SWALLOWED BY THE WHALE

Surviving and Managing Change in the WorkplaceBy Paula Rowlett Tom Rowlett

AuthorHouse

Copyright © 2010 Paula Rowlett & Tom Rowlett
All right reserved.
ISBN: 978-1-4520-8566-1

Chapter One

The New Budget

One of the first changes to affect me was the financial priorities. As a small company, we had always watched our expenses, no matter how small. Whenever possible we used both sides of the paper in the copier and the computer printer. The office supply cabinet was my desk drawer. I found out that if I forced people to come to me every time they lost a pen or left it home, they were more careful the next time. Every desk calendar in our office was from some organization that had given them away as advertising. I asked everyone to bring in their church calendars if they were not going to use them at home. When my husband was traveling, I had him grab those pens the hotels throw on the nightstand and desk.

I was proud of the money I was saving the company and was not prepared for the effect these activities would have when applied in the new organization. Not only were my efforts not wanted or appreciated, they were criticized as time wasting and insignificant. I had always assumed that a dollar was a dollar. I soon discovered that was not the case. The importance of each dollar was relative. In corporate economics, expense-to-revenue ratios rule. We were now part of a billion dollar company, and to their way of bookkeeping, the cost of the time I spent to save a buck was more than the savings. The way it works in a big corporation is that your salary is multiplied to cover the cost of the company overhead (office space, insurance, benefits, organization, support, etc.). To SuperCorp my hourly rate was four to five times what I actually made. Office supplies, as a business line item, were so far down the priority list it was almost never noticed. My new top priority was to support sales and tens of thousands of dollars in revenue growth, not to save pennies on expenses. On the other hand, the sales team's expenses were enormous, but as long as the revenues they generated were large enough, no one cared.

The first lesson I learned was when you wake up one day and find yourself working for a new company with substantially greater revenues than you were used to, be prepared to have your financial priorities turned upside down. I suggest that you try to get a look at your department budget. See where the income and expense items for which you are responsible fit with respect to amounts and percentages. Chances are you are spending some part of your time working on things at the `bottom' of the list. In order to adapt to the priorities of your new employer, you may need to abandon some activities and search for more juicy items higher up the revenue scale. At the very least, look at your tasks from the perspective of a company that includes your salary as a part of your overall cost. Ask, "Is my time worth these savings?" In all likelihood, you will find a shift away from the activities that save money towards those that generate income.

In that light, let me say a few words about my income-generating responsibilities. When I was with LittleCorp, I was constantly praised for my collection activities. I knew how to work with our clients to get them to pay a little each week on a larger debt. I knew from experience that if you allowed their debt to remain, it would tend to increase rather than shrink. I would attempt to reverse that trend by collecting a few dollars a week on their arrears balance. That meant the customer was paying down his bill instead of watching it expand out of control, and since most of these companies were honest and sincerely wanted to pay their debts, it gave them a sense that they were accomplishing just that. Sometimes a LittleCorp customer got into financial difficulty and it became apparent that they would never pay. When I spotted those, I would either put them on a "pay as you go" plan, i.e. no credit, or have the driver recover any of our assets, and drop them altogether.

SuperCorp could not be bothered trying to collect from a customer that was a few hundred dollars behind. They felt it was not worth either my time or theirs. They would just as soon write them off as a loss. If 120-day accounts receivable got too large they reset it to zero. SuperCorp would hand off these companies to collection agencies, which were highly impersonal, much less effective, and often returned less than twenty-five cents on the dollar. So when I continued to try to work with our overdue accounts receivable as individuals, my boss ordered me to stop. The few times I tried anyway, I began to feel like I was running some covert operation. Eventually I stopped, but it took me almost six months to get my budget priorities aligned with those of SuperCorp. Along the way, I found that I had come close to being fired for not doing the job assigned.

On the other side of the revenue coin, big corporations have expense items that may have been okay for a small company, but now are not acceptable in SuperCorp's. One that comes to mind in my job was overtime. In LittleCorp, our business was seasonal. It was far more efficient to have the staff work overtime when the business peaked, than to hire and train additional help. SuperCorp looked at overtime as an unnecessary expense. In order to cut costs, the regional manager would simply make a proclamation of no more overtime. When the business began to increase during the busy season and we needed the extra hours each day, this presented a problem for everyone, especially me, who received no pay for overtime. I now had more than eight hours of work per day. I would work through lunch and stay late, off the clock, in order to get my job, and any other work, done. However, some of my extra workload was related to the misunderstanding of my new responsibilities. I will discuss how I dealt with that issue in Chapter Four.

Another budget item that became ridiculously confusing was petty cash. In LittleCorp, petty cash was a very informal, but necessary, process. I had a box in my desk where we kept the profits from the soda vending machine. We used this money to buy birthday cards, cakes, etc. for employees. However, if I had to have cash quickly I would take what I needed, and Bill would replenish it later with money from his wallet. I kept receipts for what I spent, but that was pretty much the extent of the bookkeeping for petty cash.

SuperCorp, on the other hand, had petty cash set up as a regular checking account at a local bank. I matched cancelled checks against receipts and expense entries, just as though they were ten thousand dollar capital purchases. All use of the petty cash account needed approval. Now I was forbidden to keep any cash in my desk. The new procedure required me to gather up the petty cash expense receipts at the end of the month and send them off to headquarters. They would send back a check to be re-deposited into the petty cash account. The first three months after the takeover, we had exceptionally high petty cash expenses due to setting up a standard SuperCorp office. Often we would go into the last week of the month with little or no petty cash funds available, and by the time the headquarters check arrived a few days into the new month, I was passing the hat to buy paperclips at Office Depot. We could have avoided much of this chaos if I had been more aggressive about adapting our procedures to the new petty cash system, instead of the other way around.

Here is a story that typifies my frustration with cash flow. After the takeover, the corporation procedures required that all vendor expense would be handled through Headquarters' Accounts Payable System. Up until now, we were paying local vendors with local checks. One of these vendors was the electric company. Some time after this change in vendor payment policy, I received a call from the local electric company. They informed me that our bill was 60 days overdue, and that our electricity would be shut off that evening if the bill was not paid by the end of the business day. If I had still been working for LittleCorp, I would have successfully negotiated an extension, but as far as the electric company was concerned, we were a brand new company at this address with no history as a reliable payer.

This was very early after the takeover and Headquarters had not yet made their first electric payment. It seems that it takes a few weeks to get a new supplier into the accounts payable system and the company accountants in some distant part of the country had not yet added our electric company as a regular expense item. If I had understood this delay I would have set up all of our utilities as a new account and made sure a security deposit was made up front. There was nowhere near enough cash in my desk to cover the bill. I contacted the SuperCorp financial group in Headquarters and explained the situation. They assured me that they would contact the utility company and "fix" the problem and our electricity would not be disconnected.

That afternoon I decided to follow up with the power company representative whom I had spoken to that morning. I wanted to be sure that everything was taken care of. We had huge freezers that were loaded with perishable goods. It was Friday, so the earliest that we could have our power turned back on was Monday. A power outage would have been disastrous. To my surprise, I found out that no one from SuperCorp had called the electric company. Later I discovered that some bean counter in HQ had left a message with the utility message center, simply instructing them to NOT turn off our power. In the message, they promised that they would be sending a check in a few days. I also found out that the power company summarily ignored the message. Meanwhile I had a crisis. I paged my manager, but after an hour and no response, I decided I had better do something myself or we were headed for a blackout. I got in my car, drove to the electric company's local office, and wrote them a personal check for the entire amount.

The good news was that it was Friday, and I had the whole weekend to figure out how I was going to cover that check. By the time I returned from my errand, my manager had still not returned my page. That night I was able to reach her at home and explained what I had done. She praised my initiative, but never offered to reimburse me. All she said was let me know if you need me to sign anything to help you get your money back "Yeah how about your personal check," I thought to myself. After I told my husband what I had done, we transferred money from our savings account just in case I was not reimbursed before my check cleared. I then set about the task of getting my money from SuperCorp. If you have ever worked for a large company, you already know what I was about to find out. There was no way for the existing accounting practices to reimburse an employee for making a payment on the company's behalf. Not only did it take me weeks for the company to repay me, but I was actually turned down the first few times I asked. In addition, I got my butt chewed for doing such a "stupid thing". No one seemed the least bit interested in how much it would have cost the company if our power were off over the weekend. I am sure the product was insured, but those items were earmarked for delivery to our customers. I cannot imagine having to tell them, "You will have to do without, because we didn't pay our electric bill." SuperCorp's only concern was that I had broken Accounting Rule 28A. Of course, no one ever thanked me. One upper manager said to me, "They would never have turned off the electricity; they were just saying that to scare you." Too bad they were not there when the technician showed up at our facility at 5:30 that night and threatened to pull the plug if I could not show him proof that I had paid the bill.

To reiterate my suggestion, take a few days to understand how revenue flows through the company. Find those budget line items the company considers significant expense, and where the money for these expenses comes from. If these items directly affect your job, be prepared to revisit the way you operate. Do not assume that any of your old procedures will apply.

Chapter Two

New Procedures

Since I had performed most of the jobs in our LittleCorp, I understood the business processes as well as anybody; in some areas, I may have even been better qualified than Bill since he usually did not get involved in all of the more mundane day-to-day tasks. If I saw a way to make my job or someone else's job easier, I often took it upon myself to streamline our procedures. I was tenacious about paper trails and cross-referencing. I figured that when there was a disagreement between the customer and the company, I wanted to know who was right, what caused the confusion, and be able to fix it. I made a rule that every invoice had to have a record of how and when it was paid, and every payment had to have an invoice number associated with it. For example, when a client paid by check I wrote the invoice number on the check, then made a copy of the check and attached it to our copy of the invoice. When the customer got in arrears, some invoices took several checks and a long time to pay. My system of matching checks and invoices made it simple for me to discuss with any client how much they had paid, when they paid, and exactly how much they still owed.

When SuperCorp took over, Headquarters (which was hundreds of miles away) did all of the billing and our customers mailed payments directly to them. If a client wanted to pay cash, the system crumbled. I had to deposit the money in a local bank account then make a wire transfer to Headquarters and show it as payment from the customer. This indirect method of crediting the client's account was a nightmare for everyone.

Taking our office out of the loop on payments created other problems as well. If we had a customer that owed us a lot of money, we would make them pay cash for each order when delivered, and occasionally a few extra dollars toward the amount that they were in arrears. Under our old procedures, when I received the invoice and payment from the driver, I would record to which invoices the payments were applied. Now the new system applied their payment to the outstanding balance. Therefore, when a customer who was technically current with their most recent order received their monthly statement it always showed that it was not paid. Their account remained delinquent until all of their outstanding balance was paid off. Some of our customers who were paying COD until they could catch up on what they owed were getting computer generated "nasty-grams" demanding to know why they had not paid for their last few orders. We explained that it was a computer glitch, but it never stopped.

One by one, each of our COD customers went delinquent. As more accounts became delinquent, the branch did as well. I could have suggested that we write off their debt as a loss but I was reluctant to do so since I believed that I could recover some or all of the money over time. SuperCorp's procedures did not mesh with my bookkeeping method. To me there was a simple solution. We (the branch) would receive the payment and I would use our computer to post it to their Headquarters account. You can imagine what it was like trying to get this little process changed. It took forever to find out whom to talk to just to discuss my suggestion, and of course my request was refused. The system did have a way to do this, but the folks in charge felt that it was a waste of time and refused to let me use it. When I persisted, they accused me of being belligerent, nasty, rude, unprofessional, and not following company rules. No one wanted to talk to me and eventually no one would return my calls. Bill's boss reprimanded me after he had unsuccessfully tried to have me dismissed.

While my motives were more than admirable, my approach rubbed too many people the wrong way. I was trying to inflict my process on them instead of doing it their way. They did not see a problem to be fixed, so I came across as complaining, out of step, and out of line. No one else had questioned their procedures before, and they viewed me as criticizing them. How could there be a problem. No one else had ever complained and these systems had been around a very long time.

(Continues...)

Excerpted from SWALLOWED BY THE WHALEby Paula Rowlett Tom Rowlett Copyright © 2010 by Paula Rowlett & Tom Rowlett. Excerpted by permission of AuthorHouse. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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