3 financial management lessons from my weekend DIY plumbing experience

I am happy to announce that I bought my first spanner last Sunday to replace the bidet showers in 2 of my bathrooms.  I am even happier to report that I did not flood the bathroom. I even had an epiphany of how similar trouble shooting post-installation leakage was to managing cashflow.

  1. Precision and attention to detail matters

My dad claimed that the replacement job would be a straightforward one, where all I needed was my bare hands to unscrew and screw the new bidet on.  In reality, I needed a spanner.  And initially when I replaced the shower, it was not aligned properly nor sufficiently tightened so I did get a little wet.

On the second try, I took extra care in ensuring every contact point was as snug as it could be, and the result was there was no leakage.

Similar to financial control processes, a simple installation of a “standard operating procedure” in itself is insufficient to prevent leakages, but every single potential point of waste or leakage has to be identified and tested for.  As an example petty cash management is not a petty matter – as an abuse of petty cash is a gateway to larger breaches of trust.  A tip would be to have a regular surprise audit of petty cash.

  1. Trouble shooting involves understanding existing state

After replacing the first bidet shower, I was brimming with confidence when I got to the second. But I was in for a surprise.  Despite taking all the precautions and care I did in the first, it leaked even more!   [Sorry no pictures of this fiasco as that was the last thing on my mind to get my phone wet.]

Despite knowing the impending result of my turning on the faucet again, I knew I had to do so in order to perform “root cause problem solving” (note to self: I learnt something useful for plumbing from an Ivy League MBA) and to observe the problem.  I isolated the problem to the grooves of the water valve and realized that some bright spark had applied sealant to it!  The nut of the bidet spray was never going to fit snugly to the grooves of the valve if there is white gunk on it.

While I was tempted to use my manicure implements for the precision removal of the white gunk, I opted for an unused screw and began scrapping.  After the clean-up, the leak was significantly reduced.

In the managerial finance world, troubleshooting a problem often times begins with understanding the existing processes and systems.  For example when speaking with employees in encountering data with discrepancies, it is not uncommon for them to point their fingers at the system. “It’s the system,” they say and thereby hoping to absolve accountability in tracking the error down as if the system is an inanimate object sprouting the autonomous intention to mess up the data and the humans. For scenarios like this, merely asserting the oft-quoted more often ignored phrase of “garbage-in garbage out” will not even put a dent into solving the problem.

In the cases where I’ve encountered these issues, approaching it with the mindset that ‘there are immovable stakes (be it defined by accounting double entry systems or the fact that physical inventory should always match the inventory data in the system) is a pre-requisite, the way in plumbing where you need to believe that the nut will fit with the valve.  Secondly, only a root-cause problem solving session in understanding how the data was entered, how it was maintained, and the process flow of the data can we begin to identify the problem areas. Solving it from there may require some out of the box thinking (e.g., not using manicure implements); but ultimately, if you believe in the immovable stakes; the discrepancies can be reconciled or explained.

 

  1. Sometimes you have to live with the best possible result, not “perfect”

Despite my efforts, I was unable to remove the white gunk entirely out, I felt that the installation of the second bidet shower was not perfect, but the best possible result and I could live with it given there was no further leakage onto the bathroom floor.

Similarly in resolving issues in the managerial finance world, we sometimes have to live with the best possible result. One of the common pitfalls that I have observed, is that some professionals being obsessed with cleaning data to a 100% level of sanitary standards; including data from more than 5 years ago.  How I would usually approach a problem as such is to first prioritize the 100% compliance of an on-going process to eliminate errors moving forward. Thereafter, I will start moving back in time, with lesser emphasis for older data.

Back to my little DIY incident, just like I accepted that I could not remove all the white gunk, but as long as it is not leaking onto the floor is the mindset I would adopt in approaching solving similar issues in business.

So until my next DIY project …

 

 

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3 ways lawyers and their clients can better communicate

Legal Drafting Cartoon

As a legal practitioner, I was often instructed to capture various forms of commercial transactions into a legal document. Many times, even after scouring the legal library for precedents, I was still left with a feeling that the legal document was not ironclad due to the lack of clarity of instructions from clients and the lack of business experience as a young lawyer on my part.

Fast forward to my career as a professional manager, I am yet faced with long forms of documents, full with superfluous words and clauses. Worse still, I am sometimes faced with poorly drafted standard form documents that I have to execute and have little room for negotiation simply because they are ‘standard’.

Now armed with both viewpoints of the legal advisor and the client, here are 3 typical communication pain points and some suggestions as to how to overcome them

Issue 1: Legal format and language

Chances are that in your professional career you have had the misfortune of encountering a poorly drafted legal document. Whether it contained unnecessary phrases such as “hereinafter referred to as” when a simple (“ “) would have done the job; or having to flip back and forth across the main document and the schedules, one cannot but help feel that perhaps their time could be better spent.

The legal document is not structured like a typical article or book. It typically starts with a definitions and interpretation clause up front, that contains prosaic and often repeated information such as registered address of the parties and the likes, even before we know what the subject matter of the contract is about. It is akin to a work of fiction introducing its characters in chapter one, in the absence of context.

TIP to the client: Skip the definitions and interpretation clause, and use it only as a glossary as and when needed.

TIP to the lawyer: In my later drafting I would enclose the definitions and interpretation clause at the end of the document, to provide a more natural reading flow to the business reader.

Also as to the multiple schedules at the back of documents, these are usually created with the end goal of being able to produce mass documents from a master document (think commercial tenancies in malls) in the fastest possible time by isolating the variable components to one area of the document for the paralegal or legal secretary to work on. For the client, it translates as cost savings in exchange for the hassle of flipping through pages.

Issue 2: Commercial lawyers function in their silo with little hands-on business operations experience

Have you ever sent a document for a lawyer’s opinion only to receive an opinion which primarily was correcting grammatical errors? This is not only frustrating, but evidence that many lawyers (especially those in early practice) do not put on a business lens in evaluating contracts before them.

Yet conversely, sometimes the instructions received by lawyers are not with sufficient clarity. In another case, a client had instructed a lawyer to prepare an employment contract with a profit sharing element, without defining what profit is. When asked for more information, the client proposed, “Why don’t you advise.” This is not an ideal situation for this requires knowledge of the company’s financial performance and expectations which a typical lawyer is not trained for. Professional managers would know that profit could range from gross profit, to operating profits, to profit before and after tax, and any other definition in between which the parties could agree to.

To overcome this communication challenge, a commercial lawyer should ideally equip him/herself with basic business and accounting concepts; while the client should be able to elucidate the transaction he is trying to reduce to a legal document, be it by a way of a simulated financial statement or a process flow document, as examples.

TIP to the lawyer: To draft a commercial transaction, obtain more instructions from clients if you are not able to visualize the transaction steps fully.

TIP to the client: Do not rely too heavily on the lawyer to advise on commercial and economic terms; these are business decisions. The lawyer’s role is to ensure that a commercial transaction can be performed and enforced.

Issue 3: Good lawyers excel at negative distortion thinking, good business people excel at positive distortion thinking

As commercial lawyers, you sometimes get the feeling of being the person in the church responding to the question “Should anyone objects to this marriage, let them now speak.” Face it, your clients are happy and racing to get the contract signed and making money, and there you are the naysayer lawyer, telling them all the 20 ways or more the other party could basically sc*w them over.Guns Pointing

The best documents that I have drafted gave both parties sufficient incentives to perform. The mental images of guns drawn and pointed are at the back of every obligation or warranty drafted: i.e., for every obligation there must be an incentive to perform, otherwise it is a meaningless clause.

Nowadays as a businessperson, in crafting a deal, the mental image is to achieve a win-win situation.

And herein lays the fundamental crux of the tension: great lawyers excel at negative distortion thinking (how things can go wrong) while great business people excel at optimistic thinking (how great things can be if everything goes right).

TIP to lawyer and client: A way to overcome this tension is for all the risks to be listed down, and have both the client and the lawyer weigh each probability of occurrence. Thus, doomsday scenarios are tempered; and the client will walk into a transaction with eyes wide open.

[Metamorphic Training offers workshops on Commercial Drafting to Junior Lawyers seeking to understand common business concepts and transactions and Essential Law for the Business Professional for professionals, managers and executives. For more information: visit www.metatrainings.com or email enquiry@metatrainings.com]

Why train when people leave?

There is an oft-shared exchange between a CEO and a CFO that goes:

CFO: “Why train when people leave?”

CEO: “What happens if they don’t?”

The key learning from the exchange is that the decision to train should not be affected by potential attrition. In fact studies have shown that people do not leave companies, but they leave poor managers (Buckingham, 1999).

On the flip side, a company’s performance is driven by its managers. Thus if a company is battling an attrition issue, the logical action is first to ‘fix’ its managers.

I was once approached to provide customer service training to a hotel in tourist town, and when I asked the owner-operator if he was considering training his General Manager first, his response indicated that he felt that training his General Manager was not a good use of resources due to his resistance to change. But think about this, what if the hotel had proceeded to train the staff and having completed training goes back to an environment where expectations from the General Manager are different from what was trained? The training would not have stuck, and the training investment would not have been realized.

Here is another typical exchange when owners tell me about how they feel that their people need training.

Owner: “My people need training.”

Me: “What do they need training in?”

Owner: “They need to be better managers.”

So what constitutes being a better manager? My definition of a good manager is quite simple: an effective manager is one who is effective in driving business outcomes and retaining people.

But what are the actions and habits of managers that are effective in driving business outcomes and retaining people? How do you define and measure that?

Research has shown that employees who are in an environment with the following 7 traits belong to business units with good business outcomes and high retention rates (Buckingham, 1999). The 7 traits are as follows:

  1. They know what is expected of them at work
  2. They feel that they have the materials and equipment to perform their job
  3. They are given the opportunity to do what they do best every day
  4. In the last week, they have received recognition or praise for good work
  5. They feel that their supervisor, or someone at work, care about them as a person
  6. There is someone at work who encourages their development
  7. They feel that their opinions count at work

So here lies the necessity for training of the manager:

  • For the manager to deliver items 1, 3, 4, 5, 6, and 7 well; they need to possess skills that are commonly known as soft skills – yet soft do not imply easy. These are communication, coaching, problem solving and execution skills that typically require years of on-the-job training. Yet, a good starter leadership development course that is experiential that involves role-playing will be able to cultivate an awareness of the skills a manager is required to perform better.
  • With regards to item 2; these are function/technical-based training as well as tools (e.g., software) required for their jobs. This does not mean a carte blanche for managers to ask for sophisticated customization on their software. When faced with a RM20,000 software customization request once, I asked if the executive could generate an increase in revenue of RM2,000,000 with it. And when he could not make a case for an increase in revenue, the customization request was abandoned.

As for the subordinates, continued evaluation of what it takes for them to perform their current job better as well as what skills they need for a promotion demonstrate continued organizational development. Often times, in emerging markets, employees are promoted mainly because they expect a salary increase, not because they are able to perform in the role that is above them. For example, a high performing writer may not automatically perform well as a managing editor. In an ideal scenario, the Human Resources and Training Development function will be actively monitoring the progress of high-performers and be working hand in hand with business functions to craft career paths for these individuals.

So why not train to improve your business performance?

 

[Metamorphic Training offers 2 signature 5-day General Management Workshops that focuses on (1) Leadership Skills and (2) Functional Skills. Additionally a host of other workshops and ready to go courses are available. We also offer training needs analysis to ensure that any training investment is focused. For more information: www.metatrainings.com]

Works Cited

Buckingham, M. a. (1999). First, Break All the Rules. London: Simon & Schuster.

 

 

How I became a Dato’ for 12 hours

maskMalaysians often put a lot of value in Datukships, an honorary title awarded by royal families or state governors supposedly to honor contributions to the country/state. It’s a common name drop in social functions and festivities:

“Ohhh I know Datuk…he’s my good friend, I play golf with him!”

*Talking loudly on his mobile* “Hey Datukkk! That deal ahhh no problemm wannn!”

For those having to deal with any sort of administration in Malaysia, be it government departments or hotel service, saying you’re a Datuk gets you immediate respect and attention.

Despite a Datukship’s high standing, Malaysia has probably one of the highest numbers of royal title holders in the world, with some several hundred Datuks being anointed annually and often given for dubious reasons. Jackie Chan, a Hong Kong movie star, recently received a Datuk title “because he is an actor with many fans in Malaysia and can promote Malaysia especially Kuala Lumpur and is deserving.” Shah Rukh Khan, another movie star also received a Datukship because one of the movies in which he starred was shot in Malacca, and this has purportedly increased tourism to the state. Instead of honoring worthy contributions to the country or the state, Datukships are now being used as a tourism gimmick.

What is worse is when such titles can be bought, especially with certain states being notorious for being generous with their Datukships. In November 2014, a mining company from China claimed that they had spent USD100,000 per Datukship to curry favor with Malaysian politicians.

The self-styled royal Raja Noor Jan Shah Raja Tuah Shah (2nd left) and his wife Zaidatul Mardiah Yussuf (2nd right) posing for picture on a throne with their 'Datuks' at a palace in Gombak, on the outskirts of Kuala Lumpur. – AFP pic, November 12, 2013
The self-styled royal Raja Noor Jan Shah Raja Tuah Shah (2nd left) and his wife Zaidatul Mardiah Yussuf (2nd right) posing for picture on a throne with their ‘Datuks’ at a palace in Gombak, on the outskirts of Kuala Lumpur. – AFP pic, November 12, 2013

The most entertaining perhaps are Datukships awarded from the “Sultan” of Malacca. Malacca had one of the oldest Malay Sultanates but when the Portuguese took over in 1511, the Sultanate was effectively ended. Today, it only has a Governor. A rich property businessman, however, by the name of Raja Noor Jan, proclaimed himself a Sultan, claimed royal blood and started awarding his own Datukships. Hundreds of applicants were willing to give cash donations in exchange for Datukships from this self-styled Sultan. He even has a rather entertaining blog. Thankfully, he was arrested in early January 2014 and the International Court of Justice confirmed that his Sultan certificate was fake.

One night over Chinese New Year drinks, while I was listening to people talking about VIPs, I really wondered how often do people actually look into the validity of a Datukship? I joked with my friends that with some social media postings and having a few friends join in the fun, I could possibly fake that I was awarded a Datukship. After all, if Raja Noor Jan could pass himself off for a Sultan with a bunch of fancy regalia and a certificate, surely it was a lot easier to fake becoming a Dato’?

The plan started a few days later when I decided to trawl the internet for some pictures of Pahang and its palace. Pahang awards some 100 Datukships each year so it was a good state to stage the prank. I trawled the internet for pictures of Pahang and looked for high quality yet amateur pictures. At first, I posted this picture of Pahang without any description.

1st pic of Pahang
Posted at 2:26 PM, this post garnered 14 likes and two comments.

At 7.22 PM, I executed the second part of my plan by posting the next picture. Once again, no captions, just a location tag that I was at Istana Sultan Abu Bakar. A friend of mine who wasn’t in the know as to what I was doing, jokingly posted “Dato’ Yap?” Within an hour, I started getting congratulatory texts and WhatsApp messages, but I quickly let them know the truth and told them they were free to congratulate me on the Facebook post to spur on the fun.

Capture

The post caught like wildfire and there were 62 likes and 30+ comments in a matter of a few hours. It got a bit scary when my colleagues started asking me if I was a Dato’ and work clients were calling in my other colleagues to ask if it were true. I was mortified that someone would actually buy a newspaper ad to congratulate me! So the next day, early in the morning, I took down the post and posted up a clarification post to ensure there were no more misunderstandings. All good fun, no one hurt or fooled for more than a few hours but it did highlight a few things:

  • I have nice friends that believe I deserve a Datukship and thought it was because of my contributions to internet privacy (which goes to show how little it takes to get one nowadays)
  • It is slightly depressing that despite my posts having no captions, the first reason people think of when visiting Pahang’s royal palace is the granting of Datukships.
  • It is probably pretty easy to social engineer a Datukship. It only takes a few people to start calling you a Datuk, get yourself some official looking certificate, post the obligatory regalia picture and there you have it, you’re now a royal title holder! The whole ruse could have been made more realistic if the post coincided with the Sultan’s birthday which is traditionally the day in which these awards are given out.
  • We have way too many Datuks and there is no national registry to verify Datukships. An attempt to find all the titles given out in 2009 – without referring to the respective state departments – did not result in a comprehensive list.

Although more than a month has passed since the prank, I still get referred to as Dato’ jokingly by some friends and I wouldn’t be surprised if bystanders actually believe it’s real! The real takeaway from all of this is, what’s truly in a Datukship title nowadays?

 

Special Thanks to Guest Contributor Reuben (Not a Dato) Yap; a true jack of all trades.

 

The first steps of change … starts from within

When you speak to people on whether they would like to see change in their organisation, chances are their responses will go something like this:

“Yes, change is necessary,”

“We must evolve with times.”

“It is about time.”

Most if not all people will agree that the only thing constant in this world is change.

Rarely will you get a response that vehemently states, “No, we should stay the way we are.” (Though admittedly there will always bound to be contrarians and traditionalists.)

Yet when you take the conversation to the next level as to what they would like to see changed, very often the tone will go along these lines of a recent discussion that I had with a sales team at one of our clients.

Q: “What would you like to see changed?”

A: “We need to be more competitive. We need to get an exclusive distribution agreement. Our competitors are winning because they have exclusive distribution agreements.”

Following up on that statement, we probed if the exclusive distribution agreement was truly the cause.

“Do you know if your competitors are offering cheaper prices?”

“Do the competitors have exclusive distribution agreements for all products?”

None of the members of the sales team could definitively answer the 2 questions posed.

Throughout the discussion, there were many hurdles highlighted but limited suggestions given, and where suggestions were given, rarely did it involved actions that were to be taken by the individuals themselves. Which brings us to uncovering another prevalent mindset in organisations: “Change is good … if it happens to someone else”.

Shifting this mindset within key individuals, in my opinion, is the first step to effecting change in any organization. What does this entail? First is awareness. Awareness for the need to change; and that change comes from within.

Beyond paying lip service, an leader will have to demonstrate a change not merely in tasks performed but habits to jumpstart change. For example, if the sales team does not actively track numbers, it is because that management does not require them to do so. So, if the sales teams needs to start actively monitoring sales against targets; the manager has to go beyond asking them to submit their numbers. The manager has to monitor, ask questions, and addresses issues that arises on the same frequency as the sales teams members are required to do so. This involves the manager adopting new habits; which is the first visible step to effecting change in any organisation.

The pertinent question now is: How can we guide managers in taking this step?

[More to come … in upcoming blog]