It’s the focus on measurement that stuffs everything

Over the past few days, my understanding of “why” firms won’t move from the timesheet model has had a breakthrough.

It’s really quite simple – people feel they need to “measure” their performance in some quantitative manner.  This means that they prefer to use an inherently subjective measurement forms the basis of their perception as to how they have “gone” in doing their work.  This sheeted home to me the other day when I was having a chat with one of my gurus at work.  They wanted to know whether they had progressed over the past year and how successful they had been in delivering outcomes.
The discussion turned to the methods we could use to assess how they had performed. All good, but the conversation then progressed to a point where we were discussing the difference between qualitative and quantitative measures. Now, being accountants, we inherently prefer to use quantitative measures – things like gross margin, profitability, ROI, efficiency and the like.  All good and useful in some respects, but the measurement is usually only an indication of something else that relates to qualitative issues.

Let me explain.  In our conversation, we talked about the things that were really important to our firm – things like development of each other in technical and non-technical ways (communication, customer relations etc).  These things are incredibly difficult to measure – so difficult that I am not aware of any way of objectively assessing them.  As I pointed out to my team member, they had contributed incredibly to the development of one of their support people over the past 12 months. They had lead by example and created a more rapid pathway for the person concerned to develop their career – personally and professionally. The leadership provided and coaching and development have formed a platform for the support team member that will take them through their career.  As I asked “How do you value that?”  What method do we use to assess this level of contribution?  In my view, such an assessment is going to be subjective and no two people would come to the same conclusion as to the “value” of that work.

In assessing this type of contribution, if we were using timesheets, we would be able to point out that the estimated time (do we record it in 6 minute or 10 minute increments) that might have been allocated to “development” or “training”.  But, much of the training related to customer work so, should we allocate it to the customer?  If we did allocate it to the customer, they would have every right to get pissed off that they were being “charged” for training.  So many decisions!

How much time should we take in this work?  Is here a benchmark or average (you know – where the best of the worst meets the worst of the best) that we should use to determine the input required?  No.  Everyone is unique and learns in their own particular style.  There is no one over-arching approach that works for everyone and therefore, the time spent tailoring the training approach to achieve the best outcome is of incredible value (also, the trial and error process undertaken to work out the most effective approach).  The value that my resident guru added to her team member was the combination of a range of skills, talents and abilities that they have developed over many years.  And then, how do we attach an “hourly rate” to that?  At the end of the day, does the arduous quantitative process we would need to go through to get the result add anything valuable to our analysis or inform our decision making?

geniusThe thing that really matters is that the outcome is effective.  The process in itself is inefficient until such time as the trainer and trainee have worked out what works for them.  Using a “one size fits all” approach will only create average outcomes and no-one wants to be average!  Spending the time to work out effective outcomes is far better than recording the time spent.  For example, if we knew that it took Manager A and Team Member B 20 hours to work out the most effective training method for Team Member B, can we use that when we look at the potential training time needed for Team Member C?  Of course not. B and C are different people with different learning styles.  To use the metrics from B to design the process for C stands a wonderfully unlikely chance of being useful to anyone for anything.

The measure of effectiveness should not be merely based on some subjective assessments that inform us of little and guide us nowhere.  The effectiveness of what has been done in training lasts a long time (a lifetime?) and to try and reduce it to a number is devaluing the contribution that has been made.

And, because the analysis and assessment as to the effectiveness of what you do is so inherently subjective, most firms cling on to timesheets – they know they’re not right. They know they are subjective.  They know they are a pain in the you-know-what.  But they are too scared to let them go as they believe it’s all they have.  Sad really.

Timesheets – the blunt object of management

It amazes me that so many of my colleagues and other professional knowledge firms (lawyers etc) still utilise timesheets as the basis for “managing” staff and billing their customers.

dilbert - customer serviceI have written on numerous occasions about the lack of logic in this approach and the fact that it places the interest of the firm in direct opposition to the interests of the customer (the incentive for the firm is to spend more time on the job as doing things more quickly leads to lower bills).  The fact that it also impacts adversely on the customer relationship is an issue that many who argue the opposite rarely mention.

Using timesheets to manage your people is not at all edifying.  It doesn’t create the behaviors you want and causes your team to be more focused on inputs rather than outcomes.  This then leads to staff feeling they need to deliver high recoverable hours rather than results that matter to the customer.  I know when I was using timesheets, I found the process cumbersome, tiresome and irritating.  When it comes to assessing performance using the “all powerful” measure of “productivity”, it became a stick that no-one liked using or having used on them.

The timesheet is a very blunt object which many professional knowledge firm managers use to analyse the performance of their people.  Many years ago, I was having a discussion with a retired lawyer and we were talking about the difference in team members in his firm – as he indicated at that time, he would rather have a staff member who was really solid at client relationships rather than one who was better technically as the customers really valued the relationship they had – his summary was that the relationship was, in effect, more important to the customer than the quality of the work!

Now, when we take this issue a step further, the time that is “spent” building and managing a relationship with the customer, in the world of timesheets, needs to be recorded and billed to them.  After all, it is work relating to the customer and, when you are being assessed on the amount of time you have spent working on the customer, well, you need to record it and it becomes part of the timesheet/WIP world.  It then gets charged to the customer and, when they look at the bill they see they have been charged for talking about their recent holiday, the kids and school, weather, sports results or current interesting news and they get pissed off.  The work that has been done to develop and relationship then turns into a point of argument and resentment.  That is of course unless the manager on the jobs writes it off the WIP – in which case, it impacts on their performance metrics…

All this reporting, analysis and processing.  For and to what end?

Hit tip to my fellow Verasage Fellow Ed Kless for the following reference in his blog post of 10 June, 2009:

Reports and procedures should be the tool of the man who fills them out. They must never themselves become the measure of his performance. A man must never be judged by the quality of the production forms he fills out – unless he be the clerk in change of these forms. He must always be judged by his production performance. And the only way to make sure of this it by have him fill out no forms, make no reports, except those he need himself to achieve performance. – Peter Ferdinand Drucker, The Practice of Management, 1954, page 135

Stating the obvious – Drucker is right.  There is no point in having forms filled out for the sake of filling out forms.

There are so many different ways that can be used to assist your team in their development.  As I discussed with the senior staff of an accounting firm in Melbourne the other week – if you are relying on timesheets to determine the level of performance of your people, you’re probably not doing a great job of managing your people in the first place.

The whole approach takes the human out of human beings.  It reduces them to being cogs in a wheel, ciphers on a page.  It does nothing apart from create new and different ways of disengaging your people and aggravating your customers.

The challenge is for my colleagues to stick their heads up and determine what has helped them get here will actually hold them back from getting to where they want to go.

Using Drucker’s logic, we therefore need to review whether the forms and recording that our people are doing is actually helping them perform their roles or if it is in fact holding them back from doing better, more valuable work and therefore making a more positive contribution to the business as a whole.

Pollen and the Professions

What’s in the Wind in the Accounting Profession?

A question posed recently by an accounting profession publication

I was recently asked to answer the question of What’s in the Wind in the Accounting Profession? I believe such questions are naively complex. I feel it leads to a drumming simplification of MeTu (aka me too) thinking. The collective of the various professional press and media along with national and state association leadership tends to rework an all too common concert of sound bites and feel good Kumbayah designed to placate the rank and file while providing a spin that there is something significant just around the corner if we could just stretch a little. This pandemic of Pabulum for the Professions eventually annoys even the most infrequent of listeners.

Now that I have that off my chest, I will share the following thoughts of What Should be in the Wind in the Accounting Profession? In my view, what is (and should be) in the wind is simply Pollen.

Profits over Production: The debate about effectiveness (doing the right things) over efficiency (doing things right) is over. The corollary is that firms need to focus. Focus on profits over production. Focus on Results over efforts. Firm leaders need to focus on profit improvements over gross billable hours. Customers do not care about the hours one works; they care about the results that are delivered. Effectiveness is far more superior then efficiency.

Efficiency is always a ratio and never, in and of itself, ever an output. FedEx is far more effective then the postal system. In order to be effective, they had to seek better outcomes and certainly FedEx improved its efficiency in the process of effectiveness but envision that FedEx designed a package system but still used the Pony Express instead of a fleet of planes? The result would have been highly efficient (they know where each and every package {and its horse/rider} but it would have failed as it is ineffective today to transport packages in such a manner. In essence, firms need to stop orgasming over top-line growth and instead need to focus on profit improvement.

Opportunities Abound: True professionals are naturally observant: Too many firm leaders look at their markets as closed pools of opportunities. They naively seek growth at the expense of competing firms. In fact I have heard partners of established firms specifically target another firm’s customers and operated as if all members of our Profession were competitors instead of colleagues. This is utter nonsense and such thinking destroys our Profession.

The first canon of our Profession as outlined in the AICPA’s Code of Professional Conduct (Principles) notes that we have an obligation, as members, to promote the well being of our Profession. This includes both improving the Art of Accountancy and, likely more importantly, to Cooperate with Each Other. We aren’t cooperating if we are poaching.

Learning and expanding by observation is simplistically easy yet requires infusing effort into the process. We grow our firms by investing in the opportunities we find and the ones we create. Waiting for the phone to ring is not a marketing and growth strategy. Firm leaders must learn to create their own futures.

Smart real estate developers have learned to look for leading indicators about where to build and what to build. For example, when it comes to mixed-use commercial style real estate what do you believe are the leading indicators as it relates to capturing early-stage value? It isn’t zoning or demographics. And, it isn’t merely location, location, and location. These indicators are either lagging (zoning changes occur after someone has figured there is a better use, acquires or options the property, and then seeks the changes they seek) or they are coincident, meaning they help us concurrent with the changes in the market. Neither of these is leading (predicting where the values are headed). It turns out that one of the best leading indicators is to watch where the artists go.

Artists are relatively poor (economically) and need to find inexpensive and creative spaces for their studios and residences. Artists seek out great value. Artists then tend to invite other artists to share their spaces. These new artist colonies begin a following. At some point these colonies of people draw the attention of supporting and cottage companies; (from creative coffee shops to stores to restaurants to dry cleaners) entire communities follow the artists to their new neighborhoods. And artists are creative and innovative as it comes to the quality of life of their buildings and neighborhoods driving up values by driving away dirt, dust, and decay. Artists, it turns out, are a great leading indicator for real estate developers who desire to be early adopters of profit opportunities by merely observing their own communities and where the artists are headed.

Firm leaders need to approach their growth the same way. Look for the leading indicators. Look for your firm’s equivalent of artists. Look for the innovators, the inventors, the new immigrant businesses, the prospects that are expanding, and look for value when others are blind to its beauty. Firm leaders need to get of out their offices and look around. They need to be active members in their communities and seek positions of influence in fledgling industries.

Firms mature, as do their clients.   Anyone can recognize a change is afoot after the proverbial tipping point where the innovators and early adopters have paved the way for the following majorities. The best firms and best firm leaders are at the left-hand edge of the diffusion curve. These mavericks inherently understand there will be many investments that fizzle and only a few that sizzle. It is those profits from the sizzling hot successes that drive the firm’s future value and growth.

 

Legislation and Regulatory Issues: Together with my VeraSage Institute colleagues, I have the opportunity to speak to and meet with thousands of fellow CPAs and CAs each and every year. One of our favorite questions to ask our audiences is: Have you recommended our profession to a loved one during the past year? Across the board and regardless of country (most common are USA, Canada, UK, Australia, and New Zealand) we receive positive responses from 10-15% of the participants. Inversely, this means that 85%+ of our fellow professionals have not and in reality do not recommend our profession to loved one (defined as a person one knows and cares about – unlike say a high school or college student sitting through some mind numbing “Feed the Pig” commercial).

This decline in advocacy about ones chosen profession is a leading indicator that something of a cancer must be present that is stripping away our enjoyment about what we do and how we do. Failure of firm (and profession) leadership to adequately diagnose and then cure this disease suggests the end is closer than we think to losing ourselves and becoming a trade or job rather than a career and profession. Personally, I do not want to see our profession go the way of the Scribe’s and be relegated to pages in a history book and postage stamp.

When asked why participants avoid recommending our profession, the most common responses include: regulatory overload, work load compression, and the sins associated with hourly billing as it relates to technological improvements and efficiencies via technology (think about the reduced time it takes to complete a tax return using software today then say 30 years ago when we filled in bubble sheets on CompuTax forms, or even 50 years ago when we prepared returns by hand and typed the values onto the forms).

Lets look at regulatory overload. This includes government regulatory matters from the SEC, the PCAOB, the IRS, the FASB, the AICPA SSARs, the GAO, the DOL, the 50+ State Boards of Accounting, the IFRS, and all other bodies deemed capable of dolling out but never retracting rules and regulations that impact what we do and how we do it. There is no joy in contorting ourselves to please the whims of bureaucrats residing in such cities like Nashville (home of NASBA), Washington, D.C., home of the federal morass of death by regulatory action, NYC and RDU (home of the AICPA). Such regulators act like they can use rules and procedures to triumph over common sense and good judgment. They can’t; but they sure try.

Leaders of our profession should seek ways to reduce the complexities of rules and regulations in exchange for more principled driven decision making that promotes the right answer, with the right disclosures, with the right outcome, so that users of our reports and services may make informed judgments about the economic activities of the businesses and individuals we represent.   Far too often, the so-called leadership of our profession is to cozy with regulators and rule making bodies and, in fact, support additional complexities under the misguided notion that more is better when in reality simpler is better.

As it relates to workload compression, this too is a function of an overzealous regulatory and ill informed bureaucracy and/or legislative body (or bodies). Much of this compression came about during the TRA 86 when fiscal years for pass through entitles was essentially abolished. This shifted more audit and assurance work along with the tax work to the front half of the year rather than allowing for a smooth seasonality of services. This has increased our need for people in narrow time frames and then we face an excess capacity of human capital in others. Firms burn out their people increasing the chance that our actually “best and brightest” leave our profession as it lacks the enjoyment they hoped to achieve in life. Firm leaders should continue to pressure their local, regional, and national officials to return to a time when natural business cycles could be used for associated filings and reporting periods.

Finally, the toxic nature of timesheets and billable hours drive talent from our profession. Time-based billing is the antithesis of professionally based pricing. Hourly pricing where one is compensated based upon recorded time does not align with the goals and objectives of our customers. Our customers desire a result. When we are compensated based upon our inputs and not our results, we are apt to add useless procedures, steps, and complexities that drive the billable hours up and hence charge the customer more. Also, timesheets are full of lies as people are unable to really capture in (6 minute) increments what they really do all day and so they tend to make a lot of it up. Ric Payne (the smart founder of Principa) has suggested that over time the lies balance each other out (e.g. I work a little for free for client A today and bill my time to client B, and sometime in the future it is reversed). This may be realistically true, but does not cure the challenge of misalignment of interests. Another toxic challenge of the timesheet mentality is that billable hours are rewarded for promotions, partnership, and influence.

Too many firm leaders list their billable hours like a badge of honor when in fact they should be ashamed. It is far better to produce results with effectiveness rather than efforts and price according to the value delivered rather then the time invested. I am reminded about the conundrum of hours invested versus the effectiveness of the team member via the following example shared by one of my former firm partners. His wife is a construction project manager. Her supervisor one time confronted her about the fact that the “men” on the job site were spending part of every Saturday working while she did not. The supervisor suggested this looked like she wasn’t pulling her “weight” as a team member and that come bonus time she might not receive an equitable share. Her response was superb. She responded with “if I were as wasteful and inefficient with my work during Monday through Friday, I would have to work Saturdays too.” – How right she was. And how wrong are firm leaders that value the inefficient worker over the effective one because the tool for measurement only records efforts and never results.

A final aspect to the tainting of the value of our professional lives is living within the childish nature of our elected officials. Their creation of complex rules and financing regulations designed to reward their patron saints (their donors) end up punishing their people by forcing unwarranted behaviors by citizens in order to minimize their individual tax footprint rather than supporting a culture where people seek to maximize their individual opportunities to expand their financial horizons. Too much of our national GDP is spent reporting and navigating the complex tax code. We need a simpler and fairer method to collect the necessary funds to operate our government.

Loyalty and Customer Economics: Firm leaders and members of our profession need to understand and operate within a customer loyalty framework. Too many firms reward the hunt, the capture, and the kill of a new customer while failing to understand why their best customers leave. It is far superior to enhance the value proposition of current customers then it is to invest heavily into new relationships.

Customers love to be loyal. Just ask any director of an airline loyalty program. Even if passengers dislike flying, they love ‘’their airline”. Ask a Nordstrom customer about loyalty and they will frequently advertise that they rarely shop elsewhere even if they believe Nordstrom is slightly higher priced (they generally are priced very competitively). Just look at American Express that captures great loyalty from all of their various card levels – from the inexpensive Green Card to the exclusive Black Card, American Express delivers value across the board or its continuing customers would use alternatives.

What is frequently missing in CPA firms is a reason for customers to remain loyal. This is partly because our profession focuses on efforts. CPAs extol how hard “we” work rather than focusing on helping the customer achieve her objectives, goals, and desires. When asked to rank those attributes that customers use to select CPA firms, firm leaders respond in the inverse to the customers. CPA firm leaders discuss their technical skills and acumen over their softer skills like communication, awareness, and creativeness. Customers on the other hand respond by relying greatly on communication, creativity, and engagement. Customers struggle to comprehend our technical skills yet too many CPA firm leaders only speak about their knowledge while ignoring their more important competencies.

CPA firm leaders need to understand why CPA firms are hired and why we are fired. We are rarely, if ever, hired or fired due to our technical quality.   We are almost never hired or fired because of our price (about 4% of all engagements are decided upon price). We are almost always hired and fired because of our communication skills, our ability be creative, our eagerness to help our customers, and our availability to help them when they want our help and not “after tax season”. Sometimes we are hired because we have nicer furniture or a better location. Sometimes it is because we will meet them at odd hours of the day. Sometimes it is because we offer a solution that others can’t. What I can guarantee you is that you aren’t hired and fired because of price or quality. It is all service related opportunities and challenges that drives customer decisions. Investing in customer loyalty metrics goes a long way to a more profitable firm. Simply remember that a current customer can be 11x more profitable then a new customer.

Experiment with Service Offerings: I believe that the best firms are the ones that experiment and expand their offerings. Many experiments will fail to deliver their desired results. That is a price of admission. There are two primary reasons for a firm to explore new opportunities and experiment with creative options: The first is that our complex customer base is not standing still and their wants and needs continue to evolve and if we aren’t at least with them or even better, ahead of them, they will naturally look elsewhere for solutions to their unfilled needs and desires. The second reason is that many members of our profession have signs of ADD. In essence, our best and brightest get bored and bored people become inattentive and inattentive people make mistakes.  Worse, bored team members daydream of better jobs and brighter futures and these daydreams become realities far too often.

I have concluded that our professional attention span is about 3 years. This is enough time to learn a skillset, master that skillset, and then teach that skillset to a new person and then be allowed to move on. I see too many firms with team members living the same routine for years and decades to the extent of missing the true needs and wants of their customers. Hence, they become my customers. Times are changing, generational shifts, web 2.0 to 3.0 – go head and add some R&D; experiment with new offerings, and take aware the boredom of our lives. Remember, each new mountain pass travelled generates a new world view and an ever-expanding world view is more necessary today then it ever has been.

Networking – Networking is not social media. Although social media is a part of networking it is not networking. Networking encompasses so much more than mere social media. Networking is the act of becoming an integral part of the multi-variant solutions to unknown problems. Thus positioning the professional in the middle of the necessary web of needed information and solutions to an infinite array of challenges.

We, as professionals, have the distinct opportunity to provide what I term as “bridges to structural holes”. The “structural holes” as I term them, are the distances between what a customer has and what the customer needs. Of course, one could substitute almost any synonym for customer. The key is that a well-networked professional is the key that opens many doors.

Most firm leaders undervalue networking; unless the participant is already a member of leadership. That is unfortunate. Networking should begin from the beginnings of student life, through early careers, into leadership, and into retirement. As Australians are fond of saying, “we all need Mates”. And Mates watch out for each other.

Networking is not about just providing referrals or leads. Networking is seeking solutions to problems that possibly don’t’ already exist and, concurrently, listening to wants and needs from those who will benefit from connections that we are only to provide.

Networking requires dedication and commitment. Networking is not about “you”, it is always about “them”. Networking requires in investment in time and resources. It requires your ears to be always open, your mind to be engaged, and your heart to centered on your clients, friends, and colleagues. Networking isn’t just slapping palms or sharing LinkedIn profiles. Networking is active engagement across all disciplines, across all strata, across all industries, and encompassing all opportunities.

Networking should begin even before the beginning of a career. Networking must begin most definitely concurrent with your professional work. Twenty years into a career, the connections made in one’s youth frequently pay dividends. The customers you meet, the contacts that are made, the alumni of your university, the town where you live, and the hobbies that you share are all part of a valuable interconnected web of opportunities and solutions.

The most important time for investing into your network is at the beginning of your career. Networking’s ROI is akin to the time value of money. The earlier your investment, the larger your return. Networks expand exponentially. They are not a zero-sum game. Young people must develop a network and they need time and opportunity to learn this craft.

Partners and other firm leaders must allow younger professionals time to attend meetings, events, lunches, professional society events, and community activities. Each and everyone one of these avenues provide an opportunity to meet someone whose individual return on investment is multiples greater than the average. And, when this occurs, the net present value of those future transactions is exponential.

Yet, such networking activities as described above run counter to the firm’s current objective of maximizing revenues. If, on the other hand, the firm had a long-term profit view, leadership would both understand the value of these early career investments and support return multiples of any “opportunity costs incurred today”.

A professional’s value is predicated on their ability to solve expressed and unexpressed customer wishes and problems. If you can’t do this, then the professional is really just a technician; nothing more than a hired gun to perform the work orchestrated by others. There is nothing extraordinary in merely following the recipe crafted by others. The value of a professional is primarily connected with one’s ability to craft excellent resolutions to an ever expanding list of unfulfilled opportunities.

My advice is to constantly expand your network, each and every day for your benefit and the benefit of others. In this way, you maximize your opportunities to really make a difference in the lives of others. There is nothing truer than a professional that makes a difference.

There you have it. Now you know what I believe should be in the wind of the accounting profession.

Now, enjoy your day.

 

Who is More Generous Bill Gates or Wal-Mart?

Blame Facebook. Actually it is really my fault as I was reading recent postings on Facebook and there it was: a shared post from a local television station positing that Bill and Melinda Gates (Bill, Melinda, or the Gates) are the most generous humans of all time (http://www.kgw.com/story/news/local/2015/06/05/bill-melinda-gates-biggest-philanthropists/28562631/).

When such statements are made, context matters. History matters. Definitions matter. And, even if it were true, why do I care? Really, why do I care about how Bill Gates spends his money? So I asked my friend who posted this item to Facebook “why do you believe that?” And she replied by asking me a question of “not true? Below is the full set of Facebook comments:

 

  • ‪Me to My Friend‪ why do you believe that?
Like Reply · June 5 at 7:50pm

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  • My Friend to Me: Not true?
Like Reply · June 5 at 7:51pm

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  • My Response to the Question:‪ Didn’t say that. Just is spending $ the criteria. Carnegie invested in infrastructures that lead to great things. Difficult to compare generations. The gates’ have certainly been generous but with very tax sheltered money. Warren Buffet talks about why rich pay less % of tax like him in dividends and capital gains while at the same time avoiding estate taxes of 40% by giving money to gates (likely because he believes gates will spend it wiser than the U.S. Congress and he is now fool. But possibly a slight hypocrite). How does one really define most generous? Thomas Jefferson created a university, as did the Stanford’s. Gates hasn’t done that? It is easy to look at their money and even their time but comparing across generations is dangerous. We can look back in 100 years and decide. History is too short for them at this point
Like Reply · June 5 at 7:57pm

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  • 

‪My Friend’s Friend Responds back to Me: 

Why do you have to disect generosity?
Like Reply · 2 · June 5 at 8:47pm

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  • My Reply to the Friend:    

Why? Well because I believe that we should consider such questions. How should one define such subjective terms? Does a rich person who leverages tax deferred assets that are contributed to something he controls more generous then the union labor family that quietly tithes and donates countless hours to community services but without fanfare and media? Are we, as a society, to over value money relative to spirit? What value has come from there efforts? Can you prove it or feel it? I am sure the world is better with their contributions then without. This is not a slam. But why the need for such a label? True generosity is frequently done in quiet and not in public. It is too easy for a perplexed media to pander such easy opinions that get repeated (posted at 9:14 PM June 5th)

 

 

The above conversation got me thinking not only about the state of our collective critical thinking skills, but also about the bias of media outlets and others to view donating a fortune as the most important generosity.

One of the lost skills of our current culture and society is the infrequent use of reflective critical analysis. I don’t mean political polarizations – the screaming from our political extremes – I mean an individual’s personal reflection and thoughts about the value of ideas and thoughts posited as facts. When such statements (like the Gates’ are the most generous in history”) are made in a factual framework, people frequently (and IMHO too quickly) jump onto the proverbial bandwagon and repeat the statement without confirming or understanding its validity or its limitations.

We all played the old telephone game when we were kids. The game was a lesson in our inherent weaknesses in communications, even within a small group and with nearly homogenous members. Statements by media outlets are merely a small segment (albeit overly influential) of our society’s infatuation with others and their lives and choices. It is too easy to simply accept what is spammed around the internet (or worse yet reported via a Google Search) and pass it on like it is a demonstrable fact (one reason the website Snopes is so popular with some people is to merely have some level of a Bullshit Meter available to inform the uniformed that the 65 year old Russian Woman really didn’t just deliver 17 children) but Snopes isn’t any good in cases where simple logic, inductive and deductive reasoning, and inquiry via questioning are superior to just accepting the statement as true, complete, and supportable by some level of independent verification . I’ll return to this topic in future postings, however for now, I believe my point has been made and you, the faithful reader shouldn’t be bludgeoned about this topic at this time.

Meanwhile, I decided to consider the value of the gifts of the Gate’s Foundation to that of Wal-Mart. Both enterprises benefit society: one (Gates) by endowing upon groups, institutions, and individual, grants, gifts, fellowships, and funding (frequently with controls, reports, strings, etc.). The other, (Wal-Mart) focuses on being the voice of the people. Wal-Mart is constantly reducing prices so that people (especially poor people) may receive the maximum value for their money.

Note: Unlike many people, I am a fan of Wal-Mart. Although I do not regularly shop there out of choice; I recognize the value Wal-Mart has created for our national and global economy. There are certainly many criticisms available to cast upon Wal-Mart and its practices. Many of these criticisms are (IMHO) overly jaundiced and lack the intellectual curiosity about the truth that I seek. For example, people will compare Wal-Mart to Costco as it relates to pay and benefits. Costco earns $2B per year from its membership fees. Wal-Mart is free. Costco reports a profit of about $2B per year. Hence 100% of CostCo’s net profits are from membership fees and not from profits generated by sales of their products. Wal-Mart does not have a membership cash flow. Wal-Mart is profitable for sure. However if Wal-Mart had increased its average wages back in about 2007 from say $9/hour to $12/hour – 100% of all of Wal-Mart’s profits would vanish and that would have created less stores, higher prices, and less choice (all of these are bad outcomes for poor people) – I will return to Wal-Mart and its complexities in future posts. The key part is that Wal-Mart kept inflation low in the USA for over a decade (the Government can’t do that); Wal-Mart lowers prices for the poor (what do anti Wal-Mart people have against helping the poor); Wal-Mart helps poor and rich in its communities by fostering lower overall prices at stores that aren’t even Wal-Mart (e.g. Safeway has to be competitive so it must balance its value proposition with options like Wal-Mart); Wal-Mart helps the environment by taking waste out of the distribution system (like excess boxes, wraps, etc.); Wal-Mart shares the savings of its innovations with all three of its constituencies (example – when Wal-Mart found a way to save 5 cents on packaging – the supplier was able to keep 40% of the savings, the customers received 40% of the savings, and Wal-Mart kept 20% of the savings {note this is not a sign of a greedy company – this is one that understands that value and profits must be shared}. These are just some of the benefits of Wal-Mart that aren’t widely discussed.

Lets now look at how the Gates Foundation and all of its PR stacks up against Wal-Mart (note – I will provide sources for statistics at the end of this posting for your individual reference):

According to the Gates Foundation website, lifetime gifts equal $33.6B (which is a boatload of money {and Gates has more for sure}). So, I will agree that Gates has provided a generous amount of money. Way more than I have; however I would like to believe I am at least as charitable but on a different scale.

Wal-Mart on the other hand as certainly provided community support, shareholder dividends, employment, and federal, state, and local taxes. I will ignore these societal contributions. I will focus on savings the customers have received by paying less at Wal-Mart then if Wal-Mart either didn’t exist or more likely wasn’t in their community.

For Wal-Mart statistics, I will reference only the past decade. Hence any value Wal-Mart provided during its first 35 years of existence only adds to my analysis. It should be noted that the values below are through my own analysis as Wal-Mart doesn’t provide statistics as to its “savings” provided. There are plenty of price comparisons though and you can use the link I provide below or perform your own research.

Some basic pricing savings for Wal-Mart as compared to its competitors averages 3.8% across the board. That means for every $1 spent a Wal-Mart, on average, a consumer would need to pay $1.038 in the general marketplace. More specific to say the North American market would be to compare Wal-Mart to Target. Target’s prices are (on average) 2% greater than Wal-Mart. This means a consumer is certainly better off shopping at Target as it relates to typical market-basket markets and stores and slightly worse off then shopping at Wal-Mart. In my analysis I will use a 1% across the board savings (which is likely at least ½ to 1/3rd of the actual savings – hence I wanted to be conservative with my values {e.g. less predictive savings value then to report more}.

Wal-Mart reported a total gross sales of 3.716 Trillion Dollars over the most recent 10 year period. Wal-Mart reports 144 million customers per week. For scale that means slightly more than 1/3rd of all Americans shop at Wal-Mart each and every week. The average sale is $61.17 (I did that by math). Using the 1% value noted above as net savings – that means each customer saves 61.17 cents per visit. This equates to a 10 year savings of $45.671B (the math is: 144M*52 (this gets us visits per year)*10 (now we get visits per decade)*.61 (the savings per visit) = 45.677B {rounded}) (see high school algebra does come in handy).

Comparing Wal-Mart benefits to the customer – freeing them up to spend their savings as they wish of 45.677B to Gates’ gifts 33.6B, we learn that Wal-Mart has provided 36% more benefit then Gates.

So who is more generous? Bill and Melinda Gates or Wal-Mart? Ultimately that depends upon how you want to value generosity.   I believe that Wal-Mart has provided tremendous real value and continues to provide that value each and every day and with each interaction with its customers, suppliers, communities, and shareholders. Gates provides value too – simply differently. Wal-Mart is likely more democratic about their contributions to society as they aren’t philosophically motivated to achieve any other objective then low prices and great value to its customers by constantly improving its supply chains, distribution, and watching any and all costs. Gates desires to have certain effects and outcomes. That is a value of spending one’s own money – you do get to choose where it goes (isn’t American great?).

Essentially, distinctions such as most generous, best run, nicest, most labor friendly, and any other type of ranking always needs to be analyzed to ascertain how the conclusion(s) were reached, why the conclusions really matter, and how do we confirm we have a reasonable understanding of the analysis necessary to draw our own conclusions as to the veracity of the statement. Otherwise we fall victim to our own ignorance as we propagate false and/or inaccurate statements as fact and hence contribute to the mental pollution that is all too popular in our current leap to quick judgments and fast answers.

Sources:

http://www.fool.com/investing/general/2014/07/20/everyday-low-prices-vs-expect-more-pay-less.aspx

http://www.gatesfoundation.org/Who-We-Are/General-Information/Foundation-Factsheet

On Client v. Customer

When speaking at conferences aimed at professionals I often use the term customer rather than client to describe the buyers in the professional relationship. Sometimes I can visibly see some people winch.

I know what they are thinking, “This guy doesn’t even use the correct word to describe the people I serve. What can he know about this industry or my business?” I see these contortions so often that I usually have to have a side bar conversation to explain myself. I fear if I do not, the rest of what I have to say will fall on deaf ears.

This post is about why I prefer customer to client. But first, a story about growning up in the Kless household in Levittown, NY.

My Dad loves Latin. I mean he really loves Latin. (For a short time he tutored a post-Vactican II educated priest who felt he, the priest, had really missed out on something.) My Dad especially loves taking English words and breaking them down to the Latin roots to gain greater insight into their meaning — in other words, the etymology.

Did you ever see, My Big Fat Greek Wedding? If you have, I am sure you will remember the running gag in which Nia Vardalos’ Dad, portrayed superbly by Michael Constantine, asks, “Give me a word, any word, and I will show you how the root of that word is Greek.”

Well, in my house it was like that only with Latin instead of Greek.

I will always remember the time my Dad explained that the two root words compounded to make up the English word mortgage are mortuus- meaning “death” and –gage meaning “pledge.” A mort-gage is a “death pledge.” Yes, Dad, yes it is. Crystal clear now, right!

As a result of this upbringing I tend to look up (as I do not have my Dad’s memory for such things) the original meaning of the root words (Latin, Greek, or otherwise). This, of course, brings us to the word client. The origin is from the Latin cliens, a variant of cluens meaning ‘hear or obey.’ Further still the word derives from the suffix –klei meaning “to lean.” We see this reflected in the English words incline, decline, and recline.

The term originally denoted “a person under the protection and patronage of another,” a ‘leaner’ if you will, who needed to be propped up and fixed so they did not ‘lean’ anymore. These were people who needed to be protected by an adviser, usually in a legal proceeding. 

In ancient Rome, lawyers did not charge for their time or anything at all for that matter. All citizens had to be represented before a court by a lawyer for free. (Interesting model.) We still see this with Legal Aid (“if you can’t afford a lawyer, one will be appointed for you”) and in social work. Social workers, too, have clients. You see it is very much a patron/benefactor relationship and at worst a derrogatory one at that.

Customer on the other hand derrives from custom — “a practice followed by one as a matter of course.” The word custom as far back as can be traced in Latin has this same meaning — “to become accustomed to.” There are no negative associations with the word that I can trace.

It is my belief that professions can/should/do aspire to this kind of relationship. We want the people we serve to look at us as a practice to be follwed as a matter of course. We want it to be their custom to engage with us, not come to us when they need propping up or fixing.

I think changing the language around this relationship is important. Words matter. Semantics matter. It is for this reason I believe professionals should speak of their customers, and not their clients.

Regrets? They’ll have a few

OK, so we’ve all got them.  You know, those things that we look back on and think “what the hell – why did I do that?” or, (even worse) “why didn’t I do that?”

I’ve had plenty – more of the former type than latter, but it all forms part of the rich tapestry of life that we humans form part of.  And, much as we may regret things, it helps us develop into the people we are and forms the foundations of who we will be.  Great.

apple

BUT, what would happen if you knew that something was going to happen and, despite every nerve in your body screaming at you to do something, you didn’t “do it” (whatever “it” might be) – is that really a regret?  If you adopted a stance of denial, does that turn into a form of regret?

How is it that, even when confronted with massive amounts of evidence supporting a reality that is going to occur (and I’m not talking “consensus” here) – I am talking incontrovertible facts – you still don’t make the moves that are required?

I’m not going to launch into semantics here (I will leave that to my far more learned colleagues in Verasage), I am just trying to posit the argument that often times, people do not do what they should and don’t take action when they should or find a million reasons not to do something they know they need to because, well, they have lost something.

What is the loss they have made?

Consider if you will the current state of the accounting profession.  We are seeing massive changes set upon us – mainly from technology/cloud solutions, but also from offshoring operations.  Did you know, for example, that most of the Big Four have established offices throughout Asia to which they “in-source” their compliance work at (about) AUD10 per hour?  I know of an Australian example where a large corporate has moved a significant volume of their processing/admin work to a Pacific nation as the effective wage rate there is AUD1.20 per hour – a bit better than the award rate over here!

This is all happening now.  Today.  To our beloved accounting profession.  And what are the vast majority of our colleagues around the world doing about?  Nothing.

I posted some time ago about the changes that were occurring to our profession.  The changes that were coming then are rolling out even more quickly than I anticipated.

So, what is the profession doing to adapt to this change?  Not much.  Some of us a screaming to all who can be bothered to listen that there needs to be a change in business model.  Hardly anyone seems to be listening.  Or caring.  And we are not, by the way, being “chooky looky” – the sky is falling in!

What are most accounting firms doing to try and combat the inevitable?  They are trying to be more efficient.  Making better time recording platforms and putting greater emphasis on staff productivity.  Anyone recall Danny DeVito in “Other People’s Money”?  Buggy whips.

To make the process more precise isn’t what’s required in the accounting profession today (or tomorrow).  As Ron Baker is fond of saying – “I’d rather be approximately right than precisely wrong”.  Bravo Ron!  But tell that to the Luddites who persist with a 1950’s business model 65 years after it was made common place and 64 years after it became redundant.

The time-sheet is an anachronistic tool that does not fit with today’s requirements.  Staff hate them, admin hates them, managers hate them and Partners/Directors hate them.  The people who hate them most however, are the second most important people in your business – your customers.

In some respects, I am advocating a “back to the future” scenario – get rid of time-sheets – but with some important changes.  Changes like agreeing the scope of work and price up front with your customer.  The change which includes and involves your people in determining scope – and price!  The one where you truly empower your people to shine rather than record their misery in 6 minute increments.

Ed Chan of Chan & Naylor last week posted on Linked In.  Chan’s argument is that accountants sell time.  No.  We don’t.  We sell solutions to our customers’ problems.  His argument is that the “solutions” (I am expanding his argument a little here, but I believe it is in the same vein as what he has written) are all compliance-based whereby all we are doing is the “same thing” for each client.  As I have illustrated above, the basis of a lot of the compliance work is going to be automated or off-shored.  So scalability only applies if you’re doing basic, processing and bookkeeping work.  Not exactly what we’re trained for is it?

Similarly, setting an arbitrary hourly rate to charge them for your time isn’t reflective of their need or the value that they place on the work to be done.  Using the same rate for everything you do makes you pretty “average”.  And remember – average is where the best of the worst meets the worst of the best.

My belief is that every customer is unique and have their own set of fears, needs and the like.  To try and put them all in one basket is to demean both them and the people who work on their files.

Chan’s argument is also based on the premise that all you have to do is to hire more people and more customers will come to you.  Oh, to live in such a wonderful world!

From my experience (such as it is), the only way you can achieve this is to discount your offering to a level that drives people to you.  And then, what happens to “the margin” that Ed believes is the Holy Grail?  That and the fact that you’ll generally get the bottom-feeding clients who don’t value what you do anyway and will bring a whole heap of their “friends” along with them – High School Chemistry – like attracts like.  You will also not exactly engage your people as they merely become cogs in a never-ending grind out of tax returns.  Inspiring isn’t it!

So, in Ed’s world, where “you build a business to prepare a tax return”, I believe there will be regrets.  Lots of them.

Customers don’t want tax returns.  They want advice.  Support,  Counsel.  Encouragement.  SOLUTIONS.  The tax return work is only there because the government stipulates it.  Nobody really “values” it in the true sense of the word.  And the ultimate disruption?  I know of at least one of the Big Four that will be offering their clients compliance work for $0 in the coming years.  How’s “the margin” on that?

Getting the business model right for accounting firms is critical given the disruptive times we are in.  Making a bigger or cheaper version of what exists won’t answer the challenge – it merely cements in a race to the bottom for those firms that don’t adapt.

Regrets?  Yep, I have them.  A number of them.  One I do not have however is getting rid of time-sheets and moving to a business model that will sustain our business, our people and our customers for a long time.

Oh – the loss they have made that I referred to above?  It’s a loss of self esteem and belief in why they do what they do.  And that, my friends, can be scaled!

My New Question for CPE Polls

Lately, I have been doing a number of webcasts which offer CPE to those in attendance.

One of the requirements is that the participants answer poll questions during the session in order to prove they paid attention. The questions do not have to relate to the material in any way and are not quizzes with right and wrong answers, just survey questions.

As a presenter I find being interrupted four times for about a minute each time to be iksome to say the least. The webcast I am doing are 60 to 90 minute sessions and quite frankly the polls just interrupt my flow. I know #firstworldproblem.

Still I was wondering how the participants felt about this practice. After all, most of them are highly educated individuals who are trying to further their knowledge on the subjects about which I speak. Furthermore, as professionals they have some fairly high ethical standards to which I imagine they hold themselves. To me, it seems quite insulting to break from the material in order for the learners to “prove” they were paying attention.

Well, my twisted mind led me to create a poll questions which serves as a mini protest for both me as a presenter and for the participants. Feel free to use this in your own polls if you do educational programs requiring CPE. Here is the question with the results from my latest webcast.

I find it interesting that only 42 percent find this to be disagreeable to them in some way.

What do you think?

Is Google Promoting Tribalism?

It is well known (or at least it should be) that Google’s algorithm for search provides results that are based, in part, on the information of prior searches. My understanding is this leads to similar people receiving similar search results and different people receiving different results as it relates to the same inquiry.

I first learned of this during the BP Deepwater Horizon Oil Spill. It was reported that a search of BP from a computer with prior searches of environmental matters would provide pages of listings associated with the Deepwater matter, oil spills, pollution, and activist information. Meanwhile, the same inquiry of BP from a computer that had a history of searching stock quotes, investments, and business, would receive pages about BP corporate matters and the Deepwater situation was relegated pages deep.

This concerns me on several levels. First, it leads to an unconscious concentration of similar opinions. Likeness, familiarity, and similarity are all vastly important as it relates to our social connectedness. And people are highly social. However, we have learned from past experiences that limiting our worldview by reinforcing our current positions leads to hardening of positions, inflexibility, and intolerance of opposing viewpoints.

Diversity in our natural environment promotes the general welfare of all inhabitants. Destroy the mountain lion’s habitat and the deer population swells. The weak, the old, and the sick thrive and survive longer than they would naturally in a balanced environment leading to increased disease that could lead herds of deer to be wiped out, not by predators, but by weakness. Additionally, the swelling numbers outstrip the natural vegetation’s ability to grow and food supplies are reduced leading to either changing migration patterns or starvation. With each cycle of reduced diversity the stresses upon the surviving support systems become greater until a time is reached that a calamity ensues and natural order is restored.

I believe that there is a similarity between the above deer habit example and people. People are naturally tribal in nature. We lived in tribes, clans, and villages for hundreds of generations and large cities and urban environments for less than 10 generations. Our DNA is hardwired for tribal mentality. (As a quick note – assuming a 20 average generation span {25 may be a better value – but I will work with 20 for this} that is 5 generations per century. Egypt, the oldest western civilization (at least on record) is about 10,000 years old. That means we are 500 generations removed from early Egyptians. From the early Greek’s, maybe 150 generations. From the fall of Rome, maybe 50 generations. From 1776, maybe 15 generations. My point is that our DNA is way more connected to our pre-industrial age than it is to our post-industrial age and our habits are vastly interconnected to these biological realities).

Google search results could lead to increased polarization as like people’s opinions are sourced from ever specific and concentrated sources. Aristotle once noted that opinions matter. However it was the opinions of the learned that matter more. Who are our learned people whose opinions we should value? Where are these voices?

Our mass media is following the path of Google. We have Fox on the Right with limited liberal perspective. We have MSNBC to the Left with an absence of conservative thinking. We have many with split personalities as it relates to our interwoven options and positions relative to fiscal and social policies.

Congress and the Executive Branch mirror and more likely extend these polarization and myopic positions as our winner takes all with a minimal majority and swelling support from fans while viciously verbally attacked from their detractors. Where is the civility? Where are the candid conversations about what is best? Where are the policy discussions that include and incorporate our distinct and varying positions? It should not be a winner takes all mentality.

I have met Presidents, Cabinet Members, and Congressional Leaders. I may not agree with all of their individual positions but there is common ground. A conversation about WE over ME is always appropriate. What is lacking today is the courage to reach across the proverbial isle to find our common interests. To find solid ground for one tribe to connect surrounding tribes. To recognize that we all have inherent biases and our maturity is based upon our ability to understand that and to leverage our sameness for the benefit of all.

Extreme positions are easily argued. They are based upon an ideology that in its abstract is generally appealing and logical. These ideologies, whether religious, political, or economic all lend themselves to binary answers. Yet the world is complex. Our environments are complex. Our opinions are complex. Yet our ideologies are too frequently binary.

Google is extremely useful and valuable. Google (along with Yahoo and other search engines) provides a wealth of information. Their algorithm capabilities are complex and highly useful. We, it users, merely need to remember that our search results are predicated on predictive behaviors, biases, and prior searches and we should be cognizant of the subtle implications of such results and seek ways to minimize our polarization tendencies.

Customer Service and Moments of Truth

Moments of Truth

            Each customer interaction is a “moment of truth”. And the savings bank of previous good works can be depleted with one poor interaction. One disappointment is all it takes. One gatekeeper that could have used judgment applied to a specific situation. One opportunity to understand that the happy customer tells few and the frustrated customer tells many.

If it isn’t clear by now, I was on the receiving end of a terrible customer experience. What is even worse, this is with my preferred brand.  A brand that I have had 2+ decades of great experiences and happiness with. And today – all of that is at risk. It is early enough in the year for me to make a shift and share my $50k to $100k annual spend on alternative options.

My frustration today is with American Airlines (www.aa.com)(twitter @AmericanAir). I was beginning my 2nd leg of 3 flights today spanning about 17 total hours and maybe 4,500 + miles. I have logged over 3.5 million miles with AA and its One World affiliates. I have been to each and every continent and I have been an Executive Platinum (One World Emerald) Member for about 10 years. I am a loyal customer with the singular ability to direct my spend. I choose where to spend my money and I may be choosing elsewhere.

If you have ever had the displeasure to fly through Miami International Airport (MIA) you already understand it is a challenge on good days and on bad days it is a nightmare. Customs lines are generally long. The crowds can be maddening. The inbound and outbound rush that is all too frequent in southern Florida all lead to a pressure cooker environment.

One reason for investing in the likes of Global Entry for speedier customs and immigration and AAdmirals Clubs for relaxation, work spaces, and snacks is to make the difference between a good day and frankly a frustrating travel day.

Today – the savings bank of American Airlines’ great work went flushing down the proverbial toilette. And it didn’t need to be that way. I will admit that I wasn’t in the best mood when I entered the club today. The immediately preceding phone calls had frustrated me. I was flying out the E terminal (which I detest) and on the US Airways part of the new American (which I am unfamiliar with).

AA in conjunction with its One World partners (BA and Iberia) now operate a Premium Lounge near the E Gates (this is an old Admiral’s Club location). – Note I arrived in D gates from Nassau, Bahamas and had to transit to the E terminal . There are two Admiral’s clubs in the D Terminals but those are, at best, a 10-15 minute walk to the E gates and I researched the usage of the E Terminal Priority Lounge prior to arriving in MIA. I did this because I needed some Internet time, a bathroom break, and a cup of tea. I was planning on spending my 20-30 minutes between flights being productive and relaxed.

Instead I received bitchy attitude from an AA Club Employee that only cranked me up and ultimately denied my wife’s entry that which should have been offered, even if the “rule book” didn’t think so. This is where that Moment of Truth arrives and in their moment – their truth frankly Sucked. It sucks so much I am concerned I won’t forgive and I guarantee I won’t forget.

As many of you already know, I (along with my colleagues) tour the world speaking and writing about customer experiences, great expectations, and the difference between a mediocre company and a brilliant one. The profit margins of airlines are so thin that disgruntled premier flyers are impactful. Frankly, at the amount I fly (2014 225+ total segments split mostly between Alaska and American and 2013 slighty more) they should treat anyone at my level special.   – As an additional aside, a colleague of mine who has flown more cumulative miles but not at my pace over the past few years was provided a Concierge Key – for gods sake I should have one those.

Today’s Moment of Truth has passed. A Scotch on the Rocks before takeoff has helped a little. Writing this has helped even more. Believing that you may read this and tweet about it so your friends will know to avoid AA Terminal E if possible, especially if they believe they should be invited into the Club, makes me feel even better.

It is funny, my wife who is traveling with me, and a genuinely nice person, even commented that the “lady at the desk had a bitchy attitude” – that is telling. If you want to share this – of course add #AmericanAir to your tweet. Maybe we can have them recognize this challenge.

For the record, here is the language from their website:

The AA, BA, IB Premium lounge is open daily from 1 p.m. to 9 p.m. and welcomes oneworld eligible International First Class, Business Class and Emerald and Sapphire customers. Customers traveling on an AA-operated transcontinental full fare First Class (F and Z inventory) or full fare Business Class (J and U inventory) ticket, as well as Admirals Club members departing from Concourse E, may also access the lounge

 

They would have allowed me in; but not my wife. What did they want me to do, leave her in the hallway? It isn’t like we were a dozen people. It wasn’t like we were going to drink them into bankruptcy. It wasn’t like they didn’t have the room. It was a bureaucratic response to what I truly believed was an earned and paid for accommodation. In fact she suggested at one point that she turned away another person and they quietly said ok. Well I am not that quiet especially when I believe I am within my standing. This is about the customer and not about the bureaucracy. I advised her that their website was vague and unclear. She argued with me. I launched my web browser – I read her the information – and she continued to deny my wife entrance and frankly that was a bad decision.

Her (the desk receptionist at the club) defenses were as follows:

 

  • We always have operated this way (who cares)
  • This isn’t the Admiral’s Club (like I am freaking stupid)
  • Yes your wife is on a F class ticket but is it a transcontinental flight (well if Miami to Portland via Charlotte isn’t at least a transcontinental flight at least I am crossing the continent and they don’t fly to Portland direct from MIA or I would have been on that flight.
  • Yes you are on an international itinerary but we don’t count Nassau as international (well whoop-de-do) your website conveniently omits that and by the way – the US State Department considers the Bahamas as international
  • Yes you are on an international itinerary, in first class, on full fare, but “this isn’t an arrivals lounge” – like no Shi* Sherlock. I never claimed it was an arrival’s lounge
  • Yes you are an Exec Plat member but these Premium Clubs only allow the “member” in. Really? Better check with the Marco Polo Clubs, the Qantas Club, the BA First Class Lounge – as I can guarantee that I (and a guest) are graciously admitted (not two guests by the way – so that is known).
  • I pointed out that their website was unclear. I pointed out that I was an Admiral’s Club Member. She acknowledged that. She said it doesn’t say “guest” and hence my wife of 20 years was not allowed in. This policy is stupid and their writing is unclear. And who’s responsible for that? Certainly not me as I didn’t write it.

 

She looked at me like I was an alien and she talked to me like I was a toddler – that only made my hair stand up and I can bark right back. Oh and remember, I am the customer. One should remember that. She could have said, let me call my supervisor or let me get you a cart to ride back to the general club. She offered nothing but attitude and my attitude can be loud too.

 

I tweeted about this via my twitter @morriscpa. AA has responded that they are “sorry” for my inconvenience – that and $4 will get me a Starbucks. AA wrote that they will have a customer service specialist reach out to me after my journey (yippee skippee but possibly helpful if future people can avoid this experience). At the moment AA is on probation. Because of this posting – it is not “double secret” probation. I will be the sole arbiter of the value of this relationship.   I will decide where to spend my money. I will decide whose loyalty program deserves my loyalty. I will decide if I forgive.

 

Unfortunately for them – it isn’t up them. It is always up to me.

 

Lessons learned and relearned. Your customers decide if the value exchange between their money and your service is worthwhile. Your team members, especially those on the front lines, represent the entire company in each and every interaction. That happy customers remember tell a few and frustrated customers tell the world.

 

The ball is in AA’s Court – how they respond will determine how I ultimately feel about this and how I evaluate how I move forward with my airline choices

CalCPA 2015 Honoree Dinner Keynote Address

Note:  –  This past Thursday, I had the pleasure of sharing a brief commentary during the annual CalCPA Silicon Valley/San Jose Chapter’s Honoree and Scholarship Dinner.  In attendance were the Past-Presidents of the Chapter (my year was 2002-2003), Several area university scholarship winners (each was very impressive, probably why the Big 4 have already hired them), along with their professors and family.  Also in attendance were CalCPA Members that have reached their 40 year mark and hence no longer pay dues (lucky them).  Finally, our Chapter awards a Lifetime Achievement Award to one member that has gone above and beyond.  Below is my keynote address (delivered after dinner – so maybe it should have been renamed, an After Dinner Speech;  next time).  I simply thought I would share it here.  I hope you enjoy reading it as much as I did writing and delivering it. –    Dan

Honorary Dinner

Is it an Is or is it Ising?

 Welcome:

Good evening past presidents, distinguished 40 year members, professors, scholarship award recipients, the friends, colleagues, and families of our Lifetime Achievement Award recipient, Stu Karlinksy, fellow members of CalCPA, and guests –

It is an honor and privilege to share some thoughts and comments about our profession, its past, its present, and its future.

            My favorite professor and mentor, Dr. Dominic LaRusso, once expressed his view of time: He said, “that for some…..Time Is   and for others – Time Is Ising”…..Is time a noun as is “time is” and hence inactive and merely present or is Time a Verb as in an action for which we, its benefactors, are able to harvest vast wealth? Including financial wealth, psychological wealth, social wealth, and family wealth?

            I believe that Time is a Verb and our ability to harvest is grand. And speaking of time, there are seconds, minutes, days, months, years, decades, scores, and centuries. Each, with its own cadence and its own rhythms. As children, time is fleeting, fast, and sometimes slow. As early adults we recognize that time, at least prospectively, speeds up – and as we crest into our AARP years – we wonder where it has all gone.

            Tonight’s message is for you: young and old, senior and junior, experienced and inexperienced; student and teacher. These are a maturing man’s view of things I wished I had bettered understood when I was younger and for which I believe are worthy of discussion.

  • I wish I had understood how much timesheets suck the life out of professionals and are at odds with the customer.
  • I wish I had understood that we serve Customers and not Clients. That while clients are recipients of what the service provider desires to provide with little control on either inputs or outputs, Customers receive “custom”ized services designed around them with outcomes they desire. Frankly, customers pay more than clients.
  • That when promoting and selling our services that we should focus on outcomes and not inputs. Time-based pricing focuses on the firm and the professional whereas focusing on outputs aligns the customer’s interest with what they want and what they need.
    • Landscaper – (share the lesson here)
  • I have learned that we do not compete with each other. Although we share the same profession, we are colleagues and not competitors. We do however, compete with any and all organizations that can raise the bar of customer expectations – from FedEx providing real time access to each and every package; to Nordstrom playing a piano while shoppers shop, to Google developing a driverless car, to the Ritz Carlton who’s entire mission is to exceed even their customer’s unexpressed wishes – Like taxi cabs of today, we compete in a marketplace driven by outsiders who desire to provide a superior solution to our customer’s challenge and while we labor to protect our monopoly, change is among us and if we forget this, we will be relegated to the role of the Scribe and soon to be forgotten.
  • I have learned that specialists are really valuable and firms that specialize produce superior profits; it is the Deep Generalist that has more fun enjoying each and every day, rain or shine. That ultimately it is our human spirit that drives our success.
  • I have learned that is always better to fire a customer than suffer a painful day providing services to the wretched, to the greedy, to the arrogant, and to the cheap. One doesn’t improve their life until they surround themselves with better people.
  • I have learned that there are 4 ways to spend money – and to never ignore the different quadrants
  • I have learned to price the customer and not product or service – just like an airline – different prices for different people provides optimal results
  • I have come to the conclusion that our future professionals need deeper studies in liberal arts and sciences, and less accounting, auditing, and tax work. The prior comprehensive learning platform provides the foundation for our technical prowess. We should control the profession’s education, like Law and Medicine do, through our own professional schools rather than being a part of a general business curriculum.
  • I have learned that CalCPA, its committees, its governance, its chapters, and its education foundation, together provide an opportunity to change the world of our members by creating an environment for connections and relationships beyond measure. That through this great organization, I have had the pleasure of impacting ten’s of thousands of fellow CPA and CA’s lives and livelihood. That much of that work would never had been achieved or if achieved would have been arrested in its development simply because I had the good fortune of saying yes when asked, being alert when listening, being brave when scared, and being resilient when resisted. I am who I am because, in large part, this organization, this group of independent voices, the amalgam of friends and colleagues, provides an environment like no other for each and everyone of you to grab those proverbial reigns and direct the horse you ride to seek the future you want.
  • I have learned a great deal – and my learning doesn’t stop. To our graduates and students, lifetime learning isn’t a mantra of the old, it is the formula for designing and living your future. Be the drive. Drive your time and make it a verb. Life requires action and you are the only one that can create the future you desire. To our professors and teachers – thank you for crafting our young. Thank you for investing in our future. Thank you for sharing of yourselves to those you touch to have the power to drive their future. To my friends and colleagues, thank you for being there even when you were trying to avoid me. Thank you for your support of my dreams. Thank you for giving of yourself so our profession has a superior foundation to for which to move forward, and thank you most of all of your attention.

May each and every one of you have a remarkable year and until we see each other again, remember to smile, take some time to smell those roses, and may the University of Oregon someday win the Big Game.

 

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