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| Volume 7, Issue 2
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In This Issue:
 The good bookkeepers: America’s most trustworthy companies
Are you an A$&*@^?
How to hold a great meeting
 Top (10) ways to retain your great employees
Top (10) ways to show appreciation to employees & coworkers
 Letting talent walk out the door: Corporate interview mistakes
The benefits of incentives
 The benefits offered by Google may be grand, but they’re all business
 Google’s George Reyes
CFOs wanted: Controllers need not apply
The buyout binge
Say [Restatement] again!
Is the SEC a threat to FASB’s independence?
Cleaning up carbon
 Greenspan talks, people pay
IRS may shift AMT gap burden to small biz
 Finance salaries: Up, Up, Up
VCs aim to out-Angel the Angels
Turning up the heat on global warming
The Subprime story’s latest chapter: 11
The richest zip codes – and how they got that way
 7 Steps to optimize AR Management
New tools enhance Excel
How to create a more competitive end-to-end Supply Chain
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The good bookkeepers: America’s most trustworthy companies
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Alexander the Great is reputed to have said, "Upon the conduct of each depends the fate of all." More than two millennia on, the words of the Macedonian king echo
true in the boardrooms of America, where the tainted winds of option backdating, insider trading and questionable pension accounting blow fitfully--along with the
occasional gust still from the Enron-era corporate scandals.
Trust in free-market capitalism requires that shareholders and other stakeholders in the system have confidence in the probity of companies. Hence accounting
standards and governance rules, and the regulators' requirement that they be transparent. Audit Integrity, an independent Los Angeles firm that does research on
corporate governance best practice (and which is a data supplier to Forbes.com), has drawn up its first list of 100 American companies that, in its judgment,
"showed the highest degree of accounting transparency and fair dealing to stake-holders during 2006."...
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Are You An A$&*@^?
There's usually one or two in every office. And the word "jerk" or "idiot" doesn't suffice. No, this type of person has a very specific attitude that evokes such dislike,
disdain and meanness that he or she brings the place down. This person is nasty and cruel in a way that jerk doesn't connote.
No, the word for them starts with an "a" and ends with, well, you know, and now someone with a Ph.D. has actually studied these folks in the workplace. Robert Sutton, a
professor at Stanford University and co-director of the Center for Work, Technology, and Organization there, looks at how to identify and cope with them in his new book The
No A------- Rule: Building a Civilized Workplace and Surviving One That Isn't.Sutton didn't intend to write the book. In fact, it was born from a wacky pitch to the Harvard
Business Review that he didn't think would get accepted. Not only was it accepted and published in 2003, Sutton received loads of e-mails from readers who agreed that
workplaces are crawling with a-------. He realized there was much more research to be done. He recently spoke with Forbes.com about how to identify them, deal with them and
perhaps even rid your office of them...
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How To Hold A Great Meeting
Ask most people to describe meetings at work, and the adjectives they might use include "boring," "long" and "worthless."
"Hardly anyone does them well, and nobody thinks about how to improve them," says Jennifer Goodrich, president of Benchmark Leadership Training, a management training
firm just outside of Chattanooga, Tenn. But becoming a meeting master isn't the equivalent of searching for the fountain of youth. Just remember a few guidelines...
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Top Ten Ways to Retain Your Great Employees
Why Retention? Four Tips for Employee Retention
Key employee retention is critical to the long term health and success of your business. Managers readily agree that retaining your best employees ensures customer
satisfaction, product sales, satisfied coworkers and reporting staff, effective succession planning and deeply imbedded organizational knowledge and learning. If
managers can cite these facts so well, why do they behave in ways that so frequently encourage great employees to quit their jobs?...
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Top Ten Ways to Show Appreciation to Employees and Coworkers
You can tell your colleagues, coworkers and employees how much you value them and their contribution any day of the year.
Trust me. No occasion is necessary. In fact, small surprises and tokens of your appreciation spread throughout the year help the people in your work life feel valued
all year long.Looking for ideas about how to praise and thank coworkers and employees? Here are ten ways to show your appreciation to employees and coworkers...
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Letting Talent Walk Out the Door: Corporate Interviewing Mistakes
Corporations incessantly talk about talent acquisition, talent management, retention and onboarding. You can hear these buzzwords surface when senior executives and human
resource managers meet. Yet, most organizations do not pay attention to how their first impressions really set the tone for successful talent retention.
Corporations incessantly talk about talent acquisition, talent management, retention and onboarding. You can hear these buzzwords surface when senior executives
and human resource managers meet. Yet, most organizations do not pay attention to how their first impressions really set the tone for successful talent retention.
Let's start at the beginning and look at five major interviewing problems that should give any candidate pause when considering accepting a position. These situations are
based on either firsthand experiences or were related to me by a candidate:
* "The Yawn"
* "The Two-Door Interruption"
* "The Endless Interviewing Process"
* "The Lost Soul"
* "The Empty Promise"
The Yawn...
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The Benefits of Incentives
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Incentives have been defined as "what companies put in place — above and beyond straight salary — to get people to do their jobs."
The definition is only partly tongue-in-cheek. The most successful and progressive businesses in the world increasingly are embracing performance-based compensation and
incentive programs. Why? Because most of the time, they meet a need and offer tangible benefits.The need might be strategic: to attract and retain high-caliber talent, manage
risk from rising competitive pressures or lift the levels of productivity and performance across the enterprise. Other objectives for implementing employee incentive
programs are more tactical, such as shoring up sagging customer service, boosting sales or addressing a shift in the balance sheet. Often, they are short-term efforts focused
on driving employee behavior toward achievement of a specific productivity or profit initiative, sales target or service goal. Incentive programs are equally as effective
in either an "up" or "down" business climate. When demand softens, the best competitors recognize the advantage of increasing their share of the market to weather the storm.
During an "up" swing, incentives can help accelerate new product introductions, expand distribution and increase market penetration.
Cash or Noncash? The incentives
organizations offer employees might take the form of bonuses, or they can be noncash rewards. More than three-fourths of the Fortune 500 companies prefer to use noncash
incentives. Expenditures for these programs exceed billions of dollars annually, as companies supplement their employee compensation plans (straight, salaried, or
commissions and bonuses) with noncash incentive programs.The Incentive Federation's "2005 Survey of Motivation and Incentive Applications" examined incentive users'
objectives, practices, costs and results across all levels of American business. Results of the study revealed several trends in noncash incentive use:
• 83 percent use merchandise and/or incentive travel in their sales incentive programs.
• 72 percent use merchandise and/or incentive travel in their nonsales recognition/motivation programs.
• Four out of five survey respondents (80 percent) think travel awards and merchandise awards are remembered longer by program participants than cash awards.
Characteristics of a Good Incentive Program. Whatever form of incentive a company selects, for the program to work well and achieve the desired results, the
first order of business must be understanding the target employee group, what motivates that group and what it considers valuable. Otherwise, the program won't be personal or
productives...
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Perk Place: The benefits offered by Google may be grand, but they’re all business
During a telephone interview, Gopi Kallayil, senior product marketing manager
for Google, lists which of the company's much-publicized employee benefits he takes advantage of.
"Let me pull this up because there are so many," he says. When his computer produces a list a moment later, Kallayil makes his way down the screen and
continues: "The free gourmet food, because that's a daily necessity. Breakfast, lunch and dinner I eat at Google. The next one is the fitness center, the 24-hour
gym with weights. And there are yoga classes." There is a pause before he adds that he also enjoys the speaker series, the in-house doctor, the nutritionist, the dry
cleaners and the massage service. He has not used the personal trainer, the swimming pool and the spa -- at least not yet, anyway. Nor has he commuted to and
from the office on the high-tech, wi-fi equipped, bio-diesel shuttle bus that Google provides for employees, but that is only because he lives nearby and can
drive without worrying about a long commute. Is Google's generosity purely altruistic? Of course not,...
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Google's George Reyes
The finance chief began instilling financial discipline at the Internet icon well before it became the envy of Silicon Valley.
Not since Federal Express burst on the scene in the 1970s has a company had the good fortune to become a verb. Today you'd be hard-pressed to find a sentient being
who hasn't Googled something, probably within the hour. So ubiquitous is the company that if you Google "Google" you get more than 600 million hits. Flush with
$1.7 billion from its 2004 initial public offering, Google has embarked on a sweeping series of acquisitions and product-development efforts encompassing
everything from consumer and office applications to a landmark effort to create a digital library of every book ever published. Sometimes accused of profligate
spending, Google has relied on CFO George Reyes to instill financial discipline since well before its coffers filled and it became the envy of Silicon Valley.
Reyes sat down with CFO recently to discuss the delicate art of not acting spoiled:
You had never taken a company public before and yet you played a key role in what is certainly the most high-profile IPO this side of the dot-com bust. What was that like?...
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CFOs Wanted: Controllers Need Not Apply
Why companies often won't consider controllers when choosing their next finance chiefs.
Controllers couldn't make all the numbers work out for them this time. New research shows that as of April 2006, the number of Fortune 500 CFOs hired from outside of
their new companies total 190. While 58 percent were plucked from the ranks of existing corporate or divisional CFOs, a paltry 4 percent were sitting controllers.
That's because controllers are rarely viewed as CFO material outside their own companies, according to research that was released on Monday by executive search
firm Korn Ferry International at the CFO Rising conference in Orlando. Rounding out the survey of external CFO hires, 17 percent of big company finance chiefs were
chief executive officers and general managers immediately before being named to the CFO slot, 9 percent were senior financial generalists, 3 percent were treasurers, 4
percent were involved in strategy and corporate development, and 5 percent came from "other" disciplines. advertisement Outside controllers aren't prime candidates
for finance-chief spots because...
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The Buyout Binge
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Private-equity firms are gobbling up everything in sight. How long can it last?
Seated on the stage of the Empire State Ballroom in New York's Grand Hyatt Hotel, Bill Conway talked of missed opportunities. A featured speaker at January's Private
Equity Analyst Outlook Conference, the cofounder and managing director of The Carlyle Group told the assembled bankers and private-equity partners that he wished
he'd done more. "We should have done every single deal, everywhere in the world," lamented Conway. "Every deal worked." Although it may sound as if Conway were
channeling Gordon Gekko, he was hardly exaggerating: nearly every Carlyle deal in recent years has worked. The private-equity firm's recent purchases of Hertz,
Dunkin' Brands, and other companies have outperformed all but the most optimistic projections. What's more, Carlyle isn't the only one with the Midas touch.
Private-equity firms are enjoying a success that eclipses that of the Michael Milken era of the 1980s, when leveraged buyouts (LBOs) came into vogue. Through the
first three quarters of 2006, private-equity funds yielded an average 12-month return of 23.6 percent, versus 9.7 percent for the S&P 500, according to Thomson
Financial. Over the past three years, buyout firms have averaged a 15.6 percent return, compared with 9.9 percent for the index. As private-equity funds have
consistently beaten the markets, money has poured in by the billions. In 2007, according to industry professionals, U.S. private-equity firms could raise...
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Say [Restatement] Again?
An explosion in accounting errors — in part reflecting the difficulties of today's complex rules — has forced nearly a quarter of U.S. companies to learn the
art of the restatement.
When Mark Blinn became Flowserve Corp.'s finance chief in November 2004 — 10 months after the company uncovered accounting errors and announced that it would restate
past results — his first job was to help staffers shake off the negativity. "I didn't want them to feel tainted," he says, "or that we all of a sudden wore a scarlet A." The lesson in positive thinking, not to mention many other restatement-related exercises, lasted another 15 months. Initially attributed to
"isolated computer-system implementation difficulties," the problems ultimately extended to numerous material weaknesses in internal controls. By early 2006, when
Flowserve, a Dallas-based maker of industrial pumps, seals, and valves, finally filed restated reports going back to 2000, Blinn himself had a new outlook.
"Restatements aren't something to fear," he says. "They're a fact of life."...
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Is the SEC a Threat to FASB's Independence?
A new agreement between the SEC and FASB gives the regulator greater say over future board candidates. Could that open a door for political interference in
accounting standards?
With the holidays fast approaching at the end of 2001, Harvey Pitt, then chairman of the Securities and Exchange Commission, was presiding over a collapse in investor confidence. That fall Enron had imploded in one of the most spectacular
finance scandals in memory, and it looked increasingly as though its auditor, Arthur Andersen, had been careless — or perhaps even complicit — in some of the
energy company's most questionable dealings. In the midst of this, Pitt recalls, the Financial Accounting Foundation (FAF) informed the SEC — by phone — that it had settled on a new nominee to replace Edmund Jenkins, the outgoing chairman of the
Financial Accounting Standards Board. Pitt claims he cannot recall the candidate's name. However, it was probably G. Michael Crooch, then and now a FASB member, who
confirms he was a candidate at the time. Like Jenkins, Crooch was a veteran of Arthur Andersen, and had succeeded Jenkins as head of the firm's
professional-standards group. That was the group involved in ordering the shredding of Enron-related documents,...
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Cleaning Up Carbon
Pressure to curb carbon emissions is mounting. How companies respond will affect much more than their bottom lines.
In January, the United Nations's Intergovernmental Panel on Climate Change — a group of scientists and government officials from 113 countries — issued its much-anticipated fourth report on global warming. In it, the panel not only
indicated that global warming is worsening, but that the rise in temperatures is likely caused by human activity. How likely? The panel said it's at least 90 percent sure humans are responsible. In the contentious battle over global warming,
90 percent may be as close to a dead-certain lock as you can get. Equally as certain is that businesses — the primary generators of greenhouse gases — will be held accountable for what the report calls the "unequivocal" change in the planet's
weather. The reckoning has already commenced. In the 2007 proxy season, investors filed 42 global-warming resolutions with U.S. companies — nearly double the number
filed three years ago. At the same time, coalitions of eco-minded institutional investors have started to confront corporations considered slow to address their
own carbon emissions. In February, a group of powerful institutional investors posted a list of 10 offending businesses,...
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Greenspan talks, people pay
At $100,000 per, former Fed chairman reported getting more from two speeches than his 2005 salary at central bank.
Alan Greenspan is still commanding attention - and $100,000 per speech - a year after leaving his position as chairman of the Federal Reserve, according to a published report. Greenspan is commanding $100,000 for an hour-long speech, USA
Today reported, citing three unidentified people whose groups have hired the former Fed chairman. The paper said that he's averaging about one speech a week, meaning
that he likely earned more than $4 million in speaking fees last year after leaving office. In the past week Bernanke and Greenspan expressed differing opinions on the
outlook of the economy. Ali Velshi reports. Greenspan earned only $180,100 as Fed chairman in 2005, his last year in office. But he was hardly pressed for cash when
he left the job in January 2006. His 2005 disclosure filing showed him with assets of at least $4.2 million. And on
Sept. 17 he will have his memoir The Age of Turbulence: Adventures in a New World published by Penguin Press...
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IRS may shift AMT gap burden to small biz
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To raise revenue, the feds plan to stick their noses deeper into small-business financial records.
Carson Stanwood has no problem with the Internal Revenue Service going after tax cheats. The founder of Stanwood & Partners Public Relations, based in Jackson Hole,
Wyo., understands that paying their taxes in full puts small-business owners like
him at a competitive disadvantage against the corner cutters. But when contemplating some of the Treasury Department's recent enforcement proposals - such as vastly expanding the number of Form 1099s he would have to issue and requiring
him to verify his independent contractors' taxpayer IDs with the IRS - Stanwood, 47, changes his tune. "I applaud them going after this until I hear that it's going to vastly increase my paperwork. I believe it would add 20 to 25 percent to what I
pay my bookkeeper - another $6,000 or $7,000 a year - which would suck," says Stanwood, whose firm took in about $1.5 million last year. "That's two or three
laptops the employees won't get, smaller Christmas bonuses, or an epic vacation my wife and I don't take."...
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Finance Salaries: Up, Up, Up
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Last year, investment banks, private equity firms, and hedge funds rewrote the dealmaking record book. Deal volume, industry profits, and CEO bonuses all reached
new heights
(see BusinessWeek.com, 12/19/06, "Deals of the Year, in a Year of Deals"). Now the money is trickling down through the ranks of the financial-services industry. Bonuses, which were set
last December, are typically paid out during January, February, and March. At many firms such as Goldman Sachs Group (GS) everyone from the secretary to the most
senior partner is eligible to partake in the record payout. Goldman Chief Executive Lloyd Blankfein received a bonus of $53 million, a securities industry
record. The average payout at Goldman was about $622,000. The money is flooding into New York City, where financial services account for 5% of the jobs but 20% of
total pay. Citywide, compensation in the financial-services sector hit a record $23.9 billion, up 17% from $20.5 billion in 2005, according to state officials.
The average bonus in New York City's financial-services sector was $138,000, according to the New York state comptroller's office...
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VCs Aim to Out-Angel the Angels
Responding to the emergence of a new breed of wealthy investor, venture capitalists are boosting their early-stage investments in startups.
In October, as startup Jaxtr hit up venture capital firms for its first round of funding, it landed an unusual arrangement. Instead of taking a few million in cash
from a firm that would hope to one day book a fat return, Jaxtr took a loan—just $1.5 million, from no less than four VC firms and three angel investors. None got
the usual perk of a seat on Jaxtr's board. The result is plenty of independence for Jaxtr, a maker of software that routes calls from blogs and MySpace profiles to
cell phones. "You're still basically on your own," says Jaxtr Chief Executive Konstantin Guericke, one of the co-founders of networking site LinkedIn. Jaxtr's
tale illustrates the new calculus governing high-tech venture capital...
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Turning Up the Heat on Global Warming
In a landmark decision, the Supreme Court affirms that the EPA has the authority to regulate carbon emissions.
Adding to the mounting pressure for federal legislation on climate change, the U.S. Supreme Court on Apr. 2 ruled that the Environmental Protection Agency (EPA) has the authority to regulate carbon dioxide from vehicle emissions and that the agency
has shirked its responsibility to do so. The 5-4 decision in the high court's first global warming case is a rebuke to the administration of President George W. Bush,
which has opposed mandatory caps on carbon emissions. The EPA, headed by Bush appointees, has declined to regulate greenhouse gas emissions that contribute to
global warming for a number of reasons, including its argument that carbon dioxide and other heat-trapping gases emitted from car tailpipes aren't pollutants. The groundbreaking Supreme Court ruling establishes that...
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The Subprime Story's Latest Chapter: 11
As New Century joins other subprime lenders in bankruptcy, some players are hunting for alternative funding.
New Century Financial's tumble into bankruptcy court shocked few observers of the swift shakeout in subprime lending. Far more surprising could be the industry's difficulties in soothing nervous investors. New Century, once the second-largest
lender in the category of home mortgages for those with checkered credit histories, stopped writing new loans last month, signaling to many the demise of the company's business prospects. On Apr. 2, it filed for Chapter 11 protection in Delaware and
laid off 3,200 workers—more than half its staff—"to better align the company's cost structure with the current operating environment and to properly size these
businesses in preparation for possible sale," the Irvine (Calif.) company said in a news release. "The decision to pursue the sale of the company's assets and operations through the bankruptcy process was a difficult but appropriate decision
for our board to make," New Century Chief Executive Officer Brad Morrice said in the Apr. 2 announcement. "This was a very hard step for me personally and clearly
not the outcome I would have preferred." The fall of the industry's biggest player to date underscores the market's tough posture toward the whole field in the current era of rising defaults and shaky
housing prices...
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The Richest Zip Codes—and How They Got That Way
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As the ranks of the super-rich grow, they are increasingly grouping in tighter—and wealthier—communities. Find out where.
Search the Internet for luxury real estate across the U.S. and you might be surprised by the results. Just because a neighborhood has a rarefied Zip code, it's no guarantee that all the houses listed within it will be equally opulent. Some may
even be downright modest. Take, for example, Greenwich, Conn. There in 06831 is a house selling for just $575,000. For the Wall Street and hedge-fund crowd who have
flooded into town in recent years, a price that low is a rounding error. Far from a palace, it's a 672-square-foot cottage with two bedrooms and one bath, and it sits
on just a tenth of an acre. Why would anyone build such a dinky house in a place like Greenwich? Today, of course, no one would. The explanation is that the house was built way back in 1926, when Greenwich was a more or less normal country town
with a handful of large estates. And therein hangs a tale about the transformative power of money...
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7 Steps to Optimize A/R Management
| Case Study: The A/R Management Payoff |
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Cash released from receivables totaled $45 million.
Valued at a 10 percent cost of capital, this reduced funding costs by $4.5 million per year.
DSO decreased from 47 days to 36 days over the course of 14 months.
Bad debt expense was reduced by $1 million.
Total profit improvement in the first year totaled $5.5 million. |
For most companies, receivables are the outcome of doing business -- resulting in payment from a satisfied customer for the product or service delivered.
However, companies lacking a clear strategy for managing accounts receivable are losing money without knowing it through poor tracking, a weak or nonexistent
dispute resolution process, and technology that impedes efficiency rather than supports it. Finance staff may struggle to keep money flowing in while satisfying
competing management objectives to minimize bad debt loss and maximize sales.Receivables are among the three largest assets of 75 percent of Fortune 500
companies, according to a 2004 Parson Consulting study, yet most companies lack a strategic approach to managing them. Investments in receivables are not vetted in
nearly as systematic a fashion as capital expenditures are, for example. What are the financial and other benefits that result from a well-articulated accounts
receivable management strategy? What are the penalties of a poor strategy, or the lack of any strategy at all? Narrowly defined, companies manage accounts receivable
assets through...
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New Tools Enhance Excel
What's one way to destroy a finance department's productivity?
Get rid of spreadsheets. How do you improve your finance department's productivity? Get rid of spreadsheets. Of course, desktop spreadsheets are cheap and versatile, and millions of people work with them every day. In a corporate setting, however, the disadvantages and dangers of spreadsheets outweigh these conveniences. They are error-prone. They also are difficult to audit and clumsy to work with in collaborative, repetitive business processes such as budgeting. For years, businesses have endured a "can't live with them, can't live without them" relationship with desktop spreadsheets. Alternatives have been too cumbersome, too expensive or both. Now, however, solutions are available that...
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How to Create a More Competitive End-to-End Supply Chain
Supply-chain finance (SCF) is emerging as the next frontier that manufacturers and retailers are focusing on to drive financial advantage over their competitors.
Early adopters report dramatic improvements in days payable outstanding (DPOs), supply-chain cost of capital and cost of goods sold. By merging physical supply-chain information with financial supply-chain data and flexible funding methods, companies are able to not only automate payables and receivables but also to inject much-needed liquidity at various stages of the supply chain. For a supplier, this can mean faster access to lower-cost capital. For a buyer, it can mean the ability to...
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