SYNERGISTIC MANAGEMENT CONTROL SYSTEMS

By Ron Travis Sr.

AuthorHouse

Copyright © 2010 Ron Travis Sr.
All right reserved.
ISBN: 978-1-4520-0922-3

Contents

ABOUT THE AUTHOR..................................................................................vPreface...........................................................................................xi1. MANAGEMENT TRAINING............................................................................12. MANAGEMENT CONTROL SYSTEMS.....................................................................373. PROBLEM SOLVING - DYNAMIC DECISIONS - GOALS ACHIEVED...........................................634. CORPORATE PHILOSOPHY - OVERALL GOALS - ACQUISITIONS............................................815. ECONOMY........................................................................................1016. NATIONAL DEBT..................................................................................1217. FINANCIAL STATEMENTS - GENERAL LEDGER - FILING SYSTEM..........................................1318. ANNUAL BUDGET - LONG-RANGE PLAN................................................................1499. FEEDBACK SYSTEMS - RECONCILIATIONS - VARIANCE ANALYSIS - DUE DATES.............................15910. INTERNAL AUDITS - OPERATIONAL AUDITS - COMPUTERS - TAXES - EXTERNAL AUDIT.....................17711. CASH - SECURITIES - INVESTMENTS...............................................................20512. RECEIVABLES - CREDIT MANAGEMENT...............................................................21913. INVENTORY.....................................................................................25114. OTHER ASSETS - OTHER LIABILITIES..............................................................27115. FIXED ASSETS - DEPRECIATION - MAINTENANCE - PROPERTY TAXES....................................28316. ACCOUNTS PAYABLE - DEBT - EQUITY..............................................................29117. SALES.........................................................................................30918. COST OF SALES.................................................................................33719. PERSONNEL - PENSIONS - PAYROLL................................................................36520. SAFETY - ENVIRONMENTAL - INSURANCE............................................................37921. TRANSPORATION - WAREHOUSING - SHIPPING........................................................43522. ADMINISTRATIVE & SELLING EXPENSES.............................................................453Epilogue..........................................................................................457

Chapter One

MANAGEMENT TRAINING

"Practice lifelong learning in every area of your life, and especially in the area you plan to pursue as your career"

"The participative style of management, with positive reinforcement, is always better than the authoritative style, with constant reprimands"

No management control system will work unless the division managers, departmental supervisors, and cost center lead men and women buy into the system. That is where dynamic management skills come into play, as you learn, and then teach and motivate the supervisors in periodic meetings and seminars.

PRINCIPLES FOR INDIVIDUAL BUSINESS SUCCESS

I have witnessed companies that violate the management principles discussed in this book, and still appear to be successful. I have now lived long enough to see these same companies suffer, because they ignored basic principles used by companies with a long history of consistent performance.

We tend to view current material success, or position in life, as equivalent to wisdom and expert knowledge. The problem with that premise is that fame is fleeting, and much damage and influence can be done by people that company owners, or the media, are holding out as the latest and greatest. I have endeavored to follow the principles in this book during my career. They have also been taught to many other people who have enjoyed successful business careers, and worthwhile personal lives. I commend them to you for your consideration starting with principles for your personal success:

Strive for excellence in everything you do.

Ignore negative critics, unless you know they love you, and that they provide 5 times more positive reinforcement than they do constructive criticism.

Stand up with confidence for what you believe in, even if you are all alone on an issue. Expect only about five percent of other people to support your position.

Set long-term goals in every area, for nine to fifteen years out.

Set medium-term goals, in three-year increments, that lead to your long-term goals.

Set short-term goals for one to three years out.

Prepare financial budgets in detail for one year, in monthly increments. Also project highlights of the financial budget for longer periods.

Develop plans and timetables for project implementation and periodic report preparation.

Develop a financial and management system for controlling: sales - material cost - manufacturing costs - labor costs - warehouse and shipping costs - transportation costs - and overhead.

Provide for management feedback that is consistent between departments, to compare actual performance to the plan.

Be firm, but fair, in demanding compliance with procedures and performance goals.

Make corrective action and adjustments as soon as possible, and objectively, based on an honest analysis of feedback.

Surround yourself with positive and capable people with integrity. Avoid negative people because they will only drag you down.

Never compromise doing a job right just to save money, or meet a deadline. In the long-run, people will only remember the quality of the job. Shortcuts will come back to bite you; especially in the areas of quality, environmental, or safety.

Enjoy the process, as you move toward your goals. Keep the overall goals in mind. Then, with the knowledge that you are on the right path, concentrate on the job at hand.

Learn from failures and setbacks; make corrections and adjustments to your plans, and then move on. Don't waste time whining or making excuses.

Do more than just what is required, to leave you with a margin of safety.

Do all you can to prepare to compete, and then play hard and fair. Hard work is the only way to obtain, and sustain, confidence and excellence.

Using golf analogies: understand your overall swing, or goals - study the cause and effect - and visualize the ball flight and roll after it lands. This will give you the big picture while you work on the fundamentals and individual pieces. Be patient with your own personal progress, and keep practicing. Your repeatable swing, and management abilities, will improve with common sense and intuition. Maintain your confidence, and a positive mental attitude under pressure. Keep your eye on the ball, and have a standard pre-shot routine with an emphasis on fundamental principles.

Celebrate and remember your successes, with pictures and other aids to visualization. This will keep your goals and past successes before you, and build confidence, fire, momentum, and passion.

Never consider defeat as an option. Never give up, and persevere with your best effort.

Work hard, especially on your weaknesses, as well as your strengths. Know your limitations.

Maintain a positive mental attitude, and your sense of humor, in the middle of unfavorable circumstances.

Control your temper and arrogance, no matter how bad someone makes a mistake. Be firm but fair, flexible, reasonable, and understanding.

Great leaders are also good team players and know how to follow when someone else is leading.

Team or company goals are more important than personal glory, or jealousy.

Great leaders genuinely care about their employees.

Maintain your humility as to your natural talents and ability.

Be thankful and appreciative for any worldly fame or fortune. Avoid being conceited or pumped up with false pride.

Plan and work hard as if you will live forever, but also live each day as if you will die tomorrow.

Purge all nonessentials from your life, and business, so that you will have more time for planning, reflection, and friendships. Maintain your momentum by avoiding sidelines, or exerting energy on things outside the paths in your goals program.

Care for your employees and others. Get to know their hopes, fears, and concerns. Develop mentoring relationships with them.

Build your own support group with other leaders.

Maintain good self discipline and physical conditioning; watch your diet and overall health.

Learn to play golf and tennis; both are games of passion, enthusiasm, patience, and discipline.

I encourage my participants in seminars to always think like they are the CEO, and then support their boss the way they would want to be supported. When you are trying to sell your position, always consider where the other person is coming from.

Don't dwell on protecting your personal status, title, pay, or job security. They will take care of themselves if you do your job well. Of course, you sometimes have decisions made by people in authority over you that go against common sense and logic. Those are the times that you have to call on all of your inner strengths, and perhaps move on to the next great adventure in your life. Just never run from a dead-end job, without another job in place that you are running to.

Practice positive worry and ask yourself what can go wrong.

Use advisors that you trust, but make your own financial decisions.

Try to create win-win situations when resolving conflicts with other managers, and outside entities.

Be stubborn and tenacious as you move toward your objectives, but with patience and common sense.

Don't hold grudges, and seek revenge, if others hurt you; but it is acceptable to be indifferent.

When you need information, go to experts. They will cost you less in the long run.

Learn to make decisions without 100% assurance of the outcome. Get started and adjust as you proceed. Don't let the fear of failure make you a perfectionist, and stymie decisions.

Look for things that really need to be done, and see that someone is addressing them. Work on the important things, as well as trivial matters. Don't just dwell on what will be popular.

Plan some private time to think, plan, reenergize, and do detail analysis.

Know your strengths and weaknesses. Supplement them by involving others in each task with different skill sets. Continue to practice lifelong learning yourself.

HONESTY AND INTEGRITY

People who have a reputation for honesty and integrity are rare in this age of skepticism we are living in. We just can't depend on any segment to be completely honest. That is why I try to convince all of my students to seek just such a reputation. It is worth the price to make this a top priority, as it has been for me, and reoccurs as an ongoing theme in this book:

Maintain your personal and corporate honesty, integrity, and trust. Above all, avoid the temptation to fudge the numbers to make your forecasts, in order to please your superiors. Do not participate in, or tolerate, wrong doing, above or below you.

Integrity, honesty, and character are revealed by how people handle power. Are they authoritarian or dictatorial, or are they participative with a concern for their employees?

Just say "no" and walk away from bad deals and partnerships.

Limit your personal and private conversations with the opposite sex, outside of your marriage; or other exposures to temptations such as gambling, alcohol, drugs, smoking, overeating, etc. Just "run from temptation".

Periodically, we all need to review the failings of public figures in order to learn defensive principles and put safeguards into our lives:

Richard Nixon had to resign from office. John Kennedy and Bill Clinton tainted their presidency with sexual exploitations. Ted Kennedy always had a shadow over his reputation because of the Chappaquiddick incident. Search yourself to discover your weak areas and put in safeguards and accountability partners

Jim Baker, Jimmy Swaggart, many Catholic Priests, and other pastors have damaged the reputation and trust in the clergy. We have placed these men on pedestals in the past. The lust for power and sexual temptations led many of them to disgrace their vows. If only they had put in a hedge of protection, avoidance, and accountability around the area they were weak in.

I have worked with Baptist churches in the financial, accounting, budgeting, and long-range planning areas throughout my adult life. We have many outstanding pastors, as does the Catholic Church, and other denominations. Unfortunately, some of the pastors of the very large churches become overcome with the temptation associated with the power and influence of the pulpit and their personal position. They are corrupted by pride, greed, and a desire for fame. They take over their churches as C.E.O. versus being Godly servant pastors and leaders. Many of these men manipulate, twist, or flat-out ignore their church constitution and bylaws, as they take control. They stack the deacon and other committees with young and gullible men and women who are lacking in leadership skills, wisdom, and maturity. Each denomination should periodically publicize their tenants and doctrine, including the denomination's distinctive church polity. For example the Baptist distinctive for church polity is that the church body of individual believers is the final authority; the deacons serve the members, and committees work in the financial, personnel, and other areas of the church. The committees provide reports and accountability to the membership at large in regular scheduled business meetings. The Senior Pastor is a servant leader with the influence of the pulpit, but with no power to make major decisions as a C.E.O.

Many large corporate heads are being exposed for illegal acts and selfish short-range manipulation of earnings to enhance their personal salary and benefits including: Tyco - Enron - HealthSouth - and many of the Banks and other Financial Institutions.

Many of our political leaders are being currently exposed as corrupt and self-centered.

Maintain a support group of positive friends you enjoy being with to encourage and inspire you 80% of the time; and hold you accountable with constructive criticism 20% of the time. An honest reputation with integrity is hard to come by and easy to lose. The prize is worth the effort, and is the only source of true happiness. Prepare the best you can for every project; do your best, then relax and enjoy the process.

PRINCIPLE OF BUY-IN

I believe that participative management is always better than authoritative management. Authoritative forms of leadership are closer to dictatorships that never work in the long term. People become defensive and are not open to tell management about bad ideas for fear of being reproached. I recommend the following guidelines in resolving problems and setting goals:

Show appreciation, and praise others, five times more than you criticize. If you can't find positive items to praise them for, the person probably needs to be replaced.

People accept decisions much better if they participate in them. Therefore encourage ideas from the ranks, and be sure to respond honestly to them.

Praise people in public, and criticize them in private, to avoid embarrassing them. Embarrassed people will turn on you.

Let other people protect their turf when possible. Concentrate on the problem at hand, without pointing accusing fingers at specific people or departments.

Remember never to offend senior managers, or for that matter anyone, in front of their peers, subordinates, or superiors. Let the senior managers take credit for the good things that happen during a project, but make sure you raise your own flag as well.

Weigh information coming up the chain of command carefully, because information is filtered as it moves through each level.

Expect about ninety-five percent of those you manage to be happy with mediocrity. Peer pressure between them will sometimes keep the stars from rising. Your job is to enable the five percent who are enthusiastic and buy into success. The rest will just have to be managed.

People don't always listen, or hear what you mean to tell them; therefore, provide for spaced repetition to facilitate learning when training employees:

1. They should be told how to do their job.

2. They should be shown with a demonstration.

3. They should then be allowed to try themselves.

4. They should be corrected for mistakes.

5. And then, start the process over until they learn.

6. Establish feedback to reinforce the learning process.

Retrain, demote, and even terminate someone's employment if appropriate; but in all cases be fair, and try to do what is best for all concerned.

Be loyal to your employer and your people. Demand loyalty and respect from your subordinates, and replace those who are not loyal to you or the company.

Set standards of excellence, and hold others responsible to perform at their highest capabilities.

Provide freedom to work, with as much delegation of duties to others as possible.

Manage by objective, and exception, to avoid playing favorites with your direct reports, who normally become your close friends.

Be firm but fair, and bluntly candid, in your communications of expectations and shortcomings with your direct reports. You owe them your honest thinking about their performance. Encourage productive conflict and honest discussions.

Admit your own mistakes. You will not always be right. Cut your losses and move on.

Communicate your goals and strategies to everyone involved, so that they can see the whole picture and overall mission.

(Continues...)

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