Tag Archives: employees

Short-term focus of management ain’t due to accounting

CFO.com had a provoca­tively titled article this morning that just shouted out for a retort: “Is Accounting Blocking R&D Invest­ments?

Now how could accounting be doing that? Why, because senior management is preoc­cupied with meeting short-term quarterly earnings targets, and are cutting back on longer-term focused R&D investments!

I thought this was just an overzealous headline writer, out to get clicks (mission accom­plished!) and perhaps the article itself would walk back the ridiculous premise, but instead it doubled down:

The accounting treatment of R&D as a period expense and the overem­phasis many public-company execu­tives place on EPS. Many execu­tives pay lip service to the long term benefits of R&D. But in reality they base the size of their companies’ R&D budgets primarily on a single period’s EPS dilution. Thus, they are only looking at a tiny fraction of the value equation.

It’s gotta be up to management to teach the market how to appro­pri­ately value their company, and it’s gotta be management that shares a long-term vision of sustainable profitability to share­holders. This short-termism simply has to stop.

It isn’t the accoun­tants who are pushing for quarterly earnings reports. I’m sure accoun­tants would love to spread out the reporting, it would make their lives a lot easier not to have to calculate myriad accruals on a quarterly basis only to reverse them after.

Value, real lasting value, not just for share­holders but employees and commu­nities, is built over the long haul.

Google’s 20% time at accounting firms?

It’s well known that Google encourages their employees to spend roughly equal to one day per week pursuing personal projects, or about 20% of their time at work. The results of this unique policy are numerous and successful: Gmail, Google Suggest, Google News, AdSense and Orkut.

Google logoWhat would happen if an accounting firm allowed their knowledge workers to devote time to personal projects? Would great new ideas surface for snagging new clients, serving existing clients in better ways, or improving processes within the office? I think they would, but it would definitely require some disci­pline to set aside that much work time away from client work.

I think the benefits from this type of system could be achieved at an accounting firm without needing 20% of available working hours. All that is needed is a method for sharing the ideas with everyone in the organi­zation and a loose structure for obtaining approval to put the idea or plan into action. A wiki on the intranet would be simple to set up and, since they are editable by anyone with access, enable everyone to partic­ipate right away.

Google describes “the engineer’s life at Google” with reference to the following pledges:

We listen to every idea, on the theory that any Googler can come up with the next great one.
We provide the resources to turn great ideas into reality.
We offer our engineers “20-percent time” so that they’re free to work on what they’re really passionate about.

I think it would be a bigger challenge to create the type of environment that Google has metic­u­lously culti­vated since its inception at an estab­lished accounting firm. It’s all too easy to keep doing things the way they’ve always been done, not unlike following last year’s audit plan, in firms. But I believe great things can be accom­lished by a firm willing to break out of the mould and take the cue from Google.