm was in the midst of transition, but he did not see his role as a catalyst for change. His first preoccupation was to make sure the new financial systems delivered on the promises everyone had come to expect. The stakes could not be higher for him: after all, he was from that point on in charge of the financial statements that would wind up every month on the parent company’s CFO’s desk. And, in a more visible way, the cover memo that accompanied these statements en route to Park Avenue was going to bear his name. So, he had a vested interest in ascertaining that the systems that produced them were a well-oiled and well-maintained machine.
Moreover, as Den’s direct report, Stefan has stewardship of his legacy. He would not dare squander the goodwill his boss had amassed through many a late night devising controls and procedures, through oft-times contentious conversations with auditors. He knew he could not afford to tamper with that legacy with impunity. His predecessor’s fate was a constant reminder of how unforgiving and fatal lapses could be. Other challenges laid ahead for him, as talks were underway for the acquisition of a well-known Tri-State publishing company. The headquarters had
not decided on the form of its integration into the corporate structure; however, rumor had it that it would be splintered, with one of its two divisions partnering in some fashion with our company. That spelled growth for our operations and, along with that, more responsibilities. But, first thing first: staffing was paramount. Stefan had to go through an inventory of his human
capital, assess its quality, caliber, and adequacy. The accounting department was headed by Luke C., who had been with the firm for many years and weathered numerous storms. He was very familiar with the operations. The conservative and cautious Luke did not see a need to deviate from established practices. Stefan had no qualm with that. He was further reassured that Luke
was backed up by a seasoned accounting supervisor and a relatively stable staff. Yet, he knew he had to play his hand with dexterity. On one side there was Luke who felt a high degree of allegiance to the company; and, on the other hand, there was Enrique who felt no compulsion to maintain the status quo. Stefan had to find a happy medium between Luke’s “make no waves” attitude and Enrique’s “rock the boat” approach. That these two did not develop any working or social relationship whatsoever made the task even thornier. Enrique thought of Luke as being too
cautious, timid, lacking self-confidence, and incompetent. Luke saw Enrique as brash, ambitious, and pretentious, and deliberately kept his distance. Stefan’s other direct reports had issues of their own. Payroll was in the hands of Rosalind H. However, she badly needed an assistant; part of the reason why I was brought was that she did not have the manpower to clean up the payroll imbroglio, reconcile all the accounts, and handle the various State and Federal filings; all she succeeded in getting was temporary help. Accounts Payable did not have a supervisor for quite some time. It had some semblance of stability thanks to a long-time assistant supervisor who filled the interim. So, Stefan had its work cut out for him.
The World of Den C.
Personnel issues aside, Stefan had to create slack so he could fill the vacuum Den gradually left as he moved to other areas of operations. This necessity was all the more pressing that the takeover talks ratcheted up and demanded more of Den’s time. As the Vice-President for Finance, Den played a major role in takeover transactions. He was the guru of acquisition reserves—a kind of reserves set aside to provide for transition costs, or acquisition-related expenses; i.e., costs of running parallel operations until the new company could integrate our structures. One example of such transition costs would be those of migrating data from the acquired company’s systems to the parent’s systems due to incompatibility. Because of their temporary, extraordinary,
and oft-times redundant nature, these costs would not be considered period costs, as they would negatively impact net income. Den made sure they did not wind up on the P&L, but rather against the acquisition reserves. To that end and due to the high audit exposure they were subject to, he set the protocol for expensing these reserves and personally authorized all related journal entries. He was an old hand at this. A couple of years back, he conducted due diligence in the buyout of a prestigious luxury-bound professional book club from Virginia. He was looking forward to a repeat. In addition, he devised all the reserve adequacy studies (inventory, receivables), monthly equalization schedule for rent holidays, amortization schedules, you name it. He was a master at building cushions for “rainy days.” His resourcefulness made believers out of Sammy, the CFO and Petey, the President. Both would not make a financial decision without running it by him and securing his “imprimatur.” He made them look good, especially at year-end when their bosses at the headquarters pressed for “more goodies” after preliminary EBITDA (earnings before interest, tax, depreciation and amortization)—a key measure of operational success–had been flashed over. That was the time when he got to show his craft. And did he relish it! Flashing a
self-congratulatory grin, he would “go to work,” as he put it. And infallibly, time and again, he came up with the “goodies” the headquarters asked for, to Petey’s and Sammy’s elation. He wielded
such influence within the company that the auditors would not complete their engagement without a series of chats with him; that the parent company felt gratified that he was on board as its plan to “go public” was picking up steam. This was Den’s carefully woven legacy—a world of creativity and excitement, but also a world of “living dangerously”–a treacherous one fraught with perils, where all faux-pas were potentially deadly. Yet it was where the glory was; where his impact was most enduring; definitely where his heart was, not in the trenches of day-to-day operations. He
could not wait to be relieved from that day-to-day business and pass onto Stefan the predictable world of accounting, staffing, systems, etc.
From Milestone to Milestone
Meanwhile, the new systems implementation marched on. I fine-tuned the P&L and issued a couple of key departmental reports. Enrique put the final touches on the security features, his allocation program routine, and nightly server backup processes. Then, to support the new acquisition effort, we tested the systems’ ability to house additional companies and consolidate
the results—again a new territory. Enrique figured he needed extra help. His budget allowed for another temporary accountant. Stefan approved the paperwork right away. Enrique contracted with Patti H., a CPA who counted many years of experience in public accounting at one of the Big Six. She could not start until a week later, after she had finished grading the CPA exam; she was under contract with the AICPA for that service. Patti was to help me to set up a plethora of supplemental schedules and complete the financial reporting package. She was a middle-aged woman who had no predilection for small talk or socializing–definitely not the loquacious and vivacious type. She kept to herself, would not jump into a conversation even when an opening was made to her. On the Myers Briggs chart of personality types she would be a strong I (introverted). If she were forced to concede a smile, it was just a furtive one, not longer than a flicker, after which she would comfortably revert to her normal stance of impassivity and impenetrability. She had strong professional ethics; she always came in on time and left at the stroke of 5:00 pm. A heavy smoker, she could not wait to leave the building to devour a cigarette once outside. (She would not smoke on the premises, though we were years away from the smoking ban.)
The task at hand was: set up the P&L template for each of the ten product lines, create templates for natural expense departmental reports, and test them out. Patti’s efficiency helped us get ahead of schedule in a number of areas. What helped as well was her hermetic demeanor, which did not leave any room for goofing off. In the meantime, Enrique divested himself from the systems operations; he hired and trained Jena G., a petite, headstrong, heavy smoker as well to take over that part of operations. This progress allowed Enrique to start devoting time to the acquisition because systems support was needed in that area. The fringe benefit of this change, from Enrique’s vintage point, was that it put him in select company with Den. The duo made
frequent trips to Connecticut to be familiarized with the acquisition prospect’s modus operandi and its integration plan within the structure of current operations. Enrique had been thinking
about life after systems conversion. These trips with Den cracked the door open for him to build up on the goodwill he gained from the stellar systems migration he spearheaded. The takeover of the Connecticut Company called for significant changes in the make-up of the company. The modalities of these changes were still in their infancy; ideas were tossed around towards a pragmatic
solution that would minimize disruptions in the workflow and safeguard the market position these companies enjoyed. All this was music to Enrique’s ears. He envisioned a position with staff responsibility and a direct line to Stefan. Under no circumstances would he settle for a position under Luke C., who, by his assessment, did not have the depth and width of knowledge required of the holder of a managing position of such importance as accounting and finance. The company was not at the point of crossing that bridge; however, he put everyone on notice as to what his plans were.
Stefan’s Highs and Lows
Stefan’s learning curve did not seem a steep and arduous one; he was making important strides in his new position. Overall, the reaction to his coming on board was positive. Under the tutelage of Den, he survived his first quarterly close. He showed he was capable of owning this process. He was more engaged than his predecessor. He met regularly with his direct reports, trying to understand their individual responsibilities and apprise himself of the culture and ambiance of the place. The staff was a diverse bunch, in terms of age, social extraction, national identity… They got to take a closer look at him. He came across as a nice guy, a family man with two teen-age sons whom he always found a way to bring into his conversation. It did not take long for people to notice his tendency to shoot from the hip, perhaps more out of awkwardness than malice, perhaps from pushing too hard to be funny—which he was not. He was slowly building a small reputation as a gaffe machine. Another particularity of his was forgetfulness. From a conceptual standpoint, Stefan showed good command of generalities and could perfectly relate his experience to current situations. However, for the life of him, he could not commit a figure he saw the day before to memory. A key figure from the financial statement draft could change from one day to the next, and he would not have noticed it. Things like that would irked Enrique. That an accountant was oblivious of facts and numbers was unforgivable. Enrique, who had learned this lesson from his old mentor, held in high esteem those in the accountancy field who could argue that some figure changed from what it was a couple of weeks earlier. He predicted that this lack of awareness on Stefan’s part would doom him.
New Role for Enrique
Patti and I played our part in the successful conclusion of the first monthly and quarterly closes. Except for the balance sheet, we created and ran a whole core of financial reports by departmental or product lines, comparative analyses, natural expense schedules. With this achievement came the realization that a temporary assignment was nothing but fragile and insecure. Enrique had to make a decision; he could no longer justify the need for two temporary accountants. He let Patti go, with a promise to bring her back when conditions would allow. Meanwhile, the takeover was in its final stages. The most likely scenario was shaping up in the form of a realignment of the Connecticut operations. The youth book club was big enough to stand alone
and would remain intact in CT. The children’s magazine, however, was subject to wide-ranging changes. From an organizational structure perspective, Petey would be president of both the NY and CT children’s magazine operations; as such the publisher of the latter would report to him. While still headquartered in CT, the children’s magazine would enter into an operational partnership with our company as regards fulfillment and accounting. More specifically, the administration, marketing, editorial, copy writing operations were to remain in CT; fulfillment
functions (order processing and related functions such as accounts receivables, inventory and warehousing) would be handled in New Jersey; the accounting, payroll and systems functions were to be outsourced to our company in New York, with an allocation scheme of 35% for payroll and systems, and 100% for accounting. In other words, the entire accounting functions would be housed in New York. A separate accounting section! Enrique was vying for a position of significance evolving from the systems conversion experience. Having established his credentials in that regard, he would also be in charge of the new accounting team. That was killing two birds with one stone… that is, if he were offered the position. Why wouldn’t he be? He had lobbied for it, plainly spoken about his ambitions, and secured an interview with his mentor, Sammy B., and virtually received assurances that the position would be his at the opportune time. He knew that it might
take another couple of months to finalize the deal, and some four months to transition from CT to NY. He understood all that.
New Team on the Block: Baptism by Fire
The acquisition was finalized. The realignment was done along the lines indicated above. Enrique became the accounting and systems manager for the children’s educational magazine segment, whose senior management, including the publisher, remained in Connecticut. But Enrique was based in New York. He needed a staff. He recruited two young ladies who possessed
some publishing experience—one of them having worked for a sports magazine start-up that debuted with much fanfare two years earlier under the stewardship of a venerable sports commentator but unraveled not long thereafter. Enrique considered her recruitment a hit. To complete the team, he needed someone to play the role of second-in-command, a lead accountant. He hired me for that position. By so doing, he had to wrest me from the agency. I had worked for the latter for so long—plainly speaking, they made quite a bit of money off my services–that they settled with the company for a symbolic fee. Stefan did not see this as a barrier. This was how I parted ways with the agency, through which for the previous three years I acquired valuable finance and accounting experience at two top brokerage firms and a worldwide benefit consulting firm. Enrique prided himself on assembling a “strong” team. As a foursome, we made a couple of trips to Connecticut to acquaint ourselves with accounting issues and procedures, and develop a rapport with our peers on the other side of the border.
The real test for our team came at the first month-end close. One of the rituals of the close was the submission of the financial statements (“FS”) to the parent company for the month. To
make sure the induction into this sacred corporate tradition was done under the best auspices, Den claimed the task of breaking us in. We were thrilled at the prospect of being trained by the architect of the company’s modus operandi. The report was due to the headquarters on a Friday. All through the day we waited, but nothing happened. Meanwhile, Sammy’s cardinal rule about the FS was made abundantly and redundantly clear to us: under no circumstance should the FS be late to our parent company; no effort should be spared to deliver the thirty-page package
on the due date—late night or wee hours of the morning were all part of the bargain. At 4 pm we were still waiting. By then we had printed out all the relevant systems reports. How to translate them into the financial package was the issue. Stefan advised us to take the first stab at it. He had finished reviewing the FS for the sister company and was looking forward to a quiet weekend with his family. Around 5:30, Den decided it was time to take over. We gathered in his office. He took a quick look at the preliminary draft and asked about our preferences for dinner.
We looked at one another with a surprised frown. Did he mean…
“We’re not going to be done soon,” he added with his characteristic grin, while rolling up his sleeves.
We didn’t know what to make of it, exchanging bewildering looks among ourselves. When he passed out menus to us, we realized he was serious, yet secretly hoping we could cut out much sooner than he anticipated. The package consisted of main statements (balance sheet, cash flow, and P&L) and subsidiary schedules tying into them. However, statements and individual schedules were not systemically linked, so that any changes affecting the sub-schedules would not automatically flow through the main statements; and vice versa. It was a maddening cross-referencing exercise. Den showed how deftly he could juggle with the figures to validate the reported financial data. We finished eating dinner around 9:00 pm and were still working on the first draft; we had left out about one-third of the schedules, unsure of what to do. The package had to be thoroughly done. All in all, it was 2:30 in the morning when we were doing the final proofreading of the package. Everybody at that point was run down, but so close to the end we were resolute to make the last ditch effort. At 4:00 a.m. Den christened the package and ordered it routed to Park Avenue. It had to be delivered before the next working day. Enrique volunteered for the assignment to make sure that the package was placed at a convened location to be picked up by the first person in. It was then 4:30 am. By the time the limo dropped me off home, it was 5:30.
That session of “baptism by fire” left an indelible impression on us and fostered our understanding of the business. Through Den’s training we began to grasp the intricacies of the procedures that supported the transactions on which the financials were based. Little by little, we took ownership of that process. Yet that first experience left a bitter taste in the mouth of one of
the new hires, Martina, who thought she didn’t bargain for the late nights and the pressures that financial reporting brought to bear. She didn’t have strong credentials in the accounting arena. Enrique knew about her limited accounting skills, but was enraptured with her communication abilities, her forthrightness and aggressiveness; she fit the profile of a “go-getter”. At the other end stood Shondra, who possessed very good accounting skills but did not have Martina’s flashy, flamboyant and outspoken style. All in all, they complemented each other. Subsequent month-end closes with their plethora of financial schedules and analyses were not as painful as the first one. We picked up the pace and curtailed the turnaround time as expected. Yet the late nights around the last week of the month and the first week of the following month were a normal occurrence. Moreover, we had to black out the month-end close week on our leave time calendar so that all of our efforts could be dedicated to the close.
Eventually, Stefan became involved with our side of operations. He took over the review of the financial statements from Den. Also, he moved on to fill the accounts payable head position. The best candidate would settle for a managerial title and demanded that the Royalties be overseen by her. This settlement outraged Enrique, who deemed Stefan was conned. That she was a CPA did nothing to temper Enrique’s criticisms. “What respectable CPA would go for an accounts payable job!” He quipped. His take was that Stefan played into the hand of a con artist. He could not wait to meet her.
Missing in Action
Months passed. Our team grew more acquainted with our job; our learning curve turned out being relatively short. Our progress was shortened by my going on medical leave for surgery due to a herniated disk. This would put me out of commission for some six weeks. For the three weeks preceding my announcement, I had been plagued with excruciating pains on my lower back,
which necessitated a MRI. The specialist I was referred to, one of the best in that specialty, recommended surgery. My announcement was greeted with surprise by Stefan. He asked me to see him. He pounded me with questions about my symptoms, about the options I was presented with. He commiserated with me. He was surprised that I didn’t want to consider these options–to which I responded that my decision was a no-brainer considering the pain was unbearable and one of the finest neurosurgeons around would be presiding over the surgery. He concluded the chat with a look I could not decipher at the time—a mix of pity and bewilderment over what he perceived to be a foolish decision; then he said, “You’re a brave man.” Only then did I reckon that his keen interest was in a sense self-serving. Only then did I connect the dots to and realize that he procrastinated all along, notwithstanding the pain he endured, and in the end wound up with a permanent limp, because he was scared of surgery and talked himself out of it.
I was out on disability leave for six weeks during the summer. Due to the seasonality of the educational segment, my absence did not have a detrimental impact on the operations. The period May through August was the enrollment season for the upcoming school year. From the perspective of operations, this was a busy period for the Fulfillment Department as, pursuant to the spring promotional campaign, teacher-parent associations (TPA) from schools across the country forwarded student subscriptions to grade K-12 periodicals before the summer break. Fulfillment had to make sure that the customer accounts were set up, production scheduling was in gear, adequate inventory in place, delivery logistics planned so that these orders could be filled at the start of the school year. As for the Accounting section, this period marked a brief interlude where, due to the above-mentioned seasonality, scarcely any revenue was earned, safe for the higher grade book clubs. Most of our time was devoted to cleaning up the books, maintaining the deferred revenue accounts and the related recognition calendar. It was also the time to review the receivables, process eligible write-offs, and study the adequacy of the reserves. These tasks were performed at a higher level, namely by Den, with our input. All in all, that period was less taxing on the staff: the monthly closes were relatively uneventful and took much less time to complete. So, insofar as its impact on operations was concerned, my leave could not have happened at a more opportune time. In fact, Enrique only called me twice about business. He made sure that I received all the benefits I was entitled to. He also asked me, when I was ready to resume work, if I needed limo service for the first couple of days to ease my way back into the flow. I declined. He then proposed a flexible schedule for the first week to allow me to avoid the rush hour hustling and shoving on the subway.
Enough for Martina
I was welcomed back to the office six weeks later to find that a lot of changes had taken place. Enrique had recalled Patti, this time as a full-time lead accountant. In my absence, he promoted me to accounting supervisor. The paperwork was processed in time for me to sign it upon my return. That was quite a surprise. Stefan hurried in to find out about how I was feeling and looked amazed that I actually was able to walk on my own. All along our conversation, he kept saying “Amazing!” In the end, my recovery went on schedule. People had a clear sense of my progress three months later at the Christmas party when I rocked and rolled my way around the dance floor… I found out upon my return that the company had moved closer to its goals of going public. This was lauded as a collective effort, as a testament to the strong esprit de corps that, in management’s word, had always been the hallmark of the company. They acknowledged the effort the staff put forth and the enormous sacrifice they sustained. In return, they pointed to substantial benefits that would be accrued, once the parent company achieved publicly-traded status. But the headquarters placed the onus fairly and squarely on the subsidiaries’ management to deliver quality financials and steer from embarrassing situations leading to restated financial statements due to errors or omissions of material significance. They made an unwavering commitment to an excellent track record with Wall Street analysts; to that end, restating previous earnings statements, or recanting quarterly estimates, would be viewed unfavorably as such events would indubitably drive stock price south. Our management felt confident they had the tools and staff to tackle this endeavor, and strove to instill in everyone the utmost professionalism that going public called for. Translation: more late nights ahead during month-end closes. This crossed Martina’s
tolerance threshold: she reached the conclusion that she had to stop that madness before it became irremediable. The greener (rather, saner) pastures that she was seeking showed up in the form of a smaller company where, much to her delight, she would be involved in marketing and have nothing to do with accounting.
Martina’s resignation opened up a position for an accountant on our team. Our search brought on Charlie R., a communicator of the highest order, brimming with self-confidence. He was very impressive and overshadowed his competitors, despite not having completed his BS. He had relevant experience as he came from a famed publishing firm. We did extract from him the commitment to pursuing his degree. The gregarious Charlie R. did not take time to acclimate to the ambiance of the office. His knack for catchy and very a-propos phrases, his humor, his athletic
physique, and his diverse interests—ranging from hockey to skiing to kayaking–made him a widely sought-after conversationalist. He became rather quickly the most popular figure in the office; he was granted audience by everyone… However, his wondrous communication abilities did not find an echo in his day-to-day work. Generally good, the quality of his work did not live up to our expectations or equate to his command of accounting concepts and general issues. Not that he did not do his job, we just expected more of him. That was always a contentious point at performance review times.
Stefan was getting more comfortable in his position. During one summer break, he brought in his oldest son, a polite high school sophomore, to work on an Accounts Payable assignment. Stefan paraded him with great pride throughout the office, introducing him to everyone. He figured that his son had reached an age where he could appreciate the value of work and effort, and in
the process “earn a little bit of money.” So, he took him under his paternal wings so as to instill in him these values early in life, give him a feel for Corporate America, and show him first-hand his personal success in the hopes that junior would emulate him some day. Another time, he brought his younger son and went through the same ritual with him. Between Stefan and his sons one could tell they belonged in the mutual admiration society. Look in their eyes and you’ll see on the one hand filial veneration, and on the other hand paternal pride.
At Odds with the Bosses
By his first anniversary, Stefan took ownership of the financial statement review and submission process for both companies. By then, Den had been out of the financial reporting scene, preoccupying himself with growth strategies. Notable staff changes took place. Enrique was promoted to assistant-controller. As such, he was somewhat removed from day-to-day operations so that he could lend Den a hand with the strategic initiatives the latter was engaged in. Corporate targeted some promising limited liability corporations (LLC) with a niche in publishing to grow our side of the business. Enrique was to assist him with due diligence with respect to these acquisitions. To fill the void caused by his lesser involvement in operations, Enrique lobbied for me to succeed him as accounting manager. The cascading effect continued with the promotion of Patti to accounting supervisor.
Growth potential together with the upward motion of staff created an open position in my section. We hired Chuck S., an internal candidate who was working as an accounts payable (AP) representative. He came in with excellent credentials from a transnational corporation, where he was the AP supervisor; he was laid off when that company moved some of its operations out of New York City. My considering him to fill the staff accountant opening was perhaps the most contentious issue that arose among Stefan, Enrique and me. Chuck was in a horse race competition
with another candidate–a young man, polished, All-American type, who had played quarterback in high school and college. We all were impressed by him. His only drawback was his lack of experience. We figured this was compensated by his savvy, his aggressiveness, and his presumed ability to adapt. Chuck, for his part, was a known quantity—a diligent worker who earned his stripes the old-fashioned way, by delivering solid work without fanfare. He joined the company in a position for which he was overqualified. He accepted it wholeheartedly, hoping that his performance would speak for itself and clear a path for eventual promotion when the time arose. I appreciated his depth, modesty, and sense of commitment. For all of that, Chuck was my first choice–which put me at odds with the Human Resources Director–Marcie, Enrique, and Stefan. All three were enraptured with the outside candidate’s poise, energy level, and star power potential. I shared their assessment. However, my preference was to fill the position from within, unless the outside candidate was “head and shoulders above my internal candidate.” Clearly,
this was not the case. If anything, Chuck had a leg up in terms of experience and should hit the ground running without much concern for a steep learning curve. Also, he was already imbued with the company’s culture and transitioned rather well to it; he felt that the position fit into his career plan and saw growth opportunities in the company, which meant that there was a low turnover risk. Enrique rallied Stefan to his view that the outside candidate would be a strong asset to the company’s future. Although they liked Chuck, they felt that he did not show the
aggressiveness and the temperament that this line of business required, to which I begged to differ. For a moment, there was a stalemate. “Why don’t we ask Miffie (Chuck’s boss) about her assessment of Chuck’s performance and prospects?” I proposed.
The question seemed to have taken my interlocutors aback. It was an unconventional move. Per company policy, internal candidates were prohibited to even broach to their supervisors their intent to apply for an open position. Likewise, Human Resources and peer managers would go to all lengths to shroud in secrecy such pursuits by a candidate until he or she accepted the offer. So, my move was unprecedented and risky in terms of breach of protocol and exposure of a candidate to potential harm. Risky also in that I counted on the supervisor’s acting for the greater good of the company and not reacting in a self-preservation mode, thereby scuttling Chuck’s opportunity to grow. Knowing well that such procedural infraction would not sit well with Human Resources, we convened on a visit with Marcie to apprise her of our intent and secure her clearance. As expected, she looked bewildered; like everyone else, she was enthralled by the performance of the young All-American. A straight shooter in her own right, she did not hide disappointment over the direction we were taking.
“I don’t think you need any advice from me; I hope you know what you’re doing.” She warned.
Miffie was away for a conference when we called her up and announced the reason for our call. I remember her voice on the other line, hoarse from a recent bout with a cold.
“What’s wrong with you, people, going around stealing people’s staff? He’s one of my best players. How fair is that? Stefan, I can’t believe you’re doing this to me.” She rattled off.
After her initial shock, she gave us an objective assessment of Chuck’s tenure in her department, drawing on his strengths as well as his weaknesses. Overall, it was a very positive assessment, better that I could ever expect.
“Would you hire him again, if it came to that?” I asked to conclude the conversation.
“In a heartbeat!” She responded.
Thus, Chuck emerged as the victor in that race. I felt that I forced Stefan’s and Enrique’s hands on this issue. To my recollection, this was the only instance where I openly disagreed with Enrique; we normally operated on the same wave lengths. But he was gracious enough to bow to my decision. Taking the cue from him, Stefan followed suit. After all, as they asserted, this
was my section and I was the one either candidate would be reporting to.
Thanks, but No Thanks
On a mid-week morning, a laconic e-mail from Petey’s secretary summoned everyone to the vestibule, a venue spacious enough to accommodate a large crowd. A summary note from the president could never be about frivolous or inconsequential matters. Within a minute of receiving the e-mail, groups emerged from offices and cubicles and streamed along the hallways to converge in the vestibule, where we stood shoulder to shoulder awaiting the arrival of the management foursome. The air was thick and the silence as heavy as a concrete slab. Some tried to break it by engaging in some incoherent small talk; others could not simply ward off the apprehension all too visible on their faces. What could this be all about? It was not one second too soon when the executive group showed up. Without ceremony, Petey brought up the reason for the convocation: “I’ll be brief. The purpose of this gathering is to announce that Sammy B. has resigned as chief financial officer,” he said, visibly shaken.
A muffled “What!” emanated from the incredulous crowd, some turning to one another as if to confirm what they heard. Petey went on to thank Sammy for his immense service to the organization, unparalleled contribution for the past 15 years spearheading the exponential growth the company had known. All the while, Sammy stood by, a couple of steps behind Petey and next to Den and Marcie, the Human Resources director; his face harbored a radiant smile.
“Sammy will surely be missed,” Petey stressed, turning towards him with a nod, as if to make sure he drove this point home. “We’re grateful that he is more than generous to extend his stay to three months to allow for a smooth transition. I thank him, on everyone’s behalf, for his generosity: this is classic Sammy. Join me in congratulating him and wishing him luck in his future endeavors.”
Invited to say a few words, Sammy started with thanking the staff whose hard work made the company’s success possible. “That’s the sad part of the situation. Some of you I came to know on a personal basis; I’m going to miss you all. Keep up the good work. Good luck,” he concluded.
Sammy’s resignation took everyone unawares. In the weeks and months prior, his demeanor left no clue to any dissatisfaction or dejection. He never departed from his clear, pristine smile and proverbial affability. The reason he put forth for his departure could not be more laudable: he needed to spend time with his family. The pressures of the job and the inflexible schedule of a busy executive had transformed him into an absentee dad for his young kids who were approaching puberty. He needed to be there for them and with them, to see them grow and be a part of their lives. He would also be able to supervise the construction of his new home, from which he hoped to conduct a small scale consulting operation. Everyone saluted such a noble endeavor and
took it at face value, given Sammy was the epitome of genuineness. If there should be any doubt about his reason, his disarming and infectious smile dismissed it. Yet, the suspicion that something else could be in the midst of his decision was persistent. “For God’s sake, he is only forty-something,” bemoaned Christie. That he chose to forfeit all the perks and promises made by the headquarters; that he stepped out of the limelight as the parent company’s quest for “publicly traded” status neared fruition could not be fathomed by some. “Why at that particular juncture?” they pondered. The answer to this question would never be known. Guesses were aplenty: the company was solvent; surely, there were some fissures in the edifice that, if not attended to, could lead to cracks on the wall. For instance, the core product line that represented some 50% of the business was maturing and augured paltry growth; the expectations that accompanied the acquisition of the luxury bound editions never fully materialized. Tough decisions needed to be made in terms of divestitures and going lean… and mean. “Mean” was definitely in the offing. That was the part that probably did not sit well with Sammy, and that he was running away from. “Rough and tumble” times surely lay ahead–times that were more fitting for an ogre than a genuinely nice guy. These were the times when the business world was abuzz with the craze of hostile takeovers, leverage buyouts, re-engineering, downsizing, right-sizing, what have you!
The times when Michael Milken, the king of junk bonds, was a demi-god in the suites of Wall Street, courted by high-end investors lured by his high-yield junk bonds. Our parent company’s parent was itself knee-deep in that midst and perfected the art of deal-making. Strategic realignments were taking place in the market place. This new dimension brought along new realities, new pressures to bear by executives who were forced to look inward for ways to cut costs under the threat of a Damocles sword of hostile takeovers. These behaviors brought in new rules into the corporate game and influenced the way it was played in many ways. In our case, the constant demands of the headquarters to improve the bottom line and the pressures brought to bear by the prospect of a publicly-traded company started to weigh in heavily on the office atmosphere: the air felt thicker, and the oxygen thinner. Sammie B. experienced first-hand the weight of the change of direction and the malaise that accompanied it, and decided to part ways and forgo the alleged benefits his superiors had been touting about their ongoing strategy. Thus a class act bowed out. By the time he left, a replacement had yet to be hired. Den was called upon to assume the interim.
Man on the Move
No immediate change at the individual department level resulted from Sammy’s departure… at least for those of us who were on the front line of operations. If anything, Stefan picked up more of Den’s functions. In compensation, he received the additional title of Assistant VP-Finance. Other than that, it was smooth sailing in operations as we were at optimal staffing levels and the assignment mix was judiciously calibrated to assure the efficient utilization of our resources. In that light, it did not take long for us to appreciate the dividends Chuck’s addition brought to the team. He was in charge of reconciling our cash and prepaid accounts. What particularly won Stefan and Enrique over was the discovery of a large cash balance in the company’s bank account, which, by both company and headquarter standards, was a heresy. The headquarters used a cash concentration system, under which, on a daily basis by close of business, they “swept” all subsidiaries’ bank deposits into a concentration account. The “sweep” was then invested in safe overnight instruments such as repurchase agreements (“repos”) or inter-bank lending for reserve or margin requirement purposes. Then, on the following day, they transferred back to the subsidiaries’ accounts just enough cash to pay bills that showed up the day before. This was a short-term strategy designed to maximize the return on cash that would otherwise remain idle on subsidiaries’ bank accounts, given that subsidiaries were not allowed to make investment decisions. This required close coordination between the banks and Corporate Treasury. So, at the close of business on any given day, our bank account was expected to be in overdraft, due to the timing of the transfers. That, on that particular day, a large cash balance remained in our account at the close of business sparked a flurry of activity and drove our office into crisis mode. It turned out that the “sweep” did not take place the night prior and no one from Corporate realized it. Obviously, they were not pleased about this preventable opportunity cost. Once the assignment landed in Chuck’s hand, he was like a man possessed. In the middle of the flurry he stood, manning the phone between Corporate and the bank. The energy he put into resolving this mini-crisis revealed a side of him that neither Stefan nor Enrique had seen before or even expected. Basically, we stood on the sidelines, while he took ownership of the problem and saw its resolution through. If there had been any dose of skepticism in my bosses’ minds as to Chuck’s commitment and willingness to go the extra mile, it had surely dissipated by then. In fact, they were impressed with his performance. That was the way he acquired his “lettres de noblesse” in the organization.
The Connecticut operations moved forward with some structural changes. The publisher, Rick D., finally made good on his plan to hire a chief financial officer. Until then, he assumed the functions of president and chief financial officer. As such, he shouldered the burden of representing his side of the business and speaking to its state of affairs in monthly
conference calls with Petey, his boss. To prepare for this ritual, he had been relying on Annie T., finance director who was in charge of budgets and financial analysis. Annie prepared, in collaboration with our unit, the “President’s Letter”, a management discussion and analysis (MD&A) report, which provided a measure of achievement vis-à-vis the goals established at the outset and explained significant variances from the budget and prior year. As good a job as Annie did and as good a spinner Rick could also be, this ritual was not his cup of tea; at times he looked as uncomfortable as a man whose legs were wrapped up in his underwear. He was more versed in the marketing & public relations side of the business. So, he wanted to be out of that bind. He made the decision to hire a CFO, Davy H., a lanky six-foot-one Ivy Leaguer and product of the financial sector. Nature compensated his physical predicament with a powerful voice, which made one wonder how such a powerful timber could emanate from his thin frame. He was one tough customer—haughty, impatient, arrogant, a “straight arrow” who would find the SOB epithet somewhat flattering and indulge in that kind of attitude just for the fun of it. Annie could not help feeling slighted by management’s decision to go outward to fill this new position with someone whose only advantage was that of a white male with a super ego. She would not mind playing second fiddle to someone from whom she would learn; however, from what she could see, there was not much in Davy’s credentials that would make her genuflect. The reality was that she was relegated to the nitty-gritty aspects of finance, while Davy was given the upper crust. Her superiors argued that such complementarity could only benefit the organization and tried to reassure her of her instrumentality to the company. She was never sold on that point, no matter how hard it was impressed on her. For her, the reality was that Davy did not come in with a publishing background. She felt that, once she fully trained him, she would be shown the door. As for us in New York, we did not know what to make of his coming on board. We had no inkling as to what this turn of event meant in the long term. We had a chance to be apprised of his singular personality when, on his introductory trip to our offices, his first line of inquiry was into the headcount allocation to his company. He wanted to know what the 13.3 headcount consisted of, who they were, what exactly they did for his side. On that first encounter, the image he left us with was that of a brash, obnoxious guy who knew himself as such and could not care less.
Over the next coming months, Davy made it a point to be included in the monthly conference calls with Annie, Enrique and me to discuss the month’s results, variance analysis, and the President’s letter. He needed to be apprised of the results so he could present his analysis to Rick. More and more Annie was faced with the reality that she mattered less and less; she was reduced to a side-kick, doing the legwork and providing Davy with what he needed for his one-man show. All this seemed so sudden: it felt to her that her job had changed overnight. Her reporting line
dramatically shifted. The days of one-on-one with Rick were gone; all information to Rick would have to be vetted through Davy. The point had been formally made to her by the man himself in one of their meetings. Davy stressed this protocol should firmly be adhered to so that he was kept in the loop and abreast of all developments. She came to be aware of how maniacally
attached to protocol Davy was, how power-hungry he was, and how abrasive a personality he had. In a sense, she blamed herself for having been complacent, for basking in the illusion that the
first-rate job she was often complimented on would pave the way to a more substantive post. She thought she had amassed sufficient goodwill to secure herself a spot in upper management, even
at a junior level. Now Davy was brought in from the outside to join the executive club with a relatively thin resume, with the only sizable thing he could claim being the size of his ego. She felt that she reached an impasse and confided in us that it was time for her to seek greener pastures. We were going to miss a colleague with whom we shared some very good times, especially during budget season, a good sport who could appreciate a good joke… In the end, she landed a financial analyst position with a well-established competitor.
Growth Strategy: Acquisitions
On the selling block was a liability corporation (LLC) company with a niche in corporate-sponsored public service specials. The LLC, located in Connecticut, had made a name for itself since partnering with PBS on an award-winning sports documentary, which aired to critical acclaim. The documentary was produced and directed by a renowned historian, with a superb track record of stellar productions in collaboration with PBS. For this high-profile documentary, the LLC provided the accompanying materials (posters, pamphlets, etc.). Anyone interested? Of course, that was the kind of opportunity the headquarters were seeking to shore up the Connecticut operations: a small company with a niche or a novel business approach, strong cash flows, and good management. As the designated company strategist, Den was the master of ceremonies, in charge of ushering in the LLC into the corporate structure. As it was involved in the education
field, it made sense to consolidate it with the Connecticut entity;yet there would be no operational merger between the two offices: each would be operating as a separate company on the financial
systems. Enrique was called upon to assist on due diligence issues. He had to validate the LLC’s short-term liabilities, examine its vendor file. He also had to review its receivables; of interest was the aging of the receivables, with particular focus on the 90+ days. It was an attractive prospect, enhanced by the fact that the LLC’s president, Kenny L., was willing to stay on to ensure
continuity, and navigate the corporate venues in quest of funding for his celebrated education projects. The flow of corporate public relations funds was essential to the LLC. Kenny’s fast talk (speak easiness) with a slightly hoarse tone of voice conferred gravitas to his conversations. This characteristic and his congenial affability were an asset to reckon with when it came to extracting corporate sponsorship dollars. All in all, it was a good buy: good cash flow position, high receivable turnover, an experienced marketing unit, established goodwill, leadership continuity. All the while, Den was devising the acquisition reserve scheme to handle transition-related costs. The deal went through to everyone’s excitement. I had a chance to accompany Enrique on a visit with the LLC team during the transition; we had a working session where we discussed the particulars of their accounting systems and procedures, and the modalities of the migration to our financial systems. The staff were most cooperative. We had the opportunity to experience first-hand Kenny’s charisma and conviviality. He too was excited about the prospects—which made the whole affair a win-win proposition.
On the other side of the company, something was brewing. Stefan convened a meeting with his accounting managers and Enrique, his assistant-controller, with only one item on the agenda. The parent company asked for a plan to cut costs in the organization. He called the meeting to brainstorm on the matter. I still remember the concerned look on his face when he posed the question:
“Did Park Avenue give you any guidelines?” Enrique inquired.
“No, they left it up to us,” Stefan answered.
“I would expect them to give you a range of options,” Enrique retorted.
“We can cut down on supplies,” suggested the young and ambitious lead accountant for Luke’s section.
“What about supper money?” Luke proposed.
“Great ideas!” Stefan applauded.
“In the grand scheme of things, what is the significance of these cuts?” Enrique argued. “I would have thought that you would have taken a good look at our expense categories and see where meaningful cuts can be made,” he continued.
To that last point I added:
“Would they be thinking about headcount? I would assume they expect cuts in that area.”
We spent the next forty-five battering around a whole range of options. Stefan insisted that the issue, as he understood it, had nothing to do with headcount reduction. He adjourned the meeting and indicated that he was going to draft some policy points and reconvene in a week or so to discuss the particulars. Everyone sensed towards what direction he was leaning. As
we vacated the conference room, Enrique and I walked silently in the direction of his office. We had a silent way of communicating. I could tell he had something in mind; that in this battle of ideas, Luke & Co. had the better of him. When we got to his office, he closed the door, dropped his pad on his desk, and, in disbelief, raised his hands to his head:
“What’s wrong with this guy? Coming off with ridiculous things like supplies, supper money…! What world is he living in? Look whose ideas these were too? A pair of amateurs…”
“I don’t think Stefan put the request in any context. Why did Park Ave all a sudden come up with this? I think it’s an indirect way to tell him to cut personnel costs or at least to come up with a headcount outlook for the next, say, 24 months.”
“I hate to be on the losing side of an argument. But I’ll defer any day to a better point. Such amateurism is not just about him but it’s a reflection on the whole team, and me personally. That, I resent. ”
“Well, in fairness to Stefan, I don’t believe he doesn’t know what to do, or that he doesn’t get it,” I interjected. “I’m willing to play the devil’s advocate on this. He simply thinks there’s a better way, a less taxing way.”
“Not a chance! Excuse my French: that’s BS! You think these guys are going to buy into those moronic ideas. Nothing short of headcount reduction will satisfy them.”
“Or, maybe, Stefan is considering this option as well and doesn’t feel it proper to discuss it with us; these are sensitive matters, you know. This could be a conversation between him and
Trust me on this: he truly believes what he’s saying. I know the guy. I can bet you he is dead serious about it and not thinking of anything else. At least, he could put together a headcount scenario: attrition versus filling open positions? Can any positions be safely be phased out without major disruptions? Was any of that in his forecast? Push comes to shove, there are ways to achieve savings in that area—if he’d asked me. Those savings would be implementable, concrete. This is major league: a game for men with balls. If you can’t play it, you’re out. If you don’t have the gall to make tough decisions, you don’t have a future in this business environment.”
“I’m sure that investment bankers and IPO underwriters made clear to Park Avenue that the company’s cost structure was expected to be in line with the industry. All sorts of ratios involving headcount are being looked at: headcount to revenue, net income, earnings per share. As we see every day, nothing makes Wall Street cheer louder than a company’s announcement of massive layoffs: its stock price hit the roof almost instantly. I’m sure it would be a good story the headquarters would tell their prospective investors; this would make for a successful IPO, guaranteed. ”
As announced, Stefan reconvened us in one week’s time to apprise us of his new policy points. He put forth an elaborate set of directives.
No longer could we go to the stockroom and help ourselves with our supplies needs or verbally direct the clerk, Greggy, to fill them. From that point on, we would have to fill out a requisition form and submit it to the office manager, Ritchie. As Stefan decided to cut this line of the budget by some 20%, Ritchie would have to evaluate any requests and put tight controls in place to measure their frequency, and ensure that the inventory is replenished not routinely but based on a systematic approach—in a way to hold employees accountable for their supplies usage and foster restraint. Working lunches at the company’s expense were also ditched. Birthdays used to be pooled and celebrated at the end of the month; company funds would no longer be available for that purpose. Limo service was available starting at 7:00 p.m.; such largesse was deemed unsustainable and had to be curtailed: it should start no sooner than 9:00 p.m. Overtime for non-exempt employees was also put on the chopping block; it used to only require the immediate supervisor’s authorization—no longer so: the supervisor would, going forward, secure
pre-authorization by submitting a request supported by copious justification to Stefan himself.
After completing his expose, Stefan thanked us all for a “robust and candid” debate. He was satisfied with his plan, as he put it:
“Believe it or not, these are perks that could go a long way in terms of savings. I urge you to be mindful of these new guidelines. Even though they won’t be implemented before the headquarters’ blessings, you can unofficially and prudently start taking action. Thank you for your cooperation.”
Enrique and I sat across from each other at the meeting. At one point he sought my eyes as if to say, “What did I tell you?” He was right: the way Stefan went at it suggested that he didn’t even consider Plan B. Any dissensions at that point were moot.
“If he can pull this off, hats off to him! He will have to have strong persuasive powers to ride against the tide and against the time.” Enrique opined. “To me, it’s a death sentence. Time will tell,” he concluded.
Indeed, Stefan stuck to his plan, aiming at rallying the headquarters think-tank to his kinder and gentler proposal. In so doing, he put himself on a collision course with the novel modus operandi of the business world, with the “lean and mean” mentality that was getting traction at that time—lean in that managers had to trim fat, eliminate unnecessary or redundant tasks and unproductive processes, and make operations more agile and flexible enough to adapt to the demands of a changing marketplace; mean in that it involved heart-wrenching or cold-blooded decisions susceptible to affect people’s lives notwithstanding their job performance, but rather based on industry averages. As I said above, there were—and still are– no better tools on Wall Street than a sledge hammer, no better news than cuts involving layoffs, artfully scripted under the fancy label of “one-time restructuring charges.” Such prospects bred a tide of optimism on Wall Street as analysts foresaw higher productivity, higher output per man-hour (one person forced to do the job of two). It was true back then, and remains true today. The appetite for that type of
news, more often than not, translated into new highs for stock prices. That Stefan did not understand this “en vogue” business notion bordered on malpractice, especially at a time when “going
public” was on the offing. Actually, he was too decent a man to go that route, to use the axe and deprive a head of household of his or her livelihood over industry averages that might have no relevance to these particular circumstances… At the risk of sounding naïve, he held steadfast onto his plan and was convinced that it would appease the headquarters.
Time to Move on
If anything, this episode was a harbinger of changes to come. Some saw it as a writing on the wall. Even those who seemingly went along with Stefan felt a need to reassess their positions on the corporate chess board. Resolute not to wind up with the short end of the stick, some decided to be proactive. How resolute they were was manifest in their next move. Luke, the accounting manager for our peer unit, landed a position with a sister company, a renowned trade school devoted to the teaching of secretarial skills. His successor was an ambitious young man who had joined the company as a staff accountant and moved quickly up the ladder thanks to his hard-nosed approach and high energy style. He was the one who proposed cutting down on supplies at Stefan’s infamous meeting. For a moment, Enrique toyed with the idea of extending his reign over the two units as the assistant controller for both. However, he quickly dismissed it, not
because it would be too big a morsel to bite, but rather due to a combination of events: the world of account analyses and reconciliations no longer exerted its appeal on him, and he was
disenchanted with the direction in which the company was moving. Moreover, Sammy’s abrupt decision to retire did not sit well with him: Was the former CFO prescient of the dilemma the company would be faced with down the road? Did he chose to part ways beforehand-or was he adroitly forced out? Enrique would probably never know the answer to this twin question. A bit disgusted, he was feeling further out of his element when Annie left. Orphaned by this twin departure, he lost the feeling of kinship with the company and his motivation. With Sammy, he lost an
advocate, a mentor, his entry onto the fast lane of the corporate highway. With Annie, he lost a trusted colleague with whom he was on the same wavelengths, a comrade, a good sport with whom he could share any jokes, and who would reward him with her trademark hearty laughter. He confided in me that he had grown disengaged from the repetitious accounting and finance schedule.
“I don’t know. But I’m getting tired of this routine. Above all, I’m losing patience with some characters. I wish I had your saintly patience and wisdom. Well, onward!”
His last word in that conversation was ominous. After four years with the company, Enrique figured it was time to move on. He landed a new job. Not only did he leave the company, he left the industry and accounting altogether to join a premier financial services company in a systems-related position. He and I had another one-on-one.
“You were serious about the whole thing,”I engaged him.
“Yeah! Time to move on. You know, I lost interest and grew tired of this nonsense. But you’ll be fine. I’ll have to endure this for another two weeks. Other than that, everything will be fine.”
We swung by his office, and engaged in mundane as well as not-so-trivial banter. On a personal level, he would be able to spend more time with his nephew; he spoke fondly of his fascination with the news and precocious interest in anything political. He would make time to goof off with him: both of them were wrestling buffs, and slugged it out for fun—his being half the size of his nephew somewhat put him at a disadvantage. The next few days, we worked on transition issues. Jen, who was systems administrator, needed to learn a few more programs, among which the all-important allocation models. As for me, I was going to be fully engaged in the monthly close and work closely with Jen on that particular matter. As the days went by, Jen and I had another important matter of cooperation we had to handle—send Enrique off under the best auspices, with toast and roast on the menu.
One day, I was summoned to Stefan’s office. As I walked in, I found Enrique sitting across from Stefan. Invited to sit, I pulled the chair next to Enrique. Skipping all small talk, Stefan cited Enrique’s departure as a test of resilience for the structure that he had put in place and that, so far, has proven to be successful.
“On Enrique’s advice, I am pleased to inform you that you have been appointed assistant controller for the Education segment. To ensure continuity, we decided to make it effective on the day following Enrique’s final day in the office. You have been his trusted lieutenant from the get-go. As he put it, a lot of the operational successes this company enjoys are attributable to
the collaboration the two of you had over the years. I trust that you’ll continue on that path.”
Upon hearing those words, I turned to Enrique to acknowledge my gratitude. He winked his approval as if to say, “Don’t mention!”
Stefan, then, tendered me the promotion letter, signed by him and Den C. The letter mentioned a two-tier increase: one for merit and the other for promotion. This was a nice sum but
still short of Enrique’s salary. I frowned a little bit. Stefan seized on the opportunity to clarify.
“We had to act fast, without having to go to a full-blown process through Headquarters,” he explained. “Who knows how long that would take? We got you the max we can afford without
going to HQ.” I responded by conveying how grateful I was more for the recognition this promotion meant to me than the monetary component.
“I’m fully aware of the challenges ahead and will do everything I can to face up to them. I want to thank you both for your confidence and recognition,” I went on to say.
Later in the course of the conversation, I was apprised of the lobbying effort Enrique pushed through for me to succeed him as assistant controller for our side of the business. He wrote up a
very thoughtful recommendation on my behalf, in which he stressed the need for continuity in this important area of operations. Stefan pushed through the paperwork with lightning speed. He did not find any resistance from Den or Petey.
Thus the Enrique R. tenure came to a close. Oh, yes. We did send him off with pomp and terms of endearment……
My elevation to that post was not without controversy. Some key stakeholders of the organization took issue with the fact that they were not informed ahead of time; at least they expected to be extended the courtesy of contributing their advice to the decision. One such stakeholder, Davy, felt slighted by another act that further made him seem irrelevant. His vision was that the position should have at least a dotted reporting line to him. Enrique had always felt his intent and deftly resisted it. His departure should have been the opportunity for Davy to step in, have a say in the decision to fill the vacancy, and to put his imprint on the position. By making my promotion a fait accompli, the New York branch further rattled its relationship with him. The president of the Connecticut operations, Rick (Davy’s boss) did not harbor similar sentiment. In fact, he sent me a congratulatory email. As for Davy, he was not going to let this affront go unchecked. He might not have been the sharpest analytical mind in the company; however, he surely knew how to navigate the political waters, and on that score his influence was on the rise. The relationship between him and Stefan became increasingly difficult. One could sense his frustration. Understandably, as the CFO of the CT branch, he had a point in wanting to have control over the
accounting and finance operations: he was the one footing the bill, when it came to my salary and my staff’s through the allocation that was charged to his unit. Frustratingly, this aspect of the business continued to elude him. He was always skeptical of the benefit of outsourcing to New York this key operational function. That he received such untoward treatment at the hands of the NY folks definitely made him think about severing the ties… However, he didn’t have the structure or the expertise in place in CT to move these functions in-house. He had to concede this tactical setback to the NY Finance office. If anything, it gave me the impetus to think more strategically about his options. But, for sure, he was not going to play dead and swallow the affront.
“You Begrudge Me”
My promotion opened up the accounting manager position. My sense was that Patti would be promoted to fill it, considering her excellent accounting credentials—having been an experienced CPA, on contract with the NY AICPA for grading the exam for years. Also, a pattern had emerged such that every one of my promotions was followed by hers—from temp to permanent, from senior accountant to accounting supervisor. In her mind and mine as well, her promotion to accounting manager was to follow. At least on one occasion, Patti inquired
about the position in a way that left no doubt that she was vying for it. In casual conversations with Stefan, I had raised the issue rather tangentially. While he had always been non-committal on
the subject, I figured that it was a matter of time. A couple of months went by and her fifteen-month evaluation was coming up. Yet, I received no request for a write-up in her behalf. I approached Stefan and straightforwardly asked him whether her promotion was given consideration. There was no plan to fill the position, I was told. I argued that I needed to pass down some of my responsibilities, and that Patti was the ideal candidate, given her experience and her knowledge of our modus operandi.
“Let’s face it, Etzer,” he countered, “Why do you think Patti never made it to the next level, despite her credentials and the fact that she’s good at what she does? Her personality has been, and still is, a hindrance. Do you know anything about her beside the fact she is a good worker?”
“True…” I conceded before pressing again. “We know Patti is not the friendliest person around. We know she is not likely to engage in conversation of any sort or cozy up with anybody.” I paused, and added, “I’d hate to see a good and dependable staff member being denied a promotion on that basis. She’s one of our critical employees; her departure would wreak havoc in our ranks.”
“She is not likely to go anywhere. I bet you she knows that.”
“She point blank asked me about the promotion. Maybe she has something in mind in case she’s turned down. Regardless, this might just be the right thing to do.”
“I don’t know about that.”
I was taken aback by his sharp reply, which seemed so uncharacteristic of him. Sensing that I was “frozen,” he reckoned that he might have gone a bit too far.
“Besides, it would be a tough sell.”
This last sentence made me think… The small brouhaha that my promotion stirred probably caused him to be cautious. He was not willing to try something that would further antagonize Davy’s group. Or he was sure that Davy would use his political capital to block the promotion, the more of it that Patti does not have an army of supporters at her disposal to vouch for her or do battle for her. As bad as it was then, he did not want to run the risk of seeing his judgment called into question. Furthermore, the cost cutting plan that he submitted to the headquarters turned into a fiasco: it never saw the light of day. His judgment was indeed questioned and his credibility damaged in the process. No way was he going to put forth a promotion request. He must have judged that any such move would be dead on arrival and further undermine whatever was left of his credibility.
Patti’s evaluation came up. We went through the ritual, looked at particular aspects of her job. As always she received high marks for job knowledge and technical areas of responsibility. Interpersonal skills dogged her once more. Overall, she was well above average. I gave my usual spill, consisting mostly of accolades—how terrific a worker she was, that the department was fortunate to have her… We had an agreement with her to reimburse her for professional membership fees and dues. She tendered her voucher, which I signed off on and promised to route to Stefan for further approval. She thanked me for this and my kind words. Then she raised the subject of the open accounting manager position.
“Discussions I had on the matter lead me to believe that the position won’t be filled. Technically, it’s being phased out.” I replied.
“You know I expected that promotion. I work hard enough to at least deserve consideration for it. Give me one reason why I’m not qualified for it.”
“Patti, your credentials are superb. But that has nothing to do with credentials or lack thereof. It is an executive decision not to fill the position.”
As I was saying those words, I saw blood flowing to her cheeks. I could sense her anger reach its climax. In a matter of seconds later, she burst into a tirade.
“Etzer, you begrudge me. I’ve always known it. I knew I couldn’t expect anything from you. I got this far thanks to Enrique. You had nothing to do with it. I know you’d do everything to block me.”
Irate, she rose from her seat and walked out. For all the years I had worked with her, I had never seen her in such a state. I could only smile at the irony of the situation. I shook my head, sighed and said to myself, “If only she knew…”
On his way out Stefan stopped by my office to inquire about the outcome of the evaluation.
“Let me put it this way; I just got my derrière kicked big time,” I said with an amusing smile. “She lashed out at me. She thought it was all my doing that she didn’t get the promotion. She was literally irate. Thanks, pal.” I continued jokingly.
Stefan was not the least amused. He looked at me with empathy.
“So unusual of her!… So unusual,” he lamented.
“That’s all right! I got broad shoulders.”
“What did you tell her?”
“Rest assured. I didn’t tell her that I pleaded her case but that senior management was opposed to it. She didn’t know I was just a messenger nor did she care, for that matter. She let me have it. And I took it on the chin for the team.”
Upon these words, he smiled, shook his head, and called it a day.
A New Direction
Since Sammy left the company, Den had been the interim CFO. This was the apex of a career at the company that took him from the trenches as accounts payable representative and junior staff accountant. He had progressed through the ranks to reach an altitude that would have been denied to most people with similar circumstances. Den was every bit of an anomaly–an Asian
standing six feet and weighing 250 pounds with a thick accent, a Bachelor’s degree from a second or third-tier school–which he earned while working full-time, and no professional certification.
None of this predestined him to be at the financial helm of the subsidiary of a firm that, a few years earlier, had completed what was dubbed the deal of the century and perhaps, by historical standards, the largest buyout ever. That he was anointed with these supreme powers and commanded universal respect from peers and superiors was in and of itself an exploit and a tribute to his extraordinary intelligence. His name resonated with gravitas in the headquarters’ senior executives’ penthouse in posh Park Avenue as well as top-tier audit firm D&T’s midtown suite. One felt
illuminated after a meeting with him. He had a way of turning a worried frown into a smile, for he was so knowledgeable of the ways and means of the business. More than anything, perhaps, his way of transmitting knowledge was such that one never felt ill-at-ease; his good-natured and simply boyish grin, his down-to-earth demeanor was conducive to a climate, in which the recipient of
his teaching felt a sense of comfort rather than awkwardness or inadequacy. Personally, I never missed any opportunity to sit with him and learn, and marvel at his ingenious ways. I still remember one occasion when we had to come up with a reserve methodology for one of our product lines. From the historical data he was presented with, he devised a financial model and a provision rate based on what he termed a “double dribble pattern.” How clever! And at the end of the year, when we trued up the reserve, actual losses were amazingly close to the reserve.
Den’s tenure at the financial tiller ended some twelve months after his investiture. It was the time when Fannie C. was hired to succeed Sammy. A svelte, short-haired blondish woman, who had a career in the banking industry, joined the company to occupy the top financial spot. That she had no publishing background was surprising to many. Her hiring raised eyebrows. At a time when banks and financial institutions were going through the merger craze and all manners of restructuration, reorganization, re-engineering, spin-off, it was quite telling that a product of that milieu would head the CFO office of a publishing company. Banks were not viewed as stalwarts of frugality, as the lavish lifestyle at their highest echelon could testify. The headquarters’ decision to bring on someone from that line of business was a bit paradoxical, considering their cost cutting focus. Decisions of such magnitude are not made haphazardly or left to happenstance. Was a need for fresh blood necessary to break away from Den’s total main-mise over the operational systems and procedures? On that count, her hiring was interpreted by many as the indictment of the “old” regime.
Fannie C. came in with definite ideas about the direction the company should take. It did not take long for a sense of malaise to set in between Den and her. One day, while Stefan and I were in his office, Fannie sent for him for consultation. That he made no effort to wrap up our conversation was indicative of how venomous the relationship between them had become in a matter of months. In fact, it took less than eight months for Den and Petey to get the axe. Between the two of them, they must have contributed a cumulative 35 years to the company. As a matter of fact,
their association commenced well before the headquarters had acquired this business segment from a flamboyant British owner of a publishing conglomerate. All that came to an end in a flicker. Reportedly, they received a hefty severance package. They stayed around on their last day to greet well-wishers. Den took matters in strides, grinning and joking. Another woman, the director of finance of a sister company, replaced him as VP-Finance. As for Petey’s replacement, the headquarters turned to a loyal friend of their chairman’s, Pepe M., a successful executive from a Fortune 100 company. The native South-American reached the top rung of America’s corporate ladder by way of a chemicals and construction materials conglomerate, where he had worked for three decades. He amassed a small fortune and was hoping to comfortably retire. Barely a month into retirement came Chairman Willie R.’s call. Pepe reluctantly junked his plans and answered his pal’s call. Willie needed a confidant, a trusted ally at the helm at a time of profound change that, no doubt, would impact the future of the organization. Pepe was inaugurated as the company’s new president.
By the time the parent company launched its initial public offering (IPO), it had put in place a new team in our company, composed of loyalists attuned to its philosophy or indoctrinated
in its belief system. One of the tenets of the strategy was that the team should be of “first-rate” caliber, able to read the markets and respond to the demands and exigencies of a public company
environment. The reorganization of the education and direct marketing segments, which made up some 33% of the business portfolio, was paramount. There were reasons for concern. The headquarters’ balance sheet was highly leveraged as their acquisition craze reposed largely on debt financing. While these acquisitions boosted their revenue base, their consolidated bottom line was still in the red as interest expense was a major item on the income statement. And some of that flowed down to the subsidiaries on top of stiff management fees. A way to profitability was to retire some of the debt. Should the IPO be successful, the cash raised would allow the retirement of a big chunk of it.
Eventually, the company went public; its initial public offering (IPO) was well received in the investment community. The headquarters raised a significant amount of cash. This
achievement was celebrated with much fanfare. Sadly enough, I was the only remnant of the “old regime” controller’s office to witness the event. The only one? But what about Stefan?
To Tell or Not To Tell
I voluntarily distorted the chronology of events to end the tale with Stefan. His dismissal did precede Den’s and Petey’s by a few months. As I sat down in my office, I could not help thinking about our past, about his interests in my boys. He gave my oldest, then fifteen, his first job during an Easter break. He encouraged me to bring him in for a data entry job to update our perpetual inventory system.
“Let him come. He’ll learn how it feels to work in a corporate environment. And in the process, he’ll be making some bucks. We’ll pay him $10 dollars an hour. Kids need that. In addition to putting money in their pockets, this helps their sense of worth. That’s the reason I bring my boys to work here during their breaks. You charter for them a course for success.”
His boys… In his mind he was breeding the next generation of corporate executives and aspired to be a living example for them. At this juncture of his career, he was afraid that this screeching stop shattered his worth in the eyes of his boys.
“The toughest thing for me is: How do I break the news to the boys? I’ve never been out of work my entire life. What do I tell them?” For a moment, a pool was forming in his eye sockets. He regained his composure in time to hold the tears back. “I don’t know. I really don’t know.”
“I hear you. How to tell them, choosing the right words, I guess, won’t be easy,” I empathized with him.
“The question is not even ‘How’,” he stressed.
“What do you mean?” I inquired.
“I don’t know if I’m going to tell them. Understand… this is unchartered territory for me. And timing couldn’t be worse, with the oldest going to college in the fall.”
“Can you really keep them in the dark? And for how long?” I asked.
“I don’t know… really don’t know.”
Upon these words, he summoned his courage and stood up.
“Best of luck! You’ve been good to me. You and Enrique opened doors for me. I’m grateful for that.” I thanked him.
“You’ve been great yourself! You’ll continue to do well. But, be careful with some people.” I knew exactly whom he was referring to.
We shook hands. Stefan walked out of my office. I likened his way home to a journey across the desert that he would wish interminable. He was sacked because he did not deliver the
heads that the headquarters had asked of him. He misread the circulars that they had issued regarding the company’s new direction. What was expected of him was the stomach to make tough decisions along the line of staff reduction, position phase-out—things that Wall Street was enamored with. Where did he go wrong in his calculation? Well, he forgot that the firm that sat atop
our pyramid, our parent’s parent company, was reputed in the penthouses of Wall Street for its cold-hearted decisions, its implacable raids and hostile takeovers. He forgot that the firm was headed by a fearsome trio who earned the nom de guerre of “Barbarians” in the mergers and acquisitions quarters; that these virtuosos in the art of leveraging reigned with terror in the corporate arena, held a Damocles’ sword over the heads of CEO’s of Fortune-500 companies, and set no limits to their temerity and their thirst for control. These were the forces Stefan was up against. When the Barbarians showed up at the gates and demanded heads, Stefan offered them, instead, measly widgets–convinced that he could sell them on a kinder course of action, on a humane alternative. He was too decent a guy, too loyal a boss to risk the livelihood of his staff over a numbers game. A sense of his humane side manifested itself once, when he pulled an employee on the side after he received a garnishment request from the IRS; he urged him to reach a settlement with the agency, because he did not want to do it. For daring to defy the sacrosanct precept of
cost cutting through layoffs, he paid the capital price, with his own head.
A couple of weeks later, my phone rang.
“Etzer speaking,” I answered.
Stefan was on the other line.
“Good to hear from you. Can you hold a second?”
I rose from my seat, walked toward the door and shut it.
“How are things going, Stefan?”
“A little bit better. I was checking in to see how you’re doing and how things have been since I left.”
“Hanging in there… As you know, there’s plenty of work. Hectic at times, of course. Other than that, it’s going. My guess is things will settle down for a while. Well, we’ll see.”
“I heard that they’ll bring someone from central office to fill the position.”
“I heard that too. We’ll see what comes next. Well, under the circumstances, I’m taking it one day at a time.”
“I think you’ll be fine.”
“I find myself to be the last vestige, sort of a relic of the old Controller’s office. Yet this kind of makes me uneasy, don’t you agree? How deep they’re going with that
restructuration thing is the question.”
“They can’t afford to do anything stupid. Not at this point, anyway. I still think you should be okay.”
“Thanks for your vote of confidence. Now, how about you? How’s your family? And the boys, how did they take the news?”
“Know what, they know nothing about it.”
“I kid you not. I couldn’t bear telling them.”
“But, what do they say when they see you at home?’
“Actually, I don’t stay home.”
“Really! Where do you go?”
“A friend of mine owns a small business. I’ve been going there every day. I spend the time in his shop. He needs help with the books, anyway; I had been promising him to give him a hand with his accounting and not been able to make good on the promise. Also, from there I’ve been trying to reach out to the corporate world, working on my resume. Hopefully, I’ll get something
soon. That would help, you know.”
“That’s tough. Can’t believe it’s been two weeks already. How much longer can you keep it from them? How about your wife? Does she know?”
“Yes, she does. But the kids, it’s a different story. It’s hard. I need a little more time. Maybe tomorrow, maybe next week I’ll find a way to tell them. I don’t know… Anyway, I wanted to check in and see how you’re doing. Take care.”
“Take care, Stefan. Keep in touch.”
I visualized Stefan keeping up with his daily routine, as if nothing happened—setting his clock to wake him up, clad in his double-breasted blue suit buttoned over his Oxford white shirt enhanced by a red tie adorned with subtle motifs, having breakfast with his boys, kissing his wife good-bye, clutching his briefcase, and headed off to God-knows-where. En route he might run
across a few acquaintances on the LIRR, with whom he would exchange mundane niceties. He felt compelled to carry on this charade to maintain a semblance of normalcy and preserve a myth carefully woven within his family—the successful father, the know-it-all father, provider of all things big and small. This firing shattered his image, threw him off the pedestal that his family erected for him, and reduced him to his simplest expression. It was a blow to his psyche—a blow that threw him in the land of make-believe with a heightened sense of personal devaluation, regardless of his past professional successes. He could not help being overcome by a feeling of nothingness, of worthlessness. Stefan’s predicament was a stark reminder of the frailty and inanity of our human condition, and the many forms of expression it could take. His perception of himself, his sense of worth was tied to his job. He had invested so much in his job that his universe revolved around it and much of his identity was imbedded into it. Losing his job was tantamount to losing part of his identity, the essence of who he was in the eyes of his dearest ones. What an absurd state of affairs that made a job the centerpiece of his life, the prism through which he appraised his worth, irrespective of any intrinsic human qualities he was endowed with! How absurd was this human condition that compelled him to seek refuge in a masquerade, to hide out in a far-fetched scenario that ultimately, yet unintentionally, duped the ones in his life he cared the most about: his boys. How harsh was this human condition that subjected him to life’s vagaries, caprices, and topsy-turvies to the point of driving him to an existential dead-end. How this was resolved is not known to me. We kept in contact through the years, rather infrequently. I felt it awkward during those briefs moments to broach such a delicate issue and left it at that.
But there was a silver lining in this whole experience. Chuck ended up being a success story with the company. He was elevated to the manager of Accounts Payable position, after
having been initially passed over for the promotion. When at some point a rival company made him an offer to join it in the same capacity, the company counter-offered; thus a bidding war ensued between the two companies. In the end, he stayed put with substantial consideration. Chuck’s was one of the best hiring decisions I have ever made. I was not there to witness these events, as my position had been phased out. This, in itself, is a tale for another time.
© Copyright Etzer Cantave 2013