Who Feels for the Accountant?

Yesterday marked the end of three weeks of grueling cross examination of Gordon Eckstein, the Chief Financial Officer of Livent (short for live entertainment), a company whose founders, Myron Gottlieb and Garth Drabinsky, have been accused of a massive fraud. Their defense? That it had been perpetrated without their knowledge by their accountant.

Eckstein is not innocent. He pleaded guilty to fraud a year ago and is the key witness for the prosecution against his former bosses. He has testified all along that he knew that what he was doing was wrong and made copious notes for the inevitable prosecution. He was quite aware that his bosses would turn around and blame him should the proverbial mud hit the fan. Brian Greenspan, lawyer for the defense, has dismissed Eckstein's testimony as "Nuremberg" (i.e. I was only acting under orders).

Eckstein has withstood attacks on his credibility and his character. He has been accused of being the solo mastermind of this nefarious plot. Viewed from the outside, this smokescreen by the defense is laughable:

• Gottlieb didn't know about the fraud because he tended to sleep through meetings
• Gottlieb couldn't have known about the fraud because he didn't sell any of his shares (although the way that the owners removed millions of dollars from the company has been well documented)
• Gottlieb delegated all of the financial dealings to Eckstein (but somehow got the reputation of being a financial wizard on Bay Street - the home of the Toronto Stock Exchange)

The fact is that the defense was unable to show any way that Eckstein profited personally from being the financial mastermind behind the fraud. If he was such a criminal genius, why did he not keep any of it for himself?

Three weeks of cross examination by one of Toronto's best paid lawyers is a substantial punishment all by itself. The accusations of lying and cheating by themselves are soul destroying. Yet nobody in the courtroom takes the side of a witness to the prosecution. There was nobody to object to this farce on Eckstein's behalf. It sure makes you think twice before becoming a whistle blower or agreeing to testify for the prosecution, doesn't it?

The best thing to do would have been to just walk away the second he was asked to do something he knew was wrong. No matter how high the salary, your life is worth more.

Accounting IT Conference

I have just come home from the Canadian Institute of Chartered Accountants IT Solutions Conference. What a great conference! Alas, I haven’t learned how to self-virtualize, so I was unable to attend all the sessions, but here are some quotable quotes. Feel free to contribute yours (even if you didn't go to the conference).

Dan Lyons (Fake Steve) a writer for Forbes magazine who started writing a parody blog about Steve Jobs that became extremely popular – “I’m like the host at a dinner party” (context – he was making the point that many of the people who responded to the blog were talking to each other as much as to him. The key to blogging is interaction with your audience.) Also: "The old business models are blowing up. We don't know what the new models will be."

Barry Levine (RSM Richter) "Anything that doesn't contribute to the end goal is waste." While the context was Business Process Improvement, it led me to wonder how often we're unclear about what the end goal really is. Also: "Whatever you think the training budget should be, double it!" And: "Where there is a lot of people there is a lot of risk." I loved his advice that if you really want to change an organization start with a small group of keen people who want to prove they can improve.

Ian Clark (3 Peaks) "The key to a successful project is a QUICK ROI (Return on Investment)." I liked his session because he kept throwing in tips about free software, such as if your company purchases a Microsoft Office license, it includes home use by your employees.

Andrew Pridham (CGI) "We have fallen for the idea of shrink wrapped security." Andrew emphasized the need for people to be awake at the switch if you want good security. And: "Losses due to financial fraud (i.e. phishing) have overtaken viruses." He also poked fun at security consultants, calling them the "business prevention department" because they're always saying no.

Joshua Fireman (ii3) "Tagging is the most exciting development in document management." That's tagging as in Facebook pictures. I kid you not. You might have thought all that time on Facebook was being wasted, but someone was actually observing and learning. If you want to know about document management, contact Joshua. He lives and breathes it.

Catharine Devlin (devlin) I have to give Catharine full marks for interactivity. She was one of the few presenters who kept checking back with the audience to see if they wanted more about each topic. She made a terrific point about using eNewsletters, blogs, podcasts and web sites: "Buy a business card scanner and use it." She said that the business cards people trade at conferences end up in desk drawers where they're no use to anyone. Buy a scanner and make a habit of getting those cards into your contact database ASAP so they get the next copy of your eNewsletter before they forget you.

Microsoft didn't present, but I spent some time with a couple of consultants talking about PerformancePoint. I thought I was pretty up to date on Microsoft products, but I hadn't seen this one. It's actually a suite of products and several sources, e.g. FRxBuzz, have said that it will be replacing FRx, the reporting workhorse for Dynamics GP (Great Plains). A big advantage PerformancePoint offers is that it is based on OLAP cubes, meaning that you can define exactly which dimensions (i.e. fields) you want to include in your analysis. Personally, I like this approach because you can extend your analysis beyond the GL (unlike FRx) without having to expose unsuspecting users to ALL of the tables (unlike Crystal Reports).

Best Tag Line The best company motto I heard at the conference was from David Kilbourn of Blue Ridge Information Group: "We want you out of the office by five" and when he explained what he meant by that, I began to think it just might be possible.

What I loved about this conference was that it was accountants talking to accountants. They stayed away from the buzzwords and I felt that I was talking to people who have the same concerns and priorities as I do. I came away with tons of ideas. Watch this blog for future articles!

The Sojourner

Last Sunday, a fifty-seven year old woman died of cardiac arrest in a hospital in Ohio. I never met her and didn't even know her name, Karen Gans, until I read the news of her passing, yet she had a profound effect on me and so many others.

I knew her as The Sojourner and she ran a group called ShockProof in SecondLife, an online community. She worked with stroke survivors to help them deal with the trauma they had faced and re-engage with life. SecondLife was perfect for her. Everyone could create the kind of person they wanted to be. There is unlimited potential in the programming tools you get. It didn't matter where you were. As long as you had a computer and high speed internet, you could get to the meetings, without any physical stress.

She was a woman of unlimited creativity. She would teach her people how to build (i.e. program) objects in SecondLife then turn them loose. She had all kinds of contests, like who could build the best tree fort, waterfall, haunted house or Mardi Gras float. She had a sandbox where you could build whatever you wanted. There were always friendly people hanging around Dreams, ready to help a newbie or just have a chat. I met her through one of the Dreams events, a fair where all of the community minded groups could set up a tent and invite others to join them.

I was one of the newbies who hung around Dreams for a while, learning how to function in an online world and meeting the people. Watching Soj, as we called her, in action was inspirational and opened my eyes to what could be accomplished in an online world. After meeting her and learning about Dreams, I wrote the poem at the top of this post. Soj was herself a stroke survivor and it is a testament to her spirit that she was able to transform her own struggle into such an inspiration for others. We all miss you, Soj.

Karen Gans (Derk), age 57, passed away May 25 after an extended illness. Her life revolved around being a loving and loyal wife to Donald and a devoted mother of Andrew. She is also survived by her parents Ernest and Rose Derk, mother-in-law Dorothy Gans, siblings: Theresa Smith, Rosanne, Diane, Dave, and Mike Derk, and a host of uncles, aunts, cousins, nieces and nephews, all of whom she dearly loved. She was raised in Perry, Ohio and earned bachelor, master, and doctoral degrees at Kent State University. She worked with stroke patients and multi-handicapped children early in her career and later taught and managed a federal grant at Kent State. Most recently, Karen developed and ran internet support communities for a variety of medical disabilities. She donated her body to the medical school in Rootstown, and a memorial service will be held Saturday, June 7 at 11 am at Saint Cyprian Church, 44223 Middle Ridge Road, Perry, Ohio. (RC 5/28/08)

Labeling Co-Workers

"He is always goofing off."
"She never gets it right."
"He's always late for meetings."

People get labeled: the office clown, the slacker, the flirt. My spider senses start to tingle whenever I hear the words "always" or "never" applied to someone else on the team. It usually indicates that an unsubstantiated accusation is about to follow. As quickly as I can, I steer the conversation into specifics:

• What actually happened?
• When was the last time it happened?
• Is there any documentation?
• Were other people involved?
• What behavior do you want the other person to change?
  

As a young manager, I was put in charge of the accounting department after a downsizing. As part of the restructuring I promoted an older clerk so that a younger one reported to her. What I didn't know was that the two women didn't like each other, to the point that what had once been an uneasy truce turned into open warfare. I tried to solve the situation by working it out with both women in the same room. Big mistake! First there was a stony silence, then the accusations started to fly. I ended the meeting and sent the combatants back to their corners. In desperation, I appealed to my father for help. His advice was, "there are some problems you just can't solve." The problem eventually solved itself when the younger clerk quit.

What did I do wrong?

As I look back at the situation, I let it escalate to the point where neither party was willing to negotiate. If I had to do it again, I would talk to the people individually. I would get them to stop using labels and be specific by continually asking for more details. Instead of "that old [censored] is so controlling, she won't let me do my job", I would encourage something like "when I proposed we move to issuing payments once a week, I didn't get any response". Instead of "that young [censored] never gets anything right", I would want to hear "the last two times she reconciled accounts payable to the general ledger she left an unexplained difference." They might never have become friends, but maybe we could have preserved the uneasy truce.

Another place where you see labels is the press. The article's title was Lost boys: Are we raising a generation of Peter Pans? and it was based on the research of Dr. Leonard Sax. Dr. Sax identified five reasons why young men seem to lack motivation:

Video games. These addictive activities disengage boys from the world. Some young men even seem to prefer online porno to the prospect of sex with another human being.

Teaching methods. Girls develop intellectually up to two years ahead of boys. Boys in grade school are naturally rambunctious. They need ways to express their native energy. They are being taught to read and write too early. Their mostly female teachers prefer compliant, dutiful girls.

Prescription drugs. Hyperactive, frustrated boys are increasingly being medicated. This we all know. What Sax claims is that these drugs shrink the motivational centres of the brain and that the effect of this lasts years, well after these kids stop taking their meds. I hadn't heard this before but if it's true, it is truly frightening.

Endocrine disruptors. Chemicals from plastic bottles, canned food linings and some shampoos mimic natural estrogen, the female hormone. Boys' testosterone levels are half of what they were in their grandfathers' day. Also, their bones are significantly more brittle.

The devaluation of masculinity. Boys don't know how to become men. They no longer have appropriate rights of passage. Once Father Knows Best was the paternalistic model but now he has been replaced (and mocked) by a dopey Homer Simpson. Sax likes the old virtues of courage and temperance, with a good measure of intelligence.

These are all observations based on study. They are unbiased and objective. The writer of the article, however, leaps from these observations to the emotionally loaded label, Peter Pan. Let's say you read the above article and have a young man in your department who seems to fit the mold. Use the information, but resist the label. Your job is to help one person, not save a whole generation.

In my experience, when people behave irrationally, the reason is probably emotional. Viewed through their eyes, their behavior makes sense. As a manager, your job is to understand the situation as your team member sees it, even though you may disagree with him or her. As Stephen Covey says, "Seek First to Understand, Then to be Understood."

• The person who keeps making mistakes may feel they're stupid. Try walking them through the procedure and getting them to make their own notes instead of following material prepared by others. That will help you understand where the problem lies.
• The person with no ambition may feel there is no hope of promotion. When reviewing their performance, try to give them a sense of where they could progress to from here.
• The person who can't meet deadlines may feel overwhelmed. Help them learn to prioritize and to work with their supervisor when they have too much on their plate.

When your team feels understood, then you have the opportunity to show them your view, and you're well on your way to re-energizing the department.