Friday, April 23, 2010

Day 98 - The Fractious Path of Righteousness

          My wife and I took a van load of stuff over to our son’s place today. He’s got a shed where we can store some of our outdoor stuff like the pool toys, the barbecue grill, garden tools and so forth. Also we have never seen his place, something we really need to do in order to get an idea how much space we have to work with. It turned out to be a lot less than we had imagined, and a lot more rustic. We can make it work if we have to, but it’s going to be really uncomfortable. I can’t tell you how much I hate being in this situation.
Naturally there ended up being a problem with the cracker brothers as our hose and fitting supplier, although in the final analysis it had more to do with us than it had to do with them—even though Ringcomme and Bloome went out of their way to make it the brothers’ fault. The whole incident to me was a case study in just how screwed up a business relationship can get when stubborn and egotistical managers insist on doing it by the book.
I had hired a new cost accounting manager. Let’s call him Eddie Sharpe. He came with good experience and good credentials. He was high energy and very knowledgeable in cost accounting issues. He was also ambitious. He got a handle on the cost accounting routines early on, and started looking for other things in which to get involved.
I was feeling overwhelmed by the strategic sourcing project so I let him take over the accounts payable department. It was supposed to be a temporary assignment. The plan was that the cost accounting responsibilities would expand as volume grew, and at some point we would be adding an accounts payable manager position. Letting Eddie run the payables section was an interim solution, but once he got the bit in his teeth there was no stopping him.
In a very short time Eddie became almost universally reviled. All the women in finance hated him, especially the payables clerks he was now managing. Most of the men hated him as well. Everyone thought he was arrogant, abrasive, and difficult. That much was probably true, but Eddie’s genius for accounting process issues was hard to overlook. As a cost accountant he had a genuine flair for tracing and isolating the pesky and sometimes devious drivers of specific costs. As an accounts payable manager he understood the intricacies of information flow. As a manager he had no finesse whatsoever. His principal people-handling skills were the peremptory demand, followed quickly by sarcasm and derision. He was a fantastic accountant with the people skills of Freddy Krueger.
Now enter the hose and fitting brothers. I had just negotiated our new agreement with them and we had signed a memorandum of understanding. Among the things they had agreed to was a 5 percent discount on any invoice we paid within 30 days, provided we paid all their invoices within 45 days. These were fantastic terms for us. Having 45 days to pay was nice. Getting a 5 percent discount for early payment was huge. We were all as happy as we could be.
Then Eddie started reviewing their invoices and decided that they didn’t meet our standards. He didn’t say anything to me about it. He just held payment. When we went beyond our 45 day payment terms, the brothers called up to find out what the hell was going on. I had given them my personal word that we could make those terms work. I hadn’t considered Eddie’s imperiousness.
Eddie was right, of course. The invoices were a mess, and that was a problem that needed to be addressed. The problem is that the brothers would have been happy to address it if we had approached them like the partners we purported to be in the negotiations rather than talking down to them and giving them ultimatums.
I figure a guy who pulls a knife on you, even in jest, is probably not a guy who is going to respond well to an ultimatum. What Eddie told them, in so many words, was that he wasn’t going to pay them at all until they got their invoicing act together. They reacted like any red-blooded American knife-wielding, 4x4 driving, bass boat towing, cracker-ass cowboys would do. They stopped shipping us product. They shut our production lines down—all of them—in the space of 8 hours. This is the point where I got a call from Ringcomme wanting to know what the hell was going on.
That phone call from Ringcomme was the first I knew that we even had a problem. You would think that, somewhere along the road to shutting down our production lines, somewhere in the midst of escalating tensions and deteriorating relations, someone would have had the good sense to tell me what was going on. You would think that, but you would be mistaken. All along this road to ruin Eddie was convinced that he had things firmly under control, and that before it was over he would have taught the red-neck hose and fitting brothers a valuable lesson in how to conduct business with a real company. All along that same road the red-neck brothers knew that they had Eddie, and Albatross, firmly by the short hairs, and if we weren’t going to honor our word, they were going to give those short hairs a good yank to teach us some manners.
Because our lines were shut down for a time, this became a much bigger deal than it had to be. It ended up requiring the attention of executive management. The problem and the fix were removed from my control. Apparently, even though I had got favorable terms from them and still enjoyed a good rapport with the cowboys, no one thought I was capable of getting them back under control. A way out was negotiated by the guy who eventually fired me from Albatross in the last desperate reorganization in bankruptcy. He had to give up the discount and promise payment in thirty days. We had to fix their invoices for them. In other words, he got significantly worse terms than I had in the original negotiation, a nice ironic twist to the whole sordid affair.
I would like to say that I learned from this that sometimes it is best to swallow one’s pride and even to ignore what you know to be the best textbook procedure in a given situation, and look at the common ground between fractious parties to find a way forward. I can’t say that because I didn’t learn that at all. I didn’t learn it for the simple reason that I already knew it. Anyone with the slightest little bit of sense at all would have known to look for ways to help the red-neck brothers fix their invoicing. They would have been happy to do it. We would have been happy to pay our invoices early to get the lovely discount they were offering.
We all wanted the same thing, but sometimes the righteous among us would rather be correct than actually fix a problem. They’d rather have the right answer than the right result. I know religious zealots who act the same way. They’d rather be theologically correct than to reach out gently to lead another soul to salvation. Being correct is a necessary and laudable thing, but it should not get in the way of the goals of the enterprise. What I learned from this little story is that, more often than not, these righteous bastards are the guys in charge, and they just ruin everything for the rest of us.

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