Saturday, March 12, 2005

The Joy Of Executive Management -

The Devil's Pitchfork

Well, low on posts lately. The boss was in town and when he's around, we work until we drop or at least until the computer is swimming before my eyes. We are analyzing the business mix for our largest facility.

I won't tell you numbers, but just think that we do half a million (or more) of dollars in business out of this one facility every month and it is hit or miss whether they are going to even break even, much less make a profit and it's been the bane of our existance.

We did a RIF (reduction in force) a few months ago. It was the second one in a year. Unfortunately, it had to be done. You know, it's hard to do it, too. Some of the people have been there for ages and you develop a relationship with them, no matter how "business" you try to keep it. You know that their kid was married or they had a baby or their mom had bi-pass surgery. The things that come up when you are chatting waiting for a meeting to start or making a quick run to the lunch room for soda in between conference calls.

But, I have to say, converseley, as difficult as it is to do one, after you've done the first two, the next one is always easier. Not on the personnel or your thoughts about what happens to people when they leave. But, I did find that the further away you work from people, the less day to day interaction, the emotions are less involved. That's why it never fails that an executive and an HR from the corporate office are the ones that come down and to the actual release of employees, meeting with them, going over their benefits. One of the advantages of working for a corporation of some size. Not so easy when it's a mom and pop organization.

The other advantage of having someone else above or outside the immediate organization chart come in and do the RIF is that, no matter how much it's needed or how much you try to explain to folks why it's happening, when it happens, the management (even if some people in management get RIF'd, too) are looked at as "the bad guy". Having someone come in from outside, while not totally relieving the side ways looks, whispering and angst, does keep some of the dirt off and that is very important when you need to continue operating and working with the rest of the people every day. Even if they suspicion you were in on the deal (like analyzing business base and profitability), they don't know what your direct link is.

In my case, most people at the branch level tend to look at me as a "process analyzer" not in the numbers capacity. They see me as the person that tells them what report to run and what regulation to follow. I must admit I enjoy that cushion because it is awful hard to get people to open up on problems they are having and listen to ways of fixing it when they are suspicious that you are asking them for the sole purpose of determining whether their job is necessary or not. Which usually isn't the case of my asking, but it is sometimes by accident when I get into a department and I notice that three people are running the same report three times and looking at the data for the same reason, but none of them know it because they all assumed nobody was doing it. Voila! Free time for better productivity.

Of course, I could tell you some amazing stories of how many times I've brought something like this to people's attention and all three people will argue for hours about why it is important for all three of them (or, at least them as they are usually more knowledgable than the others) to do this same process on the same information.

Inefficiency, thy name is process ownership.

And people can take that ownship to extremes. I had an employee that insisted on doing a manual tracking process for something that came out on a report. I asked them, "why?" They were afraid that the system was not catching all of the things that needed to be tracked. I was sure it worked fine, but, I am aware that even the best system can have a fault in it so I agreed they should do the manual tracking for a month and verify they were getting their information and then, if it worked well, drop the manual system since it took so much productivity time. I was fully recognizing that the addition of an automated report and checking it against the manual process would be unproductive, but it was a trade off to me for a future of more productivity.

I left the facility and, three months later, I returned for their quarterly audit. I was walking through this department and caught the employee at their desk (always a good sign) with their supervisor (not always a good sign). I asked how the report had checked out. The employee told me it was great. The system really did work. She knew because she was checking it against her manual process for the last three months.

Could have knocked me over with a feather. The supervisor, too, was surprised. Particularly, when I gave her the "eye" which said, "what the hell have you been doing that you didn't know your employee has just been spending three months doing something we said to do for one month and I've been pointing out that you have overtime in this department on the P&L and you're always giving me some excuse about the latest and greatest project and the whole time your employee must be spending at least an hour a day doing this manual/auto reconciliation process?"

You know, the "eye" can say a lot in ten unblinking seconds and you don't even have to open your mouth.

Anyway, back to the latest analyzation. We've been working on a tool to do analyzation down to the customer and product level incorporating all expenditures from the P&L to get a true cost analysis. In the past it was difficult because the system we were working on did not tie directly to the general ledger meaning every expense was manually entered and, what ever was entered on the GL were whole numbers with out organizing data behind it. We would have to run separate reports from the order system and that gave organized revenue and direct cost of the product. No tools to know how much time we were spending warehousing, delivering, repairing or otherwise servicing the customer. We were using spreadsheets I had thrown together that basically made assumptions about service and facility costs.

Turns out that my assumptions were pretty close, which is good to hear when you are an "analysy" and your job hangs on "analyzing" things correctly. However, the bad thing was, since I couldn't drill down to specifics or make it match the P&L or GL dollar for dollar, everyone appreciated the analysis, but could always fall back to the "it isn't exact" excuse when they didn't want to give the ghost up on a contract.

Particularly sales reps. They get their money from commissions. Unfortunately, these commissions are quantity based and the only hold back they get are hold backs from unpaid claims (ie, lack of meeting cash goal) and this was to get them to help interfacing with our customers on issues about documentation, etc, not to prompt them to get us better business. So, these guys are getting commissioned on crappy business that we have been eating for several years, but no one had the guts to cut it off (even when the profit line was a big ass negative) because of the lack of supporting data that specifically supported any assumptions we made about the business.

Here we are, two years later. We finally have the right analysis tool. Guess what? Exactly what I've been saying for several years now, our business mix sucks in our biggest facility. Yeah, big surprise. Further, the contracts I said sucked, even for our high end products (where everyone thinks they'll make up any losses), sucked, too.

We had to give a presentation about it today. I didn't get the data until late Wednesday. The boss was in town. You know what that means. As soon as he left, I finally got time to go through the data which meant I spent 15 hours straight running numbers so I could create a 10 page power point ready to present today that said: We should cancel this contract immediately and, by the way, these 5 business lines are sucking the life out of our facility, here's the profit we could be making without them and here is the facility costs that have to go if we dump them. Slide number 7: here are the good contracts that we aren't maximizing. Slide number 8, here are the four contracts that are breaking even and need to be renegotiated or dumped. Slide 9 and 10, recommendations: If you dump this one contract and five product lines and costs of operation associated with it, we will lose over 100k in revenue a month but gain 5 percentage points in profit.

As soon as I put the slide up that said, "this contract sucks and we should dump it" the whole room was happy (everyone else knew it too). Unfortunately, when I brought up the slide that gave the costs that had to go, there was about 30 seconds of dead silence and then the branch manager started having seizures and declaring that they were understaffed already and that, if we did another RIF, the entire facility would walk out (same crap they've been saying for a year now and, surprise, surprise, they are actually able to perform and no one has went on strike). Also, she was concerned that we would cut them immediately and she wouldn't be able to handle the lingering orders that had to be filled to complete our obligations for things we had already promised.

The boss had to chill her out.

I like this branch manager, but I must say, sometimes she can be down right wound tight at the smallest things. Not that this is small, but she often jumps in before we finish a presentation with all the "dire consequences" and questions without waiting for the "possible issues and recommended solutions" phase. I only mention that because: a) I want to roll my eyes and wonder if she thinks we're a bunch of bozos without any idea how the business works and, b) it throws off the whole pace of the presentation when there are a few other things to be discussed and you are explaining complicated numbers and analysis. I hate when you have a limited time and somebody goes off on a 20 min tangent (that always gets further and further away from the original point). It's hard to get everyone's mind back on the situation and anything they thought they understood in the first 15 minutes is lost and you end up spending another 10 minutes of your (and their) precious time re-orienting them. I mean, it is hard enough to get the VP of sales, ops and a few other dignitaries in the room together long enough to make the pitch in the first place.

If you work in any business, you know that there are three competing areas of concern. I call it the devil's pitchfork:

    1) Sales People. The sales people want the business and the revenue because that's how they get paid. They aren't always so concerned about the niceties of actually keeping the business running by getting paid ourselves or the problems with promising the sun, moon and stars without first finding out if the operations side can do it. They hate to be told that what they promised was:

      a) Impossible based on existing technology. No, those nifty dematerialization transporters, warp drives and hyper space leap devices from star trek do not exist so, yes, it is physically impossible to process an order and deliver it 50 miles away in 30 minutes or less.

      b) Not operationally sound: No, we will not push Mrs. Jones oxygen delivery down the schedule for the 3rd time today so we can drop everything and deliver a pair of crutches in 30 mins or less to an outpatient clinic you've been sucking up to when the patient is not even scheduled to have surgery for another two weeks, the crutches are the only thing the've given to us in a year, it's an HMO (we lost money the minute our rep answered the phone) and the only reason they gave that referral to us is because you, the sales rep, chained yourself to the lounge furniture and refused to leave the office until they gave you SOMETHING. You and I both know that is the first and last piece of business we'll see out of there. Not to mention, after Mrs. Jones falls down gasping for air and has to press her medic alert button to be taken away to the hospital via ambulance, you will be calling because Dr. Jack Schmoe's office, whose partners see 900 patients a week, is threatening to cut of business and you are complaining about us pissing off a long time referral source. We will be happy to have the crutches shipped via UPS to the patient's home address. Also, we will not strap a 6 foot tank w/ 144 cu ft of compressed oxygen to the top of the patient's vehicle so they can go on a six day camping trip to the grand canyon with out benefit of electricity. There are laws against that, you know.

      c) Speaking of laws, some things are illegal. There is a reason that your last company was fined 9 billion dollars by the government and the CEO was sentenced to two years in the federal penitentiary. So, please excuse me if I tell you "hell no" we aren't going to do it. And, please, don't tell me about how our competitors are doing it. I don't care. Maybe your mom never asked you this, but I feel compelled to ask if you would jump off the Empire State Building just because your friends are doing it.

      d) Commissions and profitability. If you agree to sell a widget for $20 when it costs us $50 just to buy it, most of our contracted payers don't cover it so we won't even recover the $20 and then expect to get a commission from it you are...oh, I don't know...what's the words I'm looking for...a moron? What do you think is going to happen after I am forced to provide a hundred of them because you promised we'd provide it? Can you say "RIF"? That's one employee. How do you think we're going to take orders and deliver product if we have to RIF everyone? Some how, I think you'd be really pissed if that nice commission check bounced.

    2) Operations. Operations are always looking for the most efficient way to do something. They always have their processes they follow and, if you try to make them alter that in anyway, you are guaranteed at least two or three fits of the vapors (an hour). And, as much as they pride themselves on efficiency, sometimes they do things because it's how they've always done it even if it is the stupidest most time consuming thing in the book.

      a) Fiscal Responsibility. I don't know how many times I have to tell someone that making ten copies of an order for $2 worth of product and then shipping it overnight is neither efficient nor cost effective. I could have hired a courier and had it driven to the patient's home, charged nothing and saved more money. I don't care that the reason you are making 10 copies is because someone needs the information for some project they are doing, they can run a freaking report out of the system, send it to their computer and get the same information by glancing at their screen for the two seconds it takes to look at the number. Your time and the $.08/copy cost me more than if I had taken the product off the shelf and flushed it down the toilet.

      b) Efficiency. You aren't efficient if you receive an order at 9 AM and it is still not in the computer by 3pm, there is a serious problem. A caveman with a flint ax, rock hammer and an antler chisel could have made that widget and walked half way across America in the time it takes you to process an order and deliver it. Please, don't tell me the problem is the sales rep calling and asking you to drop everything to go deliver a pair of crutches on the other side of death valley. That only happens once a day and you have 6 customer service people and 8 drivers. And if that's not enough, please tell me why the dispatcher didn't just jump in the car and drive the 10 mins down the road to the doctor's office. Better yet, if you knew the doctor's office was only 10 mins down the road, why didn't you suggest the patient come to our office and pick it up instead of making them wait in the doctor's waiting room for the last 4 hours? I know, I know. That would require thinking outside of the box and, if you had to do that, your process might get messed up and we'd get to watch your head explode.

      On the other hand, that could be kind of fun to watch.

      c) More Fiscal Responsibility. Yes, it is the operations job to make sure that any order you take has all the right information and documentation attached so we can get paid. Your job does not consist solely of answering the phone and doing data entry. Let me simplify this for you: you don't get the paperwork, we can't bill. We can't bill, we can't get paid. We don't get paid, we can't pay our bills. We can't pay our bills, you don't get paid and will probably be a victim of RIF. See? RIF is not the evil fascist, captialist, coroporate, gestapo management, final solution plan to keep the little worker down or suck up all the profits to pay for that 30 room vacation home in Palm Springs. You are the reason why Betty Jane had to go on welfare and food stamps to feed her three children and pay the mortgage. And, please explain to me why you are all of a sudden worried about how much time and money it takes for you to fill out a piece of paper that costs us about $8 dollars of labor to complete and will net us a $1000 when we process the order and just last week you were telling me that the office supply expenses were so high because you just had to have that $12 Dr. Grip gel pen and $30 worth of multiple color dry erase markers you will use to spend $15 of labor to write the outgoing orders on a white board that was obsolete the minute we put a $300 printer in the warehouse so the orders can be printed right next to the dispatchers desk. Shut up, fill out the paper and send it to billing when they ask. Oh, yes, you also just cost me $10 in labor standing in your supervisor's office complaining for 40 minutes for the 30th time this month about having to do it in the first place. That's $300. How about I just dock that off your paycheck? No? Here's a Bic, medium ball, black ink. Now write.

      d) Time Management Inter-Department Relations. It's me again, the fascist capitalist corporate gestapo. It was me who asked your boss why, when I come to the branch at 7:30 AM, sitting in the front confrence room, I see people through my window jog in 10 or 15 mins after 8 AM, time in and then walk back out to the smoking area to take a 15 min break on my time or just stand around bullshitting with the the smoking people. It was also me who asked why 10 people clock in and then spend 15 minutes in the break room getting coffee and bullshitting. I ask because your manager is always telling me how busy it is, how you need more people and this is the reason I see so much over time on the P&L. Yet, there you are, getting your second cup of coffee and a stale coffee cake out of the vending machine, sitting down at the break table at 8:45 AM eating your breakfast on my time. Ten of you for 15 mins equals about $80/day, $400/week, $1200/mo and $14,400 a year. I could have promoted Juan in the mail room with a $2/hour raise and gotten more productivity cheaper than one of you. And, he would have been damned happy for the pay and the job. Please refer to (a) concerning fiscal responsibility. Yes, yes, please tell everyone what a slave driving time gestapo I am. Make sure you call up the other eight facilities across the country and casually drop it into your conversation. It just makes my life that much easier because, odds are, when I go to their department or branch, they will know that the time gestapo is coming and I won't have to mention it to their manager, saving me time and energy.

      e) Inter-Department Relations. Okay, I did tell you that your time management sucked and that I expected you to clock in and go directly to your desk to work. However, that didn't mean there is an invisible force field around your cubicle that keeps you from moving three feet or further from your desk and prevents you from calling or going to another department to sort out a problem or drop off the paperwork they've been asking after for the last two weeks. If your department clerk (who is a freaking luxury no one else in the company has) is on maternity leave, you will (gasp) have to get out of your chair and walk the five feet back to the "out" box and drop off your own paperwork at the end of the day. Try it, it won't kill you. Might even be good for your cardiovascular health after that third bag of "butter lover's popcorn" you just gulped down today. If the $300 printer in dispatch goes down, it doesn't mean we can't do anymore orders today, either. See that box shaped thing next to your desk with paper in it? It's a printer. Everybody has one. Amazingly, you can print orders there, take them off, walk the 12 feet back to the dispatchers' window and give them the order. I know, I know. That isn't how it's usually done. It requires you to think outside the box. Your head might explode.

That's sounding more and more interesting as I write this.

    3) Billing and Reimbursement. These folks make our world go round. Without them, we don't get paid, we don't stay in business. They know it, too and it is their favorite lever to scare the hell out of sales reps and operations people and make them do something that is, shall we say, above and beyond the call of duty?

      a) Fiscal Responsibiliy. Yes, billing and reimbursement collects the money, but you are crazy sometimes. Seriously, if you think I am going to tell the operations folks that they have to get a 15 page history and physical so we can bill a $24 pair of crutches, you are out of your mind. We already lost money the minute the rep answered the phone, much less delivered a product, processed the paperwork and sent it to you to drop a claim. We are now $60 in the hole and counting. Worse yet, you don't even know if you actually need the 15 page history and physical, you just remember that one time that you billed for crutches and this one obscure contract insisted that you do it even though the rest of the world just wants the paper claim and a copy of the physicians pad prescription that says: Joe Schmoe 1 pr crutches March 11, 2005. I don't know why, though, when I have 9 million things I need to remember and you do one job and handle three contracts only, it is only me that remembers the 15 page history and physical was for a $300 pr of titanium, rust resistent, heavy duty crutches for a patient that weighed 900 lbs and broke his leg getting out of bed for the first time in 10 years, stepping on a plate full of chicken bones that had been left from his snack three days before. We both know that they only wanted the paperwork so the claims processor could make a copy of it and pass it around their office for everyone to read in the insurance world's version of "Ripley's believe it or not". We are not spending another $15 in labor to get something that you "think" you need. It's not happening. Now stop holding on to the bill and send it out the door. I need that $24 to pay for the toner in the copy machine that you use to copy 15 copies of the claim to keep at your desk just in case you "might" need to resubmit the claim and it is just so much faster to pilfer through your alphabetic organizer for 5 minutes looking through wasted copies of claims that have already been paid instead of taking 10 seconds to pull up the account on the system, locate the invoice in question and pushing that little "reprint" button.

      Yeah, you. I'm telling you that you are as bad as the operations people thinking you are efficient at collecting the company's money while you are sucking the life out of the "general expenses" line of the P&L. By the way, at $.08/copy, that's $80 worth of claims times 30 billers and collectors equals about $2400 worth of paper, toner and leasing fees on the copier (which we pay per copy). And yet, there you were in the lunch room the other day complaining about how cheap the company was for not paying for the Party this year.

      Gee, you wonder?

      b) Time Management and Days Sales Outstanding. Last week when we were on the Accounts Receivable call, your excuse for not making goal was because the facilities were not sending you the documentation you need or in a timely fashion. Yet, there you are holding on to ten $250 claims for two days because you sent a request to the filing department to pull the file and get a copy of the doctor's order for you. There is one file clerk and 30 of you making over one hundred requests a day not to mention the the 150 pieces of documentation that arrives from the facilities every day that has to be filed, too. Please, get off your rump, walk the 15 steps to the file department and get the copy yourself. I know it's not "your job" and we pay you ump-teen dollars an hour for your expertise but that $2500 sitting on your desk just might be your take home pay and benefits this month. You might make an effort to get it. By the way, if you haven't figured it out, you're a hypocrit. Further, in the time that it took you to write that freaking email to the documentation manager about why it takes them so long to get you what you want, you could have gotten it yourself. Now you just wasted her time and yours. See (a) if you have any questions.

      c) Inter Department Relations. First, read (a) and (b). Second, you are the people that work with the contracts for claims processing the most and you are the first to find out if the documentation being provided is not sufficient or complete. Yes, we are all sitting at computers connected via the network, but I'm not sure why you think your new found knowledge is going to be conducted through ESP and osmosis to the operations people. You actually have to write an email that says there are new rules they need to follow and you have to put all of the managers' names on the email. Sending one email to the customer service and documentation manager in San Diego concerning the need for this document for one patient, one time, is not going to trip some extra-sensory flag in all the managers' minds through out the division that everyone needs to do it for all the patients. Third, that nifty hands-free head set you are wearing with the micro fiber microphone by your mouth is very good at picking up the darndest sounds. You might want to make sure that you hit the release button on the phone at least 10 seconds before you utter the words "moron", "stupid", "idiot" or "asshole" when speaking to another department, one of our contracts or a customer. If you don't, I really don't think you are going to get the cooperation you are looking for in the future.

Now, back to the discussion of RIF. We were speaking to the manager that was having a fit about the potential RIF of employees while we were simultaneously dumping $100k worth of shitty business that had us $50k in the hole every month. Basically, she wanted us to dump the contract, but not RIF any of her people. She wanted us to "wait" and see what happened. Duh! What will happen is that next month, instead of being $50k in the hole, they will not be $150k in the hole. It's simple math really: ($50k) - $100k = -$150k.

I can see this going over so well at the executive board meeting next week.

Mr. CEO, we've found our problem. We have a shitty contract that has a profitability line of -$50k. We suggest dumping the contract. Pardon? What's that? Oh, the $150k in expenses that goes with it? Well, we figured we wouldn't do anything since the branch manager thinks it will just work itself out eventually. Hey! Why is the CFO laughing like that? What's that? Do we have another contract or two in the pipeline that will offset the expenses? No, sir, Mr. CEO. We're just doing our part to keep the unemployment office empty and the welfare lines low. You know, we might need those five employees to sweep up the parking lot or something. WE figure we've been sucking at the corporate teet for so long ya'll wouldn't mind if we did it for a little longer.

Excuse me? I'm fired?! What the hell? That branch manager told me it would be fine. OOOOhhhh...I get it. I'm supposed to tell the branch manager what to do and not the other way around. Gee...I wish somebody had told me that sooner.

Before I go, I just have one much does it cost to get that Donald Trump comb over hair cut everyone seems to be wearing these days?

Okay, you get the picture. Sorry, Ms. Branch Manager, but I like my job, the paycheck, making my mortgage, car and credit card payments every month and I want to make sure that your 65 other employees and you have a job next week and the week after. So five people are going to be getting a nice severence package some time next month.

There you go. My week in one post dealing with the three prongs of the devil's business management pitchfork.

Aren't you glad you stopped by and read all about the joys of executive management?

1 comment:

Jason Rubenstein said...

Whew.. no thanks.

On the other hand, I'm in a position where the managers make decisions and place the enforcement of process and sanctions onto me & my peers but don't have our backs when the rest of the staff laughs at us & tells us to, essentially, f- off. Frustrating to say the least, and when every quarter's numbers look progressively worse they winder why nothing is getting done nor improving.

It's as if you were told to get some plant's numbers into the black and have your instructions superceded by your mollycoddling supervisor who tells everyone just to ignore you, it'll all be just fine at 50k in the red.

Bah. I have a guy with access to production who logs in, makes changes to programs, compiles them and goes home, only to find his modifications hard-halt from bugs he carelessly inserted and slipped through because system and regression testing is "beneath him". Yes, he still has a job and he still has access to production systems. I gave up months ago...