Aug. 25, 2003 - 23:08 MDT

THE WONDERING JEW

Could It Be ?

Sometimes things a person or organization says are suspect, and in many cases should be. However there is an editorial in the Rocky Mountain News this morning (8/25) on the editorial page that has the ring of truth, I think.

Titled: "Survey: Top management usual culprit in failures." by Gerald P. Buccino, who is CEO and chairman of Buccino & Associates Inc., a national professional firm specializing in corporate revitalization headquartered in New York. This from the Scripps Howard News Service.

He brings out things that I and probably others have suspected. Quote, "The cold truth is that in almost all cases of corporate failure, it is management that has struck the fatal or debilitating blow. In short it is almost always an inside job."

He then says, "Some 1,900 executives were recently surveyed by Seton Hall University's business school in concert with the firm I lead. We found that 87 per cent of the respondants said businesses fail primarily because excessive debt, bad planning and failure to act in time to prevent further damage in areas that are trouble spots. They also conceded that accounting shenanigans were like a mosquito bite in affecting the health of a company and its future growth."

Then a bit further along he says, "Internal factors are solely management decisions. Management must stay on top of the amount of debt that accrues, the strategic direction of the company and zealously conduct due diligence to keep accounting and ot;her control systems honed.

Then he brings out what I feel is a very important facet, "In an era of sweat-breaking scrutiny aimed at management, the board of directors and corporate governance issues, our findings show that the board is ulimately responsible if it permits the same management to oversee a continuing decline in profitability and cash flow.

And he explains a bit, "Warning signs appear one to three years before a business fails and paying close attention to management strategies, business plans, controls and monthly financial results gives the board information to act quickly before the corporate house collapses." He continues, "Many of the CEOs whose companies floundered and eventually collapsed failed to become engaged in managing their company. They either did not bother with details, delegated responsibility that they themselves should have accepted in whole or in part, or ignored warning signs from lower echelon management. And there were those who did not have the ability to set priorities.

Ending his column he makes a very good point, "One final irony that surfaced from our survey: When a consultant is summoned to rescue or resuscitate a company, in virtually all cases it is middle management that rises to the occasion and saves a sinking ship. "Where's top management when they're most needed ? They have either bailed out or been thrown out.

To me it follows ! It is common knowledge that many top dogs act like curs. Once again, I think, it is time for boards of directors and powers that be to survey and curtail those GOLDEN PARACHUTES that let top dogs down to a soft landing with the loot of a small nation, even though they are not doing their job. Furthermore I think that the boards of directors should be stringently held responsible for all unethical activities.

Maybe all the scandals of recent times will help open the eyes of the big brass. Perhaps, but don't hold your breath, the way I see it things won't happen that way in our lifetimes. The scoundrels are the ones that get off Scott free and leave the underdogs without a job, without their pension savings, or any feeling of security. Some day, somehow a few ethics and a bit of integrity will prevail in corporate circles . . . Could It Be ? . . . . . . . . . . .

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