Your boss is not your enemy (or at least shouldn’t be)

I’ve been in the workforce for over a couple of decades now and have worked for a lot of different bosses. Some were great and others, not so great. I didn’t figure out until about six or seven years ago that your boss is not your enemy. I mean that, really. I know that there are people reading this right now that would beg to differ, but the truth of the matter is, bosses are people too and the vast majority of them want to do a good job. So why do a significant number of us end up hating or at least develop a strong dislike for our bosses? There are a lot of different factors involved here and I admit most are based on my opinions and my observations, so bear with me.

The “haves” and “have nots”, that’s what Marx was talking about with the proletariats and the bourgeoisie. Without going into a lot of detail about Marxism and the social economic theory behind it, I’ll just grossly paraphrase it into a work environment social order. The bourgeoisie are those with the authority, power, and prestige and of course money, to stay in control, i.e. bosses. The proletariats are all those without all of the above mentioned assets. Those in control want to stay in control and those without, want to gain it. I’m sure you have heard or even said, “If I was in charge, I would do blah”. That’s us, the worker bees trying to assert control. The only reason that there isn’t a coup d’état is because we’re civilized and civilized people follow rules. The main rule that applies here of course is that you work your way to the top. We follow that one rule religiously, both the bosses and the workers.

So how do you work your way to the top? You need to be wealthy. Wealth in the work environment is not about having a lot of money. I’m sure there are people out there that got their jobs by having a lot of money, but that’s a small minority. What you need are talent, skills, knowledge, intelligence, motivation and throw in some common sense and people skills. Talent and having an aptitude is great, but it will only take you so far. So you’re talented, what are you going to do with it? I happen to be very talented in baking and pastry making, but that’s not what I do for a career. My skills are self taught and they wouldn’t take me far in the culinary world. I also lack credentials, i.e. formalized knowledge and I lack the motivation to make it my choice of career. Having good skills means that you do something well. I also happen to have a knack for numbers, hence my career in finance. That means that I’ve always done well in math and math oriented education. I took that affinity for numbers, gained knowledge and credentials through school, and then learned to become very skilled at it. Intelligence is your ability to learn, adapt and reason. Motivation is the biggest currency there is. Without the desire to do something, be something, or be somewhere, all those other currencies are a moot point. The currency you need to work your way up is actually more difficult to earn than money.

Your boss is wealthy in one of the major currencies at work. You may not recognize it or see it, but someone else in the organization has and that’s how your boss became your boss. To move up and earn respect, you need to prove your wealth in one of the major currencies. It’s more likely that your boss will recognize good work if it is similar to what he or she also specializes in. That’s because your boss already knows the value of their area of specialization. It is human nature to place higher value on something he or she already has because they pursued those skills for a reason. Charles Caleb Colton quote is apt, “Imitation is the sincerest form of flattery”.

In any good organization, your boss is rated on how good a job they do. As part of that job, they need to prove that they are good at being a boss. That means they manage their employees well. You need to be able to motivate employees to do their job well. You need to know when and how to approach issues. You need to balance the needs of the employees with the needs of the company. That last one, balancing between the needs of the two groups is one of the more difficult aspects of being a boss. Your boss was once in the same place you are now. They know and remember what it was like to work for someone. When your boss discusses with you something that you did wrong or make a correction to something that you produced, they are not trying to “put you down”, they are trying to help you. Your job as an employee is to learn from your mistakes. The boss’s job is to point them out to you and not to berate you. This is good for the company, good for your development, and also good for the boss. If you do your job well, your boss also looks good. Managing employees is actually a pretty tough job.

Your boss is a human being and humans make mistakes. Contrary to popular myth, bosses don’t know everything. It’s your job to help your boss too. If he is a bad boss or exhibiting behavior that is bad, it is OK to point that out. Of course you need to do this tactfully and take into account that your boss has feelings too. Chances are, they will reciprocate your behavior and raise their respect for you.

By Keiko Hammond

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Cost Benefit Analysis – to include or not to include, that is the question.

Financial analysis is a very broad discipline and includes various areas of specialization.  Budget analysts specialize in budgets and forecasts, corporate analysts usually specialize in producing customer (internal and external) distributed reports, project financial analysts specialize in gauging the costs and benefits/profits associated with projects or initiatives.  Although I have worked in various areas of finance over the years I specialize in project finance.  Project finance is rather a small niche and most companies do not employ a specialist.  If you do not have complex projects or do not have a lot of them, you can usually get an analyst from another area to do this type of analysis.  Of course there are pros and cons with not employing a specialist but I won’t go into that here.

The basis of good project financial analysis is having good data.  Cost benefit analysis (CBA) boils down to a really simple mathematical formula: All your benefits minus all your costs.  If you get a negative number, obviously the project has no return.  Of course there are variations to the “simple mathematical formula,” the most likely being a time value component.  Any sort of return on investment calculation is formula driven and is the easiest part of actually doing a CBA.  The difficult part is the data that goes into a CBA.  If you have bad data, you will get a bad result.

So what’s good data?  Costs are somewhat simpler than the benefits side but still can have some problems.  The easiest way to gauge the data you need is to consider what the goal of your end result should be.  Project costs are usually all the resources that go into doing the project including labor and materials.  If you are looking at just the return that a project will have then all you really need is all the labor needed, all the costs of software and hardware, and other operational expenses associated with that project.  Here’s the catch, some companies will only include additional costs, i.e. costs that are not already being paid by other means.  As an example, they may employ a financial analyst to be part of the project team to vet out the costs, but they may not include his/her cost of time spent on the project because the costs are already being picked up in the finance division.  The analyst’s salary is already being paid and is not an additional cost incurred on the project.  Regardless of whether or not the analyst works on a project team, the company already incurs this cost.

The other problem that may arise is when to stop charging expenses to a project.  This is one of the areas in which a company needs to have a well defined policy.  A project by definition is a temporary endeavor.  You cannot keep expensing things forever on a project.  Somewhat confusing are things like maintenance costs associated with a newly installed system that go on for a few years.  Obviously, it doesn’t take years to install a new system (at least you would hope it doesn’t), so once the system is implemented you really can’t argue that maintenance expenses should still be charged to the project.  Hopefully, you arranged the maintenance expenses to start after the system goes live instead of when you do the purchase.  If for whatever reason the maintenance started before the end of the project, you’ll need to define at what point the maintenance should come off the project and be placed elsewhere or just expense it somewhere else to begin with.

Project costs are in direct conflict with TCO discipline.  TCO, total cost of ownership, is supposed to capture the costs associated with the system for the life of the system.  Many companies struggle with this type of data capture simply because the process and the tracking systems available are not mature enough.  In a TCO world you’ll need the discipline to code everything associated with the system to that system.  The problem with this is that coding time like an attorney for most workers is cumbersome and really boring.  I’ve worked as a consultant a couple of times in my life and I recall all the time and effort it took to do my billing.  None of it was fun and you can’t charge people for time spent preparing the bill.  Also, accounting systems are usually very bad at doing this type of tracking.  It’s not impossible, but you’ll need a lot of discipline in the workplace to make it all work.  People leave and as time passes, no one could figure out which project is associated with which TCO tracks.  Bottom line – you need to know what exactly you want to track, how you are going to track it, and to document everything.

Let’s move on to benefits.  Typically, there is a budgeted amount set every year for the project portfolio.  Who gets the money to do their project will depend a lot on which ones have the highest returns.  There’s also the projects that “have to” be done like regulatory requirement, operational requirement, or competitive requirement.  Regulatory and maintenance projects are likely not directly correlated with revenue.  Strategic projects are the most likely to be associated with any type of revenue increase.  If you can tie a direct revenue increase to a project, that is a hard benefit and should be counted in the CBA.  Direct means we will not gain that increase in revenue unless the project is implemented.  A hard benefit means that it’s a definite benefit…we do the project, we get the sales.  A hard benefit cannot be something like; well we think if we do the project, someone will buy the product.  If the benefit is not directly correlated, then we term that as a soft benefit and should be discounted.  If a project purports to a likely revenue increase of $4M a year, we might discount it by 50% just because it is a soft benefit.

More likely hard benefits would be due to reduction of operational costs.  You do the project and you will save money.  Reduction of costs can be things like human resources, property, service fees, etc.  You have to be very careful when it comes to human resources.  You need to identify what’s a reduction verses what is efficiency.  Resource efficiency is typically a reduction in time spent doing a task.  This is a soft benefit because you are not exactly saving money, but you are saving time.  Is this quantifiable?  Yes.  But the company is not really saving this money because the people will get paid regardless of increasing their efficiency.  The most difficult part of benefits is actually execution after the project implementation.  Someone will need to make sure the reduction in headcount happen and that there is a plan for that in place.  Someone will need to manage the suppliers that provide service and product.  Someone will need to look into the real estate leases to see if we can terminate the agreement or sublease.  If it is an efficiency increase, how do we know that we are now saving time?  Did we do a before and after time study?  Benefit tracking is where most companies lack discipline.

By no means did I cover everything that may come up on a project CBA, but I think the basics were covered.  Every company will have a differing policy on what is and is not included.  The more recent trend is to include an impact analysis.  A lot of projects will not have a positive return.  For example, doing a company-wide upgrade to MS Office 2013 will not generate revenue or a positive return, but for various reasons should be done.  This project has a huge impact because it affects virtually everyone in the company.  Will this increase efficiency?  Perhaps.  Will this increase revenue?  Not unless one of your customers demands you do the upgrade or risk losing them as a client.  Will this have a huge impact?  Yes.

By Keiko Hammond

Odi et amo…I hate and I love Excel; my tumultuous relationship with a big calculator

I am a financial analyst.  As a successful financial analyst, I spend 90%+ of my workday staring at, working on, reading, and manipulating spreadsheets.  OK, I’m also a geek…I spend some of my non-working hours staring at spreadsheets, but I’m weaning myself off of that.  I love, love, love Excel.  Working in the finance field for a dozen plus years, I have come to heavily rely on Excel to get my job done.   Sometimes, my eyes blur, the numbers don’t make sense, and Excel is stupid.  I hate, hate, hate Excel.

Why do we end up spending so much time coaxing our spreadsheets to produce masterpieces that only the creator can love?  I mean, there are various other financial tools out there, so why do we end up working with spreadsheets?  I’ve used various financial systems over the years and all of them have good things and bad things about them.  All of them are very capable tools that can track all financial activity.  Some of them are even good at producing reports.  The problem with almost all of them is that they lack flexibility and can’t make changes on the fly.  For the most part, if there is a decent reporting system attached to it, I can get someone in IT to create a report for me exactly the way I need it to look.  Unfortunately, getting someone else to go into the financial system and create a report usually takes development and collaboration time.  Most of us in the finance world know that when a request comes in they usually needed it yesterday.  Excel gives us that flexibility and without the cumbersome need to use a report writer or write new code.  Thus, most finance professionals become advanced Excel users.

Let’s talk about Excel being stupid.  Why o’ why, does it not understand what I want it to do?  There is a massive amount of frustration that comes with working with Excel.  I write a formula, Excels tells me that it’s wrong, but won’t exactly tell how to make it right.  I write VB code and then it won’t execute.  I add new rows and the whole thing blows up.  What we sometimes forget is that Excel is a tool and not a productive member of your team.  It’s basically a very big calculator, albeit a complex one with lots of functionality.  You can’t just tell it that you want something done, you need to define it in very detailed parameters in a language it can understand.   What goes in is basically is what you get out.  You can’t ask it if something looks better one way, you can’t ask it if the numbers are right…that’s what your human colleagues are for.

Let’s talk about what goes in.  I’m an advanced Excel user.  That means that I’m pretty good at using it and producing reports that look professional, create templates that are functional, and pretty adroit at getting Excel to do some spectacular tricks.  I am a bit arrogant when it comes to my skills and with that comes my very assured cockiness that whatever I produce in Excel is correct.  Whoops!  I am very secure of my own skills and that of the tool I am using, but I am forgetting that I am human and make mistakes.  There is nothing more embarrassing in the workplace than to present a beautiful report that I have nurtured to maturity and then being told that there’s something wrong with it.  It’s like being an artist showing off a masterpiece and then, well, being told it’s ugly.  Remember, what goes in is what come out.  Excel is an unforgiving master and it really doesn’t care if you look like a fool.

I’ve heard over and over by other users that Excel is stupid, that it’s error-prone, and that it makes mistakes.  Really?  I’ve actually had someone tell me that I need to check each calculation in a pivot table manually, i.e. via 10-key, because Excel is known to make calculation errors.  Excel is stupid because we don’t know how to use the tool properly, it is error-prone because we are error-prone, and does it really produce mistakes?  Maybe.  I suppose the developers are human, the QA people are human, and the researchers are human.  It is possible that something fell through the process causing Excel to produce a faulty result.  It’s rather unlikely though, and I haven’t really encountered anything yet that I can pinpoint as an Excel error.  More likely, it’s the human operators entering something wrong, telling it to do something wrong, or misunderstanding what the function is supposed to do.  Trust me, Excel is a good listener and does exactly what you are telling it to do.

All in all, I think I’m going to lean toward loving Excel.  Mind you, I still think it’s obstinate sometimes and really, can’t it bend the rules once in a while so that I don’t have to be so precise?  Well, I suppose that is one of its greatest strengths and like in any relationship, I’m going to have to deal with it.  I’m sure I’ll still suffer the occasional lapse and cuss at it and hate it.

By Keiko Hammond