Money: Capital and Currency
From childhood, we surely know it exists and, until we lose our minds, it is hard to completely escape thoughts of it. Given the spectrum of its day-to-day influence, it is equally clear and curious that few agree as to its exact influence on individuals and cultures - is it a means or an end? Now there is a question with which we confound ourselves! Attraction to money is bound by need and desire on the one hand, but not wanting to get caught pursuing it in any of the wrong .1 ways on the other. This is as true with political parties, as it is in buying habits and work ethics. Another complication is that money, as in the dollar value of a paycheck, is more than money; it is a scorecard. Whoever has the biggest numbers wins, and everyone wants to win in their career. Wasted by some and hoarded by others, money remains at once both abstract and concrete, functioning on both real and imaginary planes.
The discipline of accounting intends to clarify the use and movement of cash a bit. Even at its best, however, accountings' accounting is a limited one - it fails to show how finance influences psyche. For example, bank statements and quarterly reports can cause sensations of either worry or joy because we like to know that we've got enough and that we're getting even more. As a result, such measures affect how our time and labor are spent. Odd that financial books cannot account for emotions, but are so quick to evoke them.
Previously, I have acknowledged a longstanding personal discomfort with accounting - more dismal than economics, every other subject was more interesting in college. It seemed an exercise of shoveling numbers from one column to another, and not in a wholly scientific manner. Even done right, the product is not a conclusion, but merely a point where the formal questioning could commence. After the books are closed, interpretation, analysis, diagnosis, and prescription begin. The components of accounting, with which the various statements are comprised, follow somewhat arbitrary and certainly ambiguous definitions. Thus, the net gains and losses as to how one's corporate day might be going not only lack feeling, they lack certainty.
Not that accounting is now a personal passion, but if financial resources are to be managed on my project, leave that to me thank you very much. (In fact, I'll be pleased to manage the finances on your project too!) I had better understand that the little entries each mean something. For example, do sufficient funds exist to hire the promising individual I just interviewed, or do the latest numbers indicate a need to cut expenses quickly? Either way, business operations, goals, and plans are affected, and there is the emotional currency as well. One situation is more fun than the other. Had Newton considered the gravity of feelings instead of mechanics, his first law might have been something like "Personal feelings cause reactions in others when interdependencies exist." In business, finances determine many of the dependencies arising among people and departments.
In the past 10-to-15 years, firms learned that a bottom-line focus could be destructive; it got in the way of intermediate and long-term performance. Optimizing every entry on a balance sheet for maximum profit did little to align business operations and strategy with a sense of integration, and it certainly did not help global competitiveness. Such approaches were a disintegrating force in their near-term obsession. In reaction, companies undertook remarkable steps to regain a grip on the longer haul. They embraced such concepts as customer service, total quality management (TQM), enterprise resource planning (ERP), and/or supply chain management (SCM). Although the accounting of financial matters became even more important as a means of assessing operating performance, the larger and longer goals were reconsidered with greater emphasis. These new processes focus organizations on goals and methods, and they serve to integrate the various and diverse efforts of many individuals toward commonly understood objectives.
At first blush, I presumed that this broad sea change confirmed a shift away from treating financial results as priority one. On further consideration, there remains too much evidence to the contrary. What it does mean is that finances cannot define both the ends and the means. Once the decision-makers looked beyond cash flow and income, their firms became much more robust.
With corporate health apparently restored, might there be another shoe to fall? For all of the processes that have been invoked to see to the long-term health of corporate entities, and given how profound the restoration of competitiveness has been, what might be done that would similarly benefit individual employees? It is true that the rules of brutal competition have clarified what is needed from each of us to keep our jobs and possibly grow, but one wonders if a new tool or process is waiting in the wings that will do for people what has been done for quality. However it comes out, it will likely be more holistic, thus seeing to the greater well-being of employees. If we assume such a tool were possible, and I cannot assume otherwise, it is worth pondering exactly what form it would take. Send me your thoughts as to what a TQM or ERP type/magnitude program for employee well-being might look like.
Welcome
We are pleased to welcome Linda Kosmin, who, commencing this issue, will be contributing a column called "Surfs Up." Here, she explores web-based resources that are well-suited to the topic of engineering management. Linda maintains an active role with the Engineering Management Society Board of Governors and has a professional background that is ideal for her responsibilities of reporting on useful web resources for our readers. As you draw upon her column for new sources of information, we invite you to share with us any web-based resources you have found to be particularly relevant and useful.
Your Turn
The Engineering Management Review is itself undergoing a periodic review and we request your input. EMR readers have been extremely helpful and supportive during the four years I have edited the Review. It is time again for your assessment and advice. Please consider the following questions and share you responses with us.