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September News and Notes

The Tyranny of Precedent

“It irritates me to be told how things have always been done. I defy the tyranny of precedent."
--Clara Barton
American teacher, nurse and humanitarian

During my career, as both a public and private auditor, and as a service provider to small business, I have often asked client employees why they do something a certain way.  It’s not meant to be a trick question, and it doesn’t imply that I believe the existing procedure is flawed.  It’s just that, in order to evaluate how something is being done, you have to know why it is being done that way.  Too often, the answer comes back as some variation on a common theme.  “That’s how I was trained.”  “The procedure manual tells me how to do it.”  And, my favorite, “That’s the way we have always done it.”

Now, I’m not advocating that employees rebel, and refuse to follow the established rules.  I’m not suggesting that business owners or managers should ditch the procedure manual and start over.  Procedures are usually established to provide a desired outcome.  They are established in an environment or time that may influence the construction of the rules.  However, the world is a dynamic place.  Even rules that were ideal when conceived can become outdated and inappropriate due to changes in technology, relationships with customers, product or shipping developments, or government regulations.

Even more important, procedures that are still perfectly good work better if employees understand why they were conceived, and the objectives associated with their implementation.  The more specific and detailed a rule or procedure, the less likely it will be appropriate in every circumstance.  When employees not only know the rules, but also the desired outcome of their application, the more likely they will be to “get it right” when confronted with something unusual.

Encourage your employees and managers to ask questions, and reward them with solid feedback, when it comes to the application of workplace rules and procedures.  At the worst, your employees will feel more in tune with your business objectives.  At best, you just might find a better way of doing something.  Either way, it’s a win for your business.

Dealing with Unsettled Economic Times

This article contains a quick checklist of do's and don'ts for small businesses dealing with the current economy.  It comes from the Open Forum.

http://www.openforum.com/articles/7-tips-for-small-business-success-in-troubled-times?extlink=em-openf-SBdaily

Finance Executives Most Likely to Commit Fraud

According to this article from CFO.com, the pressure to perform in a difficult economic environment has become yet another motivating factor in corporate fraud.

http://www3.cfo.com/article/2011/8/fraud_finance-executives-cfos-most-likely-to-commit-fraud

Subprime Mortgage Bonds Rated Higher than U.S. Treasuries

Here's one for the finance nerds.  In yet another example of the topsy turvy economic times, the types of securities that led to the trouble in the first place get a higher rating than United States debt instruments.  It's a little long, but will leave you shaking your head.  From Bloomberg.

http://www.bloomberg.com/news/2011-08-31/subprime-mortgage-bonds-getting-aaa-rating-s-p-denies-to-u-s-treasuries.html