Tag Archive: sarbanes oxley

Lessons Learned from a Genius Businessman

February 23rd, 2016
businessman

Harry used uncommon common sense to spot opportunities to turn around companies. His wisdom, integrity and generosity will be missed.

My best friend’s dad was as close to a business genius as I’ve stood. He made his employers rich beyond their wildest dreams yet he was happy with this outcome as he enjoyed what he did and lived to 98 including many travels to exotic places — not the ones you might think of but ones he enjoyed. For example, he went to Nicaragua and had many wonderful stories to tell about crocodile farms and uzis. Somehow, he and his wife managed to trust people they probably shouldn’t have, travel to a country not recommended, even by people they met along the way in the country, and come out of it in one piece — and with great stories and excitement.

In his work life, he spent many, many years working for the owner of Sealand, functioning as an investment banker and turnaround CEO. Thus, he’d source great deals and then if they weren’t living up to the expected value, he went in and had a 100% success ratio in ensuring they did. What else can you ask for??!! He could turn around transportation companies to banana growers. Uncommon common sense applies to more than you’d think! One day, I asked him what he thought was most important in turning around these companies, and here are some of the key points that pop to mind:

  1. Observe – Interesting that one of his top points is common sense (oh, wait, I actually think they all were uncommon common sense). He said it was amazing how much he saw in walking a facility that showed opportunities. It reminded me of what has become known as Lean — turns out it doesn’t have to be part of some fancy program; just observe and you’ll uncover gems.
  2. Watch the money – This next tip is unfortunately more common than it seems it should be. Too many companies have someone committing fraud or “on the take”. I certainly would never recommend implementing the cumbersome Sarbanes Oxley if not required by law; however, I would recommend implementing some uncommon common sense approaches to making sure you have the right checks and balances in place. I did a webinar for Financial Times’ ExecSense on this topic a while back, and it is scary how common this can be. My research found that a typical company loses 5% of annual revenue to fraudulent acts. Hard to believe!
  3. Deal with sacred cows – Again, do we really have to be a genius to realize this is a good idea? He said that there are obvious examples of this in family-owned businesses. Perhaps a son or daughter is creating havoc and wasting money but remains in position. Worse than the waste of money, it demotivates the rest of the team. Another example of a sacred cow is a ‘big’ customer we try desperately to keep even though money flies out the door at a faster rate than it flows in the door when this customer calls. There are countless examples. The key is to observe, find the sacred cows and be willing to address them head on.
  4. Persistence I’ve titled what he described as persistence. One of his doozy assignments was to go to Vietnam during the war and turn around a facility (this sounds quite appealing, doesn’t it?). He was the MacGyver of the business world. Leverage underutilized assets. Find new solutions for old problems. Treat people fairly. Don’t give up. He managed to turn the place around — of course.
  5. Integrity – I’m reminded of this quality since he spoke of it near the end. He felt that it was of critical importance. He isn’t alone. When I performed a survey of executives, it came out as a top quality for success.

Harry was a guru and knew more about almost any topic at 98 vs. anyone I know. He’ll be missed. We will help ensure your wisdom carries on!    

Did you like this article? Continue reading on how to Profit Through People:

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Sarbanes Oxley

July 17th, 2015
sarbanes oxley

Meant to protect investors and increase transparency in corporate accounting, implementing the Sarbanes Oxley Act takes some organizational introspection.

The 2002 Sarbanes Oxley legislation (new, enhanced standards for all U.S. public companies) was established in response to high-profile financial scandals (Enron, etc.) in order to protect shareholders and the general public from accounting errors and fraudulent practices. However, implementing SOX in a meaningful way for an organization is far from a no-brainer. A few tips include:

1. Understand your business – what are your key business processes? Understand and document those processes, from the financial risk and control perspective. Do not worry about the rest.

2. Materiality – this is another way of saying, focus on the 80/20. Focus on those areas that have a large potential financial impact on your business.

3. Understand risks – there are endless financial risks in any business. The critical element is to understand which risks are important to your business. Key controls are required for those risks.

4. Understand controls – how does your business mitigate the key risks? What options/tradeoffs exist to mitigate the risks?

5. Think about what makes sense – it is quite possible to throw out strict, irrelevant rules and instead think about what makes sense for your business – what is logical (remember risks, controls and tradeoffs). Then, it is just a matter of putting it into an appropriate communication format for SOX.

6. Evidence – a key word for SOX. Regardless of whether you have the best processes, it might not matter – evidence is the key. In many cases, if you execute effectively in your organization, your processes will not need to be changed. However, it is likely you’ll have to add evidence so that you can prove it to your auditors.

7. Segregation of duties – although logical and part of other aspects of SOX, I’ve given this a separate bullet point because it is often one of the more challenging aspects for smaller, flexible organizations to achieve. Remember, logic works so long as it is backed by evidence!  

Did you like this article? Continue reading on how to be the Strongest Link in your organization:

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