Tuesday, August 21, 2018

When You Don’t Listen to Your Accountant


For 12 years through the late 1980s to 2000, I worked at a family-owned retail publishing company that had been in business for nearly 40 years prior to my arrival. It was founded by the patriarch who, when he retired, predictably passed the leadership reins to his son.

It wasn’t long before I realized that as it often happens, the scion possessed little or none of his father’s business acumen and made a series of head-scratching investments and personnel appointments worthy of their own mention in a Dilbert cartoon.

First, he managed to so overfill the company’s management and executive ranks that at one point, there were more vice presidents in the New York office than sales people. Not exactly a textbook strategy when most of your revenue is contingent on advertising display sales among  the company’s portfolio of publications.

To remedy the problem, he hired an expensive consulting firm who eventually told him what any employee in the mailroom could have for free. This despite the company’s accounting firm’s repeated attempts to control the executive hiring frenzy.

He then paid another consultant $5,000 a week to implement some confusing employee performance matrix, one that rewarded high performers not with money but apparently self-satisfaction that they had done a good job.

Want to take a guess on how successful that was?

And finally, despite the accounting firm partner in charge’s repeated attempts to discourage him from doing so, he paid an absurd multiple to acquire a pair of medical publications that aligned with exactly nothing in the company’s current stable. Two years later and awash in an ocean of red ink, they jettisoned the books at a considerable loss.

Fortunately, I was long gone when the company began its inevitable downslide from which it would never recover. It sold off its flagship book to a competitor and I just read where what remained of the company was acquired at a bargain basement price. Done. Finished.

A sad ending to a company that was once a stalwart of business-to-business publishing in the highly competitive New York market.

And the sad part is that much of the malaise could have been avoided if management just listened to the advice of the folks they paid to maintain their books and dispense advice.

I’m certain that there are countless stories like the one above, folks who think they know better and eschew the experience of the people who advise them to prevent such tragedies.

And perhaps even sadder is that it will most certainly continue to happen.

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