Creative Ways CEOs Communicate

One of my favorite features in my hometown paper, The Atlanta Journal-Constitution, is the “5 Questions for the Boss: Lessons Learned by Georgia’s Top Executives” that runs in the Sunday paper.

As readers of this blog know, I’m all about lessons learned. In fact, my book is called “How Now to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes.”

A few weeks ago the reporter, Henry Unger, interviewed Phil Horlock, the CEO of the Blue Bus school bus company. Based in Fort Valley, GA, the company has 1,500 employees with sales reaching nearly $800 million this year.

Previously an employee at Ford, Phil was asked what he learned from Ford chief Alan Mulally, who is credited for that company’s remarkable turnaround. Phil’s response? “He taught me and others that you can’t manage a secret.” Phil said he learned that a company needs an open environment where people feel they can communicate what the issues are.

Every Thursday morning from 8 a.m. to noon all the leaders at Ford from all over the world would gather in a room or join by video conference and take turns discussing all the issues they were facing.

Phil says he brought that strategy to Blue Bird, cancelling a lot of the other separate meetings to hold one meeting on Thursdays. He noticed that productivity started to improve and he felt confident he knew what issues they were facing each week.

George Alvorson, chairman and CEO of Kaiser Permanente, has been sending companywide emails to close to 200,000 employees for six years. He termed them “Celebrations” and intended to continue the Friday afternoon practice for just a year. But as an article in the Chicago Tribune reports, he got a strong response to the emails and felt that writing them made him a better manager.

The emails contain data and information about what they are doing well in an effort to make the employees feel good about the company, but are based on absolute honesty, Halvorson said.  (If you’re interested you can read several of them in the book “KP Inside: 101 Letters to the People of Kaiser Permanente.”)

There are 6,500 employees of Epic Systems Corp., a privately held medical records company in Verona, Wisconsin with $1.5 billion in revenue in 2012. Most days, many of the employees are traveling around the world for installation or training on its software system. But once a month, every employee is on the 800-acre campus for the monthly meeting run by Founder and CEO Judy Faulkner. They enjoy free soft drinks and popcorn as they meet in the huge auditorium to be updated on company news.

Good communication is not just about making employees feel good about the company and about themselves, although those are worthy goals. Good communication also equals higher productivity.

According to an article written in 2011 by David Grossman, “The Cost of Poor Communications,” the total estimated annual cost of employee misunderstanding in the U.S. and the U.K in companies with more than 100,000 employees is $37 billion. On the flip side, companies with leaders that are effective communicators had 47% higher total returns to shareholders over the last five years compared with firms that have leaders who do not communicate as effectively.

I see ineffective communication all the time in my position as the Turnaround Authority. In fact it’s one of the common denominators of the companies that I work with. In addition to experiencing financial difficulties, just about every company I am brought in to turn around also suffers from poor communication among its management and employees.

One of the first things I do when I take over as CEO is to gather all the employees together and tell them exactly what is going on. I hold my own town hall meeting to quickly squash the negative effects of the rumor mill.

Is your company suffering from ineffective communication? I suggest you work on improving it. Or, well, you may just have to hire a guy like me.


Boots to Business: Veterans Succeed as Small Business Owners

As our country celebrates Veterans Day in recognition for those who have served in the military, there is good news about their unemployment rate. It has been going down in 2013 and in October was at 6.8%, compared to 7.4% in October 2012.

In honor of Veterans Day, I wanted to highlight a government program that is helping put more veterans to work and can actually benefit business by teaching veterans to use the skills they learned while serving in the military to start their own business. Operation Boots to Business is a U.S. Small Business Administration-sponsored training program to help transition service members to business ownership.

Studies conducted by the SBA concluded that veterans are more than twice as likely as the general population to start their own businesses and have those businesses succeed.

Operation-Boots-to-Business-Logo“Being in the military and being an army vet or a veteran, I have been built and trained to run my own business I think it’s a perfect fit and a perfect fit for veterans,” said Jenna Bazaric, Owner & Operator of a Tropical Smoothie Café in a video about the program. “We have the ability to react to change and to talk to and interact with all different types of people.”

Brian Iglesias served 13 years in the Marine Corps and is now President & CEO of Veterans Expeditionary Media. He credits his success to the training and education he got through the program and agrees that veterans have the skills to become successful.

“There are a lot of transferable skills that you can take from the Marine Corps and apply to your own business,” he said. “We have this take-the-hill mentality where we’re goal oriented. We don’t make comfort-based decisions. I have a dream and a vision to own my own business and my comfort comes second. And I’ll push myself and drive myself. That will to win, that will to succeed and to not surrender, to not give up has really helped me. Because it’s tough. Things go wrong. The best part about being a marine and having the military service is that we have the ability to thrive in chaos. Small business ownership is chaos. Things happen all the time and you have to be fast, smart and flexible to overcome those and continue to drive forward and succeed.”

Active duty military members and their partners or spouses are eligible for the program, which includes an intensive two-day intro at a local military installation, followed by an eight-week online course offered by the Institute for Veterans and Military Families, Syracuse University.

I’m in favor of any program that successfully helps those who served our country acquire the skills they need to succeed on their own in the world of business. I wish all the participants in this program the best of luck in their new endeavors.

Happy Veterans Day weekend to all of you and to all the veterans, thank you for your service.


Valuable Lessons from the Busch Family

A friend of mine learned to water ski by watching another friend as he desperately tried to rise up out of the water, but instead took a face plant into a wave every time. A guy in the boat was coaching him with each effort. My friend listened, and when it was her turn, got up on the first try.

Bitter-Brew-cover-e1342374617214I’m a big believer in learning from others mistakes. In fact, I’ve written a book about it. My new book, “How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes,” will be available in early 2013.

There’s another new book that anyone in business would enjoy, particularly if you have a family business. “Bitter Brew: The Rise and Fall of Anheuser-Busch and America’s Kings of Beer” is a fascinating account of the infamous Busch family. Author William Knoedelseder recounts the story in all its lurid, scandalous detail of how Adolphus Busch, a German immigrant, came to the United States before the Civil War, and with the purchase of a beer recipe from monks in a Bohemian village called Budheis, founded Budweiser.

The company, which became Anheuser-Busch Cos, was sold in a takeover to InBev, a Belgian-based holding company, in 2008 for $52 billion amidst flattening stock prices and a drop to a number 2 position.

Although Busch family members walked away with hundreds of millions, America lost a $19 billion a year Fortune 500 company and 1,000 people in St. Louis lost their jobs. Anheuser-Busch was the last remaining independent beer company, still owner and operated by the founding family.

There are so many lessons to learn from their mistakes. I’ll talk about two.

1. Not picking the best successor for the company.

Rather than analyze who would be best suited to take over the company, as I discuss in a recent post, responsibility for running this huge company was automatically passed from father to first-born son. The board of directors ignored most of the proper successor analysis and genes were selected over ability. Not a formula for long-term success.

August IV, commonly known as “The Fourth,” was the sixth in the Busch family to run it and was CEO in 2008 when the company was taken over.

His qualifications included several drunken driving accidents, including one in which a young woman was killed; leading police on car chases and taking young women along with him on business trips. His father, August III, had seized control of the company from his father, known as Gussie, in a boardroom coup in 1975. Hardly an ideal method of succession.

2. Not paying attention to the competition and changes in the marketplace.

In 1969 the tobacco giant Philip Morris bought Miller Brewing Company. Gussie was in control of Anheuser-Busch at the time and failed to see the threat this acquisition posed to its market share. The seemingly insignificant beer company rose to become the number 2 brewer in the United States.

Early in the 21st century beer sales began to fall. In 2000, beer accounted for 55.5 percent of alcohol sold in the United States. In 2006, that percentage had dropped to 50.7 percent. And In 2007, Anheuser-Busch’s two main competitors, SABMiller and Molson Coors, merged, putting the company in an even more vulnerable position.

I often reference the saying, “If the alligators are biting it’s too late to drain the swamp.” The alligators were definitely making a meal out of Anheuser-Busch.

Ironically, in a speech The Fourth made in 2006 while accepting an award, he said, “Mistakes will happen, mistakes are inevitable, but in failure there is learning and in learning there is experience. That’s how you improve and grow.”

I agree with his sentiment. If only he had taken it to heart.

CEO Not Best Person to Handle Crisis

I deal with a lot of crises in my business as a Turnaround Authority: bankruptcies, family feuds, failing businesses, gun-toting union members, just to name a few. So I’m always interested in reading articles about the topic of emergency situations — particularly about those who regularly deal with crises as part of their job.

Dr. Thomas Frieden knows a thing or two about handling emergencies. As head of the Center for Disease Control and Prevention, Dr. Frieden deals with public health crises all over the world while also leading 11,000 employees in 50 countries and overseeing an organization with an $11 billion budget.

Sometimes it takes more than a Band-Aid to fix problems in your business. Know when to call in a professional.

Sometimes it takes more than a Band-Aid to fix problems in your business. Know when to call in a professional.

In a recent interview with Sunday Business Editor Henry Unger in the Atlanta Journal-Constitution, Dr. Frieden said one thing that I wish every CEO or business leader who is in a crisis situation would read.

When asked if the top leader of a business or organization should manage the crisis, he was quite clear.

“No,” he said. “The CEO should not be the person running the day-to-day crisis response. That would be a mistake … If a CEO tries to manage every aspect of an emergency, he or she is going to mess it up. Other things are happening and the CEO will never be able to focus as much energy as you need to.”

It’s a smart CEO who knows when to call in an outside professional like me.

As a turnaround guy, I am like an ER doctor. The patient is in an emergency situation and I first have to stabilize the patient and prevent shock. Then I can perform the necessary surgery to save the patient.

Unfortunately, many CEOS in crisis think they can handle their emergencies themselves. They are bleeding from the jugular and think they can slap a Band-Aid on and stop the bleeding.

As Dr. William Osler, considered the father of modern medicine, said, “The doctor who treats himself has a fool for a patient.”

You’re not going to cut your own appendix out, right? You hire someone with years of experience doing just that. So if you’re facing a crisis, why not hire someone who has years of experience handling crises?

I am used to skepticism on being hired to turnaround a company. When I’m discussing conducting an initial assessment with a client I often hear, “Our business is failing. We can’t afford to hire you.”

I always respond, “How can you afford not to?”

Then I tell them, “If I don’t save you five to ten times what you pay me in the first year, I’ll give you your money back.”

I’m not saying I’m smarter than any of these CEOs. I’ve just been doing this a long time and have seen just about every situation. And one of the reasons that I have the ability to succeed where CEOs faced by crises do not is because it is not my business. It’s not my company, my employees, my money, my wife, or my life. That allows me to keep a clear head and an objective perspective where the CEO does not have one.

Personal involvement compromises the CEO’s ability to understand what’s important and what is not; the facts and information that manifest themselves during an assessment and what ultimately resolves a turnaround are rarely the same facts and information that the CEO initially deemed relevant.

If your company is in crisis, do yourself a favor. Hire a professional.

The High Cost of Fraud and How to Prevent It

More than a trillion dollars. That’s how much fraud is costing companies in the US each year.

The Computer Evidence Specialists LLC released the “2011 Report on the Cost of Fraud in the United States” earlier this year. The goal was to put a figure on the total cost of fraud in the United States from six industries: corporate, securities, financial, mortgage, healthcare and insurance.

Here was their conclusion: “Through our research, compiled from the most recent data available on the subject, we conservatively estimate that fraud annually costs victims $1.32 trillion.”

The figure is conservative, as a lot of fraud is underreported by victims or not reported at all.

Shocking, isn’t it? The truth is that no company is immune to the cost of fraud and you need to be vigilant in your efforts to prevent it.

The Woodruff Arts Center this week learned that a former employee embezzled $1.48 million over the course of five years.

The Woodruff Arts Center this week learned that a former employee embezzled $1.48 million over the course of five years.

The arts community in Atlanta was saddened this week to learn that $1.48 million was embezzled from the Woodruff Arts Center, the largest cultural institution in Atlanta.

Seems a mid-level administrator, who wasn’t even in a finance-related job, figured out a way to set up a fake company. Over a period of five years, the man regularly submitted invoices from the fake company and raked in big bucks. He wasn’t caught until after he left, for unrelated reasons, and someone took note of suspicious invoices.

A simple set of checks and balances would have caught the thief before he collected his first check.

Here are some key things to remember when considering your own system of checks and balances. Remember that any place money or goods exist or move is a place where theft or fraud could occur.

Remember that anyone can commit fraud. Family member, long-time employee, revered CFO. Don’t consider anyone above suspicion. I worked with a company once where the son was stealing from the family business after his dad died. He felt he wasn’t being paid enough and stealing was his way of claiming his inheritance.

Always poke around your books. No matter how large your company gets, take some time to peruse the checkbook or QuickBooks. Ask where the money is going. In the case of the Woodruff Arts Center, the fake company was one of only 13 that were regularly paid. How long would it have taken to do a Google search on the fake company or question someone about the services supposedly being rendered?

Monitor and review monetary trends. Determine what types of numbers are most meaningful to your company—the cost of goods or services, employee expenses for example—and determine the acceptable range for those numbers. Graph the data for those numbers and pay attention if any numbers fall outside of that range.

Change the standard by which you review transactions. For example, if your company only reviews expense reimbursement requests that are above $1,000, regularly review those at around the 80 percent level. I’ve found that seems to be a favorite spot for thieves. The Woodruff Arts Center thief got away with his fraud for so long because even though the amounts that were paid to the fake company increased over time, they remained under the limit that may have drawn attention.

Trust your instincts. If something in your company seems a little off, investigate further. Don’t feel guilty about asking questions. You’re in charge.

Don’t let fraud cost money at your company. Tighten up those checks and balances.

Read more about fraud prevention in my upcoming book, “How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes.” The book will be available on Amazon in early 2013.

It’s Time to Treat America Like a Business

In honor of election day tomorrow, I wanted to share a column I wrote that appeared in the Atlanta Business Chronicle last year. When I wrote this column, in August 2011, we still had eight people vying to be the Republican nominee.  But it doesn’t matter that Mitt Romney finally clinched the nomination a year later, or even who wins the election tomorrow, if we don’t start running this country like a business.

* Extra credit if you can name all eight that participated in the August 11, 2011 Presidential Debate. Answer below.

The United States is a capitalistic society, so I often wonder why the government isn’t run like a business. We had a surplus 12 years ago, but now our debt is astronomical: nearly 14 and a half trillion dollars. This isn’t a political issue. It’s a business one — or at least it should be. When my clients have problems with cash flow, they don’t print money. They either raise money, close plants, lay off people or cut spending; they tighten their belts to survive.

No matter who wins the election this week, the only way we’re going to resolve this country’s financial crisis is by treating the government like a business.

When a business finds itself in this much debt relative to its capacity to repay, the bank, board of directors or shareholders say, “No more!” and send in a turnaround professional. We are America’s shareholders, and it’s time to send a turnaround guy — or at least the thinking of one — to D.C.

Despite insurmountable debt, the U.S. government isn’t taking key actions. Businesses with negative cash flow would have been bought, liquidated, merged or otherwise gone at this point, and I don’t want to see us become like Greece or Iceland in five years. Worse still, I don’t want to be a part of the United States of China, which we might become since in the business world a company with increasing debt is subject to acquisition or being carved up by a larger and wealthier business.

I always say that 100 percent of spreadsheets and projections don’t work because the assumptions are wrong, yet people rarely revisit and alter the assumptions regularly to produce more positive results. Even today, the Office of Management and Budget, which hasn’t made an accurate cash flow projection in years, thinks that our revenue is going to increase by x if we do a, b and c. But x is an assumption that’s based on the unlikely actualization of a, b and c, possible only if we overcome party politics. And as the deficit skyrockets, the assumptions are increasingly wrong and the parties are increasingly polarized.

The only way we’re going to resolve this country’s financial crisis is by treating the government like a business.

As we repeatedly hear, a balanced budget is the first step. The second step, however, is a repayment plan of our foreign debt. The next is a tax increase. No one likes tax increases — especially me — but it’s part of the solution. That said, we can’t just address cutting expenses; we need other plays from the Turnaround Playbook.

The corporate amnesty program allowed businesses to return profits from foreign soil to the U.S. at lower tax rates, which created more jobs in America. This was a wonderful and creative idea but it didn’t do what it was intended to do. While thousands of these ideas will amount to an aggregated long-tail effect, we need to begin with more drastic measures. And we need to start now.

Turnaround 101 dictates that we start by slashing all spending by at least 15 percent. We must tell every division, department and agency that it needs to cut its cash needs — no exceptions. The pain will be shared across the whole country as it would be across an entire business. This kind of mandatory budget cut provides time to fine-tune operational requirements based on the improved results. Before you ask, yes, this 15 percent cut would affect entitlements, Social Security, health care, the military and education — everything. No exceptions.

It’s easy to buck and cry, What about the children? Shouldn’t they be exempt from budgetary cuts? What about the sick? What about the poor? What about defense?

Here’s what I ask every department at a business: “The question is, do you want your company to survive until tomorrow or do you want to quibble about who’s more deserving of money that doesn’t exist? I don’t care how you do it. Just do it.”

Internal politics kills companies in the private sector because politics and business don’t mix. Similarly, politics has no place in America’s budgetary discussions, and our issues must be addressed by those who can truly set aside political or personal biases and run this country like a turnaround professional in the private sector.

As a turnaround guy, I act like an ER doctor; my first step is to stabilize the patient and prevent shock. As a country, we’re already in shock. Nobody wants to lose an arm or a leg, but if there’s only enough blood for the torso and the leg is gangrenous, you better believe I’ll lop it off to save the body. In five years, the prosthetic surgeon can make us pretty again. I’m in a unique business, but it’s the business of making sure we’re still alive in 2025 with or without a leg.

In addition to the 15 percent cut, we must freeze all raises and expansions. That means no more foreign aid increases (also subject to the 15 percent cut), and we put a reasonable mandatory repayment plan in place for foreign aid. We can’t continue to write off receivables and survive. It doesn’t work that way in business, and it can’t work that way in government.

This also means no cost of living increases for government employees, Social Security beneficiaries and pensioners. In addition, congressmen can enjoy normal health-care services — not VIP lifetime benefits for two years of service.

Unfortunately, tenured positions can’t be affected, but we can stop giving tenure. All rules for entitlements (e.g. pensions) must be reviewed. The private sector has largely eliminated pensions because it can’t afford them, and government needs to do the same.

I don’t have every last answer for how to save the trillions we need, but by making — and enforcing — these tough money-saving moves we can save America from bankruptcy, collapse and ruin. We must empower people to save money, and punish them for spending it needlessly in order to get a line item the following year.

Legislators keep asking that we have faith. Our economic stability has been built on faith. We can’t retain faith after 12 years of increasing debt. We need to deal with hard facts and run America like a business. Business is not about faith. It’s about trusting what works, and what works in business is what I know. Treat America like a business, and we’ll all live to buy another day.
* Bachmann, Romney, Pawlenty, Paul, Cain, Huntsman, Santorum and Gingrich

Don’t Wait for Miracles: Act on the Gift Tax Exclusion Now

In this world nothing can be said to be certain, except death and taxes.

— Benjamin Franklin

The only difference between death and taxes is that death doesn’t get worse every time Congress meets.

—  Will Rogers

It actually will take an act of Congress – well, to keep the lifetime gift-tax exclusion at its current rate, that is. For the past two years the lifetime gift-tax exclusion has been at a historically elevated rate: $5 million in 2011 and $5.12 million in 2012.

It was a complete surprise when Congress voted to raise the limit at the end of 2010, which had been at just $1 million, prompting some folks to refer to the new provision as a “Christmas miracle.”

ImageBut that miracle is due to expire December 31, when the exclusion is scheduled to revert back to $1 million. And if you own or work for a family business, you need to pay attention to that deadline.

We have just entered the fourth quarter of 2012 and unlike the decision of where to hold your annual spring retreat, or whether Uncle Bob can get his office redecorated, this one can’t wait.

If an older generation has ownership in the family business, this is the time to consider gifting all or a portion of that ownership in the company to the younger generation to benefit from the $5.12 million exclusion

If a married couple have ownership, the exclusion doubles. So if dear old grandma and grandpa or mom and dad own the business, they can potentially save the company millions by exercising all or part of a lifetime gift tax exclusion of $10.24 million before December 31.

John Glass has owned a refrigeration and air conditioning distributor in Aurora, Illinois for 40 years. Last year, he gifted $2 million of company stock to his three daughters, and he and his wife are considering gifting more this year, according to an article on His company stands to save millions in taxes from that gift.

Taking advantage of the current lifetime gift can substantially reduce a family’s tax burden and will also reduce potential estate taxes in the future.

Another factor is that the percentage of tax due on amounts exceeding the limits of the gift tax rate will increase from the current 35% to a whopping 55% at the end of the year.

If your family hasn’t discussed who will take over the business in the future and how the transfer will occur, now is the time for that discussion. It could save the business millions of dollars as well as the headaches and hassles involved if there is no current succession plan in place. The greatest threat to a family business is the failure to plan and manage succession well (more on that topic later).

The issue of giving up control can be a big one, and is often the reason families haven’t had the discussion about succession. There are ways that a donor can maintain control even after gifting part or all of the interest in a company.

There are several ways to make use of the lifetime gift tax exemption in the last three months of 2012. However, these are complicated issues, and you need to contact your estate and trust attorneys immediately. You want to ensure that the right decisions are made for future of the business and for the family.

No one knows what Congress will do, whether it may extend the lifetime gift-tax exclusion or not. Make sure you are prepared for whatever happens for 2013.

Time is running out. Do you really want to count on Congress for another miracle? Didn’t think so.

Get Out of the Corner Office and Hit the Front Line

When Hubert Joly started as CEO of Best Buy earlier this month, he spent his first week on the job as many of the employees of the $48 billion company do, wearing a blue shirt and working the floor.

Joly, hired to turn around the beleaguered electronics retailer, worked at several store locations in Minnesota, being trained to serve customers, accept returns and stock items. “I want to not learn our businesses from the headquarters,” he said, “I want to learn from the front line.”

The most successful CEOs I know follow that philosophy. They walk down the halls of the office, around the manufacturing plant and through the aisles of the store. They stop and chat with people, asking Joe how his son is doing at college or Charlene about her husband’s knee surgery.

You can’t know everything about everybody in your company but the important thing is to engage with people, even if it’s just a friendly wave or by saying hi.

Not only do you show that you care about the people who work for your company, you will learn valuable information to help your business become more productive and profitable.

In addition, the employees get to know the CEO or owner as a real person, not just a face in a big fancy oil painting at the reception desk. Or a name on a memo announcing more lay-offs or plant closings.

Steve Jobs employed this simple strategy of what is known as MBWA, Management By Walking Around. He’d talk to his service reps, answer customer emails and would call customers who were experiencing problems. Can you imagine getting a phone call from Steve Jobs to answer your question about why the CD drive doesn’t work on your MacBook Pro?

When I’m running a business I’m usually given a nice desk, but you’d rarely find me there. When I’m trying to engage with people, that desk acts like a barrier. When I meet with someone, I come around the other side of the desk and sit in a chair beside them, or I suggest we go to a conference table, but I never sit at the head of the table, instead settling down next to the person with whom I’m engaging.

Of course, usually you won’t find me near that desk at all. I’m out walking around and talking with people because like Jobs and Joly I learn a lot that way.

It doesn’t matter what kind of business it is. Whether it’s a brokerage firm filled with cubicles or a manufacturing plant or retail stores, I still walk the floor.

When I took over as interim CEO of an automobile parts company in New Jersey, I told the owner I wanted to visit every one of our stores. “Give me a list of what you’d like to find out, but don’t tell them I’m coming,” I said.

I got quite familiar with the New Jersey toll booths that week as I drove 1,000 miles and walked into every store, operating as a “secret shopper.”

I learned how each store operated and got answers to what the owner wanted to know. I gathered a lot of information that was vital to turning that company around. Most of it was information that the owner didn’t previously have, because he hadn’t been visiting the stores.

It seems like such a simple and powerful concept to me, yet the most common response I get from CEOs or owners when I explain I’ll literally be doing “legwork” and chatting with the employees is, “They won’t talk to you.”

It’s actually quite the opposite. I can’t get them to stop talking to me.

Many owners also say things like, “I have an open door policy. If employees have something to say, they can just come to my office.”

But here’s the thing. Whether an open door policy is effective depends entirely on what employees will find on the other side. As author and motivational speaker Dr. Bob Nelson said, “An open door policy doesn’t do much for a closed mind.”

Your employees want to talk to you. Go take a walk.

(Photo courtesy Best Buy)

Labor Day: A Celebration of American Achievement

Workers marched from Fifth Avenue to Union Square in New York City in the first Labor Day parade in 1882

If all the cars in the United States were placed end to end, it would probably be Labor Day Weekend.

     ~Doug Larson, columnist

Americans flock to the lake or beach, attend picnics and parades or just enjoy a day off work every year on the first Monday of September. The celebration of Labor Day turns 130 years old in 2012, having originated in 1882.

History isn’t totally clear on the origins of Labor Day. The two prevailing theories are that it was either started by a machinist in New York, Matthew Maguire, while he was serving as secretary of the Central Labor Union, or our celebration of the holiday was imported from our neighbor to the North after labor leader Peter J. McGuire of the American Federation of Labor brought the idea back from Toronto.

What isn’t in dispute is that the first Labor Day parade was in September 1882 in New York City, and in 1894 President Grover Cleveland declared the first Monday in September as National Labor Day.

Yes, the American economy is in tough shape as we celebrate the achievement of American workers this Labor Day. Americans need a combination of hard work and austerity to weather our current economic situation, a New American Ethic, as I called it in a previous column.

However, according to the CIA’s World Factbook, the U.S. is still the largest and most technologically powerful economy in the world. Not that they’re biased or anything.

Either way, that’s something to celebrate.

Excelling in our current economy may be no picnic, but we can recognize the value of hard work and the entrepreneurial capitalistic enterprise that built this country in the first place by celebrating with one.

What will you be doing this Labor Day?

The $5,000 Dollar Magician and the Real Element of Disbelief

Maybe we should be more jaded by now when we see wasteful government spending. Perhaps it was believed that we would shrug off  the scandal over the General Services Administration spending $823,000 on a Las Vegas conference. But I’m not going to. I’m still appalled. I don’t know if it was the clown, the mind reader or the $5,000 motivational magician who sent me over the edge, but at least one of those entertainers didn’t belong at a government conference in the midst of one of the worst recessions our county has ever faced.

While we may be shocked and wonder how these things could possibly happen, the reality is that they happen every day.

I’ve written previously about the necessity of reviewing the expense reports of senior people, which is one of the first things I do when reviewing a company that is losing money. I’ve uncovered a lot of fraud that way, from CFO’s writing themselves checks for thousands of dollars to them depositing large rebate checks into an account only they know about.

But it’s not only theft that should concern you. Overspending on company events or inappropriate business expenses can be costly as well. Putting the morality of infidelity aside, is it appropriate for a married CEO to charge trips with his girlfriend on the company credit card?

I thought of how costly fraudulent and inappropriate business expenses can be not only to a company’s bottom line but also to its reputation when a scandal erupted recently in Atlanta.

This scandal involved a $106.22 wine cooler from Pottery Barn.

Brian Leary headed The Beltline, a non-profit, partially government-funded organization that is developing a multi-use trail on a former railway corridor around Atlanta.

His staff purchased this wine cooler – among other questionable expenses – for his fiancee. I dare say it cost a previously well-respected CEO more than $106.22. It cost him his job.

When a city audit turned up that expense plus payments of parking tickets and dry cleaning bills for Brian, $500 kegs of beer and a $2,100 tab for food for employees at a baseball game, well, people started asking questions. Shortly thereafter Brian was out, unemployed and disgraced.

I find theft and inappropriate expenses by C-level execs much more egregious than many. After all, these people have been trusted with the management, reputation and future of their companies. With their high salaries they should be the people least likely to need the money. Does an exec with a six-figure salary really need his company to pay his $7 dry cleaning bill?

I don’t know what causes senior-level executives to turn dishonest and steal from their companies or exceed the limits on appropriate business expenses (wait, is it as simple as money?) – I just know that they do.

Have you checked expenses at your company lately? Are your employees clear on what can be considered an appropriate business expense?