Day 262 – Big Chance

          I scored another interview last week. This one had me excited for several days. It started with an e-mail from a fellow I used to work with at Albatross. He was something of a wit, but he was also knowledgeable, engaging, and extremely competent. We were both division controllers when we worked together. When he left to take another job at a home appliance manufacturer, all his work got assigned to me. This was in addition to my own work. I didn’t get any more money. By that time I was already used to that kind of treatment.

This fellow—we’ll call him Ted—once showed me a graphical report that he used when he had worked previously at BMW. It tracked production starts and deliveries against incoming orders and against budget. It was part of a group of indicators referred to as a dashboard, and its purpose was to alert management to trends that were likely to result in too much or too little inventory. The report was divided into bright red and green areas separated by a bright yellow warning track. When the trend lines were in the green, things were good. When the lines went into the yellow warning track, it was time for management to wake up and do something. When the lines went into the red area, someone was going to lose their job. Things were never ever supposed to get in the red.

Ted felt we should adapt this report to our own needs an Albatross. I agreed. I duplicated his formulas and entered some trial data from my own division. Where Ted had used bright primary colors, I elected to use pastels. For one thing I thought the pastels would use less ink, thereby saving the company a few cents a page. I also hated the glaring colors. I preferred the more restful shades of rose, canary, and sage. I showed a sample to Ted. He was not impressed.

He said, “The formulas are fine, but I prefer the heterosexual palette.”

At the time I thought this was the single funniest thing I had ever heard at work. It probably wasn’t, but I was under a lot of stress already and my emotional responses tended to be a little exaggerated. Still it was a pretty clever thing to say, and my estimation of Ted’s value as a human being surged upwards by a considerable amount as a result. When he left I was sorry to see him go…and not just because I had to do his job for free.

According to his e-mail Ted had just taken a job with Volkswagen of America at a new assembly plant they are building in Chattanooga. He thought they might have a place for me as well. I sent my résumé.

          A few days later I got a call from HR with some preliminary questions about my experience and credentials. They told me a little about the job they thought I might fit. It was a capital assets analyst position—something I have never done, but also something I thought I could easily assimilate. I told them I was interested even though it would mean taking a lower annual salary and having to relocate. It’s a buyer’s market for labor. I judged that the potential for improving my situation at VW far outweighed the initial negatives.

          HR called back next day to schedule a video conference interview. I had to drive up to Vero Beach to a video center and talk to three people from management over a video connection. The three managers turned out to be the young woman I had already talked to from HR, Ted, and the accounting manager. I figured I had a pretty good chance of coming off well.

          I like video conferencing. As a rule you get two screens to look at. One displays the people at the other end of the line. The other displays your own image. It’s like you get to constantly check yourself in the mirror while you talk without it being immediately obvious to the people you are talking to what you are doing. This is great interview feedback. If you lose your poker face or nervously play with your earlobe or dart your eyes around the room like you are being probed by alien life forms, you will know right away that you need to adjust your on camera mannerisms before it is too late. I wish all my interviews were on video conference.

          I suppose that for some people there is a danger that they will be so distracted by their own image that they will be unable to focus on the job at hand. These are the people who are too attractive—or think they are—for their own good. If they also happen to be enthralled with the sound of their own voice, they will be doubly handicapped. Fortunately I am not one of these. I know such people exist though. I have met some, and you probably have too. You can read about some others here, and here.

There is a FaceBook group called Sexy Accountants. I used to belong. I joined because I thought I could get the sexy accountants to read this blog. I was especially interested in getting them to read the entry titled Budget Burlesque. It didn’t work. Apparently accountants who think they are sexy are too self-absorbed to read about other would-be sexy accountants. If you go to this group’s page and review the list of members you will immediately notice that the sexy accountants mostly are not. There is maybe one notable exception. I’ll leave it to you to decide who that is.

          Now as it turned out, the video interview with Volkswagen that I thought would be a cake walk was instead fairly arduous. They asked hard questions that forced me to get creative in responding about my abilities and shortcomings. The accounting manager was especially pointed in some of his questions. I guess he was making up for what he assumed would be ‘softball’ questions from my friend, Ted. He wanted to know a lot about my management style, which I found odd as the job was not a management position.

He also asked a lot of typical questions from the HR interview handbook—questions like what are your three best and your three worst qualities in terms of performing this job, and give specific examples of each from your work experience. I know how to answer that question, but that doesn’t make it easy. It’s one of those questions where you are expected to seem like you are considering it on the fly and thinking on your feet, but where you have actually rehearsed the answer so that it conveys a precise message while sounding spontaneous. It is bullshit. There is nothing that answering this question skillfully can convey to the interviewer except that you are a good liar. Of course a good liar may be precisely what they are looking for.

I like to turn questions like this upside down and then talk my way out of the shambles I create. For instance, I like to say that my best quality is that I am lazy. Saying that never fails to get the interviewer’s attention. They can’t believe anyone would say that in an interview. They always need to hear more, and they never fail to pay close attention to the explanation.

I tell them that I don’t necessarily mind hard work, but I hate having to do anything twice. I hate wasting my time, so it is important for me to do everything correctly the first time. When you get it right the first time, you don’t have to do it again. It’s a simple and rewarding concept. To execute it you go just a little slower than everyone seems to think that you ought. You spend a little time thinking about what you have to do and how you are going to do it before you start. This kind of thing seems to satisfy an interviewer because, I suspect, they don’t know how to think the process through to its logical conclusion.

In practice, if someone sees you sitting at your desk thinking, they are apt to surmise that you are thinking about what you are going to have for lunch or about the colors and textures of the receptionist’s lingerie. They are apt to think that you ought to be working as hard as the grunts across the hall frantically spinning their wheels off in the wrong direction.

The result is that your work outcomes will shine but your performance reviews will be bad. I try to forestall bad performance reviews by keeping my door closed. That way I get excellent performance reviews right up until the moment that I get fired. My managers like my results, but they can’t stand that they don’t have any idea what’s on my mind. It makes them nervous.

The Volkswagen accounting manager wanted to talk about my familiarity with Microsoft Excel. I told him I was an early adopter—that I had been using Excel since the early eighties. I told him that I had taught Excel as an adjunct instructor in a state university in Arkansas. I told him I was a power user. He commented that I must then know about the several glitches in the Excel code that produce erroneous results. I did not. He insisted that I must, else I wouldn’t in fact be a power user. I apologized for not knowing what he was talking about. I told him that I had used Excel extensively on a daily basis for decades and had never run into a problem. I couldn’t say there were no problems, only that I had never experienced them. He nodded in a dismissive way, and that was pretty much the end of the interview. He said they would contact me within a week or so.

I thought I had really blown the interview at that point. I figured the guy had taken my different experience with Excel as evidence that I was full of crap, and that my chances were blown out of the water. I left the video center and drove home, dejected. I was even a little pissed at Bill Gates, and not for the first time in my life.

Before I got all the way home—the trip is about an hour—the HR lady called to invite me to Chatanooga for a face-to-face meeting with some board members that were coming in from Germany. She said they would make all the arrangements and e-mail me the details. I honestly didn’t know what to think about that past that I must have fallen down a rabbit hole or slipped into a rip in the fabric of space and time. It was not a comfortable feeling. 

Day 53 - Job Search Reflections: The Heart of the Deal

          The job boards were discouraging this morning. There were only five jobs even remotely applicable on Indeed. None of them were a good fit for me, nor I for them. I fear that my profession has passed me by. While I’ve been toiling away trying to make the companies I’ve worked for succeed, I’ve not paid enough attention to bolstering my own credentials and skills. Now that the job market favors employers, and so many desperate souls are searching for meaningful work, the experience I bring to the table seems woefully underwhelming.

In addition the economy is seriously skittish. The news seems a little bleaker each evening. Now that the housing bust has exposed the cancer at the heart of our financial systems, hundreds of billions of dollars of debt on the brink of default, we seem to be spiraling into some final cataclysmic adjustment. We’ll have to wait to see just how bad it really is.

My wife is tired of listening to it. She doesn’t care much for the news anyway, so I generally let her have the remote. I tell all our friends, anyone who will listen really, that I am not authorized to operate the remote controls or the thermostat in our house. My wife doesn’t think this is very funny, but that doesn’t mean there’s not a grain of truth in it.

          I’m not used to having to look for work. I was at the same CPA firm for thirteen years after I graduated college. Then I owned my own business for a year. Then I went to work for Henry who had been one of my clients at the CPA firm. There was no job search, no resume, and no interview. I knew Henry and he knew me. I went by to see him. He told me he was looking for someone to get his bookkeeper caught up. I told him I could help him out. I started the next day. It didn’t take me long to realize Henry’s problems were way deeper than he imagined. We came to terms, and I stayed with him for 8 years. When we sold the company I stayed with the company that bought us out for another 2 years. Then I got recruited to an Alabama company. I was there for 6 years. That is 30 years of work without ever having to go beat the street for a job. I ought to be able to retire, but I can’t. I’ve had thirty years of managing other people’s money like it was my own while I managed my own money like I was the federal government.

*****

          I thought I had everything figured out when Henry sold his business to a company that traded on the NASDAQ exchange. I thought all my little personal financial transgressions would be fixed by a momentous bit of serendipity. The buyer came to us. One of their customers had recommended that they give us a look because the customer thought we knew what we were doing. We didn’t know what we were doing, but I guess it looked as though we did to someone.

Our sales were flat. We were having quality issues with a new design, and rework and warranty claims were costing us a fortune. Henry had already tried to shop the company around, but he had tried to do it without disclosing what kind of financial shape we were in. He was shopping us to another publicly traded group that was also one of our direct competitors. When I pointed out to him that, even if he did manage to generate some interest, they were going to expect to see his financials and to be able to come in and do due diligence on our books and records before they would settle any largess on him.

Henry knew that there would be two things that would happen if a competitor started nosing around our books. One, they would lose interest in buying us, and, two, before they had got very far they would know enough about our business to make it difficult for us to sell any more competing product. Sure they would sign a letter of intent with a non-disclosure clause, but that wouldn’t stop them from dropping a hint here or making a disparaging comment there when the heat was on in a potential sales deal. Henry would do it, and so would just about everyone else in our business. Henry backed off.

          Then one day comes this new company—also a competitor in one of it’s divisions—and its CEO. Let’s call him Ivan. They were a trucking company. They had already bought one boat company in Florida and wanted to diversify their product line. They thought we had a line that complemented their own products and would allow them to compete over a broader range of price points. They thought we were a good manageable size and that we had good potential for growth. Henry told them that he wanted $6 million for the company. They said they were interested at that price. They did their own due diligence. A lot of firms use consultants to do their due diligence, but consultants cost a lot of money and they sometimes tell you things you don’t want to hear. I believe that Ivan had already made up his mind that he was going to buy us and that he didn’t want any $1,200 dollar suits charging him a couple of hundred thousand dollars to tell him it was a bad idea. Ivan and Henry were cut from the same cloth.

          Henry was very excited. He thought he was going to cash out, have himself some real net worth for a change, and be able to pursue some other investment interests. He came to my office bubbling over with goodwill. The VP, Mike, was there. Henry sat down and started rhapsodizing about how he figured he’d finally made something out of all his scrabbling and worrying. He felt like Mike and I had been a big part of his success and he promised to give us a little something for our trouble when he finally had his money. “I’ll make it worth your while, if you know what I mean,” he said.

          Mike and I looked at one another. We knew exactly what he meant. He meant he needed us to help him do the deal and if he succeeded Mike and I were going to get the ‘bidness’. We’d both been there before. I decided I didn’t want to go there again. If Ivan was going to give Henry $6 million for a business upon which Henry had committed ‘bidness’, Mike and I deserved a fair share of the meringue without having to depend on Henry’s ethical sensibilities.

          I made a modest and logical proposal to Henry. I gave him the following facts:

1.     Since he had no remaining basis in the company, any cash he managed to get out of the deal was going to be taxable income to him.

2.     Absent any compelling business reason for his giving Mike and me any money, those payments were likely to be construed as non deductible gifts.

3.     Ivan’s company was surely going to want to structure the deal as a tax free exchange of stock, and to put some restrictions on Henry’s ability to sell the shares he got to avoid diluting the value of the shares they already had outstanding.

4.     The only way to make sure that Mike and I got the reward he was so generously offering was to give us a share of his valueless company now, before the sale, so that our distribution would come directly from the deal and not be dependent on Henry’s personal tax circumstances.

Henry bought it. I’m sure he didn’t want to, but he really had no choice. To balk would have been to admit that he really meant to stiff Mike and me when it came time to divvy up. He needed us to get the deal done. For the first time in my association with Henry—Mike’s too—I had him penned up and unable to cheat me out of what he had promised. Too bad I couldn’t have penned Ivan up at the same time, because he turned out to be every bit as slippery and duplicitous as Henry.

          Before Henry could change his mind I drew up all the necessary documents. We had a board meeting and a stockholders’ meeting, executed the appropriate notices and minutes, and signed, issued, and recorded stock certificates to Mike and me representing one twelfth of the company each. In an hour or so we had locked in a share of the deal, however it turned out, that Henry could not undo. There would be no ‘bidness’ as usual at the end of the road, not from Henry anyway.

          The rest of the deal was not nearly so easy as Henry had been. There was more back and forth than I imagined possible. Ivan’s people finished their due diligence in pretty short order. Everyone they sent to look us over had other things to do that they were anxious to get back to. Although they asked some hard questions and acted properly skeptical, for the most part it was a lick and a promise. They all knew the result Ivan expected and they weren’t about to deliver anything short of that. It was the negotiations over price and structure that got dicey.

          As soon as Henry understood that Ivan and his board were willing to give us $6 million, he decided that he hadn’t asked for enough money. Henry had thought they would give him $3 million. That’s why he asked for six. When they rolled over on six he decided that was too easy. He must have left money on the table.

          “Call Ivan and tell him we need twelve million,” he said to me.

That he’d already said he wanted six didn’t bother him a bit. It bothered Ivan of course. He thought we’d taken complete leave of our senses. Ivan told me to forget it then. “It was a stretch at six,” he said. It was a stretch at one, I thought; but then I didn’t know that we were going to be paid with smoke and mirrors.

We went through a lot of other machinations and maneuverings. I hired a law firm and a CPA to make sure we structured the sale to get the tax result we wanted and to make sure our private lender was protected. Our lawyers kept throwing their weight around at inopportune times. I think they were trying to justify their fees. They almost killed the deal several times by acting intractable on points that really mattered very little to us. I finally had to rein them in—one of them anyway—by yelling at him in a conference call with all the players in the deal.

I’m not used to having to do stuff like that. I hate yelling almost as much as I hate being yelled at. I am not a loud and assertive person by nature. I don’t think I should have to be. I’m a smart guy. People should pay attention to me because I have good sense and good ideas. I shouldn’t have to act like a jackass to get their attention, although sometimes I think that if I did I would make more money.

We finally got over all the hurdles. The deal died several times along the way, but whenever it did I resurrected it with sweet talk and the grace of good sense. When Henry went off on a jag, I placated him. When Ivan came up with a new twist to screw us, I found a compromise to make it palatable. I was motivated by my one twelfth share. I figured it was worth $500,000 to me. It should have been, but I had no notion of Ivan’s capacity to devalue it. I was just building castles in the air.

We were going to do a stock swap just as I had suspected. Ivan’s company would give us a number of shares equal to $6 million at the market bid price at the close of business the day before closing. At the last minute they wanted to make the whole distribution subject to an earn-out. This was not unexpected, but it wasn’t something we wanted to deal with. An earn-out meant the company would have to post profits for a period of time before the stock would be distributed to us.

We had never posted profits, but we had always thought that we could if we only had sufficient cash. I reasoned that, with Ivan’s executive team effectively taking over management, Henry wasn’t going to be able to tie up our cash flow anymore with his whacked out deposit deals. Besides Ivan’s Florida division, because it operated at a higher echelon of the market than we did, would give us access to markets we hadn’t been able to tap before. For this reason it also seemed reasonable that they would invest in improvements to our manufacturing efficiency and to our products.

We had already talked with them about these issues, and they were excited about the prospects for substantial profits under their guidance. We needed the deal so we took the earn-out. We might as well have walked away at that point. The end result was the same, and we wouldn’t have had to endure nearly so much heartache and abuse.

Day 27 - Conference Call: a meeting with eye rolling

          Technically, yesterday was my last day at work. My benefits have terminated, although the severance payments will now begin and continue through the end of January. I haven’t done a closing with Gary yet, and I missed some days because of the lithotripsy, so I am going to continue to work through the end of the closing process. Gary seemed happy to hear this. Now that I am dealing with him I don’t talk to Bill very much anymore. That suits me fine.

          We began today pulling dated reports from the subsidiary records to support the closing balances. Once this is done, there is not much else to do closing wise until Helen and the accounts receivable girl finish up the sales reports. This sometimes takes a week because they have to drag sales information out of the field reps to properly record the vehicles delivered. There are things to do but they’re not burdensome. I’ll let Gary do them and help him out if he gets lost. That’s the way I like to learn. It seems to suit Gary as well.

The difference between a meeting and a conference call. 

Of course video-conferencing just ruins all the fun! 

          There was one interesting development today. When I say interesting I mean the kind of thing that had me muttering profanities under my breath, and yelling them at the top of my lungs after I got into my car and started driving home.

          Bill invited me to a meeting to discuss the status of the perpetual inventory project, specifically the progress or lack thereof that has been made in implementing a sound, viable cycle count program. Some history is in order.

          One of New Ron’s projects was supposed to be orchestrating a company wide implementation of a perpetual inventory system. Fritz wanted to make it a priority because first, the auditors had suggested it would be a good idea, and second, it was a good idea. Fritz wanted to start with my division because ostensibly we had the least robust inventory system as evidenced by repeated significant write downs following our periodic physical inventories. New Ron contracted with a consulting group to come in, review our systems, and give us a conversion plan. The consulting firm left us with a report that contained a list of steps we needed to take in the approximate order that we needed to take them.

          New Ron sat on the report for weeks. Fritz kept calling him asking for a timeline for completion. New Ron kept telling me Fritz wanted a timeline, but there was no way to give him one. I suggested that all he needed to do was take the consultants’ report, assign the listed steps to appropriate individuals, and put dates next to the items. Still he didn’t do it.

          “Fritz is going to fire me if I don’t give him a timeline,” he said to me one day.

          “Give him a timeline,” I said.

          “I can’t give him a timeline.”

          “Sure you can. Just do like I told you. Take the consultants’ list. Assign names and dates.”

          “I don’t know,” he said. “I already told Fritz that this ought to come from Bill.”

          I thought that New Ron was right—not that the timeline ought to come from Bill, but that he was going to get fired. This was especially true if he was going to try to hand the whole thing off to Bill. Fritz had made it obvious that he wanted New Ron to do it. Next thing I knew Fritz had got onto Bill about it. Bill didn’t let any grass grow under his feet. About five minutes after Fritz talked to him he had called a meeting. He invited all the department heads to discuss the project. At the meeting Bill said that we had to get this perpetual inventory system going as soon as possible, but he didn’t know how to do it. Neither did he think that anyone else knew how to do it. He said that everybody needed to come back the next day with some ideas.

I already had an idea so I ran with it. I took the consultants’ list from their report, entered it into a spreadsheet, put a name and a date next to each item, and printed it out. It took about half an hour. I showed up at Bill’s meeting with stapled and collated timelines to distribute. Bill was ecstatic. He called Fritz from the meeting. He told Fritz that we had this timeline complete with task assignments and dates and that we would have the perpetual system implemented in 6 months. Fritz was ecstatic as well.

After the meeting Bill told me he had originally thought that the inventory implementation was going to be a bust because no one knew what to do, but now that I had come up with the fabulous timeline he was suddenly feeling really good about this project. He was feeling especially good because now Fritz was feeling good. Everything was good. Well maybe New Ron was not so good, but I had given him plenty of opportunity to be a hero. He wouldn’t listen to good advice.

We started having meetings once a week to track our progress against the timeline. We hired the consultants to come back and help with the software changes and data conversions we needed in order to make the system work. Bill ran the first couple of meetings, but gradually I took over. New Ron came to the meetings, but he didn’t have a lot to contribute. In a couple of months Fritz let him go—told him they had decided to go in another direction. My star seemed to be ascending. Ascending that is until we got to the cycle count process.

Cycle counts are critical to a perpetual inventory system. In a periodic inventory system (the opposite of a perpetual system) you take a complete physical inventory—wall-to-wall—at least once a year, and adjust the inventory balance in the financial records to the amount that you counted. In a perpetual inventory system you count everything at least once a year, but you do it piecemeal. You count the high value and critical items more than once a year. You do a few items every day. Every day you compare the counts of those items to the balance in your inventory records. If the amounts are different you investigate to find out why. Usually it is that you are using more or less of that item than your bills of material say you are supposed to use. If this is the case you then need to determine whether the operators are using the wrong amounts or the bills are specifying the wrong amounts. Either could be the case. You either fix the bills or retrain the operators depending. If you don’t do this, and do it effectively, you might as well not have a perpetual system because it’s not giving you any more accurate results than you would get with a periodic system.

The problem is that doing cycle counts requires dedicated resources. That is you have to have people permanently assigned to do cycle counts, and they have to be smart enough to do the investigative work and fix the problems on an ongoing basis. The trade off in terms of costs is that while you are paying a few people throughout the year to do cycle counts, you don’t have to shut the whole plant down for the day or two that it takes to do a complete physical count and pay everyone to count rather than to build the product that makes you money. That and you have better control over your inventory spending throughout the year. A perpetual inventory system is a good thing—a better thing than a periodic inventory system—but it does cost money to implement. It does add to cost at the outset, and some of the eventual savings are not immediately quantifiable.

This became my problem. Management was all for a perpetual inventory system until they found out we were going to have to hire some cycle counters. That little tidbit threw a monkey wrench into the works. My star stopped ascending. My star had the brakes put on. I wasn’t anybody’s fair haired boy anymore. Suddenly I was that dumb ‘sumbitch’ that wanted to hire more indirect overhead. This just reinforced something I already knew, but had neither the time nor the energy to put into practice in the circumstances at hand. It’s not enough to do your job and manage an extra project. Your also have to manage management’s expectations along the way. You cannot depend on them to know what needs to be done, or why, on their own. If you don’t do this you will be tossed overboard at the first sign of trouble. Think of it as the first rule of seamanship—keep one hand for the ship, and one hand for yourself. If you don’t make an effort to protect yourself, you’re not going to be of any use to the ship.

I had to fight for every cycle counter I got, and that turned out to be too few and some of them not bright enough to do the job. We launched the new system without a viable cycle count process in place, and as a direct result the system effectively crashed and burned. Guess who had to fade the heat? That is correct. New Don got fired for not doing the inventory project. I got blamed for doing it badly. It wasn’t the proximal cause of my dismissal, but it had to figure heavily.

That brings me back to the present day and the meeting that Bill asked me to attend. I had already been fired. I had washed my hands of the inventory fiasco. I had enough stuff to worry about without agonizing over the inventory. That was someone else’s problem now. Still Bill wanted me to contribute as I saw fit. He must have thought I might know something useful.

All the current cycle counters at the meeting as well as the remnant of the implementation team. The IT guys were on the line via conference call as was Fritz who as it turned out was running the meeting. Apparently Fritz didn’t know that I was there because about the first thing he said was we wouldn’t be in this terrible fix if only we’d had a strong individual in charge of the project. Then he chuckled at his own insight. The sound he made was an embarrassed choke. It was the kind of sound a pimply sophomore might make just after he has called someone ‘gay’ only to realize that they are not insulted by the term.

I looked across the table at the head of the engineering department. He rolled his eyes because he knew what an affront to good sense and sensibility Fritz’s observation had been. He could see how offended I was. I thought of all the clever things I could have said to Fritz just then, but the thing I really wanted to do defied the laws of physics. What I most wanted to do was stick my hand through the phone all the way to Kentucky, grab Fritz by the throat, and drag him back out at my end. I wanted to see the look on his face. I wanted to rearrange the look on his face…a lot. I did not see fit to make any contributions to the discussion. When the meeting was over I got in my car and drove home.