Category Archives: Professional Development

Five Ways to Develop Business “Street Smarts”

Are “book smarts” or “street smarts” more important? Although there is a place for both, we can tend to err on one side or the other. Young professionals with high GPAs tend to be noted for their “book smarts.” Several years into their careers they discover the necessity of developing “street smarts” that some of their peers might have come by more naturally.

Early in my career I tended to trust people and share a lot about myself. Perhaps, I reasoned, if everyone laid all their cards on the table, it would be easy to figure out how to create win-wins.

Do you notice any problems with this approach?

For example, in one of my early jobs I played a team-based game of business strategy that involved negotiation, sharing information, and trading. Much to my unpleasant surprise, I learned that not everyone shared my approach of making helpful information readily available. (Imagine that!) I learned that, although win-wins are often needed in order for people to advance, ultimately people are more interested in their own success than in mine.

Gratefully, getting a dose of reality can shake deluded idealism from a person fairly quickly.

Over time I learned that some of my assumptions, behaviors, and habits were flawed or at least needed tempered with a dose of realism. There is a place for being savvy or “street smart” — for example, “knowing how to close a sale, when to walk away from a deal, when to remain silent, and how to select winners as employees or colleagues.”

Whether street smarts are skills or attitudes, learned or inborn traits, a financial professional who aspires to a position of organizational leadership should seek and develop these attributes.

Here are five categories of street smarts drawn from Dr. Tony Alessandra:

  • Heightened awareness – Understand your surroundings and don’t allow yourself to be blindsided. Military and law enforcement personnel utilize a “color code of mental awareness” that ranges from “condition white” (total oblivion) to “condition red” (all-out fight). In the context of business, finance professionals do well to routinely maintain “condition yellow” (comfortably alert to one’s surroundings). To put it simply, don’t be paranoid but do watch your back and maintain situational awareness.
  • Confidence – I wrote previously about the importance of confidence, the role of preparedness in boosting confidence, and seven ways to develop confidence.
  • Healthy skepticism – Take measures such as getting your agreements in writing so that people don’t take advantage of you. I wrote previously about professional skepticism, which is an officially recognized and required mindset within the audit profession.
  • Resourcefulness – Be quick, persistent, prepared, flexible, adaptable, and connected.
  • Risk-taking – Choose when to accept, avoid, reduce, or share risks. Don’t let fear hold you back, but learn from you mistakes.

Learn the theories. Develop “book smarts.” But never underestimate the importance of lessons from the “school of hard knocks.” Develop discernment and become increasingly savvy by carefully analyzing your experiences for lessons learned.

You Will Gain Credibility if You Manage Expectations

Think about a time when you were disappointed. Someone promised but did not deliver. Perhaps you had even made plans around your expectation that the other person would keep a promise.

What did you think of that person afterwards? Obviously, you could no longer trust the person.

Timely and accurate communication is crucial toward developing and maintaining trust in business relationships. Conversely, misleading or nonexistent messages engender distrust.

I experienced both the good and the bad in a recent situation. A supplier promised to quickly provide documents once I made a payment. I needed to provide these documents to a customer. Upon receiving my payment, rather than fulfilling the promise, the supplier said he would wait a few more days. I communicated this clearly and promptly to the customer, and I said I would provide an update as soon as I had one.

This conveyed to the customer that I was “on it,” and the customer’s response was one of gratitude even though the message I had conveyed was negative.

On the flip side, I have no trust in that supplier because I know in hindsight that I was misled by someone who lacked integrity.

Building trust requires a long-term pattern of delivering on the promise. Conversely, destroying trust is as easy as promising and not delivering.

Most of all, if you want to build trust, you must manage expectations. Do not induce people to “play ball” with you by misleading them about what they can hope to accomplish from dealing with you.

Some people will see right through your empty promises. Less savvy people might initially be impressed, but once you disappoint them, they will start to spread the word that you cannot be trusted.

How do you manage expectations? Again, one of the keys is communication. Convey relevant information in a timely manner. Filter information before you pass it along to make sure it is reliable. For example, even though I had been “promised” that I would receive information from the supplier, I had to temper my “promise” to the customer because I did not know whether the supplier would make good on his promise.

Become a reliable person. Listen more than you speak. This will help you know what you can legitimately promise. Don’t promise unless you know you can perform. If you have done all you can but an unexpected contingency materializes, the bad news will get worse with age. Quickly communicate the relevant details you know, along with your action plan for fixing the problem.

Don’t be like the supplier who promised but had no intention of delivering. Also, even if you do have the intention of following through, make sure you really have the capability to do so before you make a promise. This means you have to honestly assess and come to terms with reality, not mere delusions or wishful thinking.

Take Ownership of Your Career

One of the themes of this site is taking ownership of your own career.

Your employer does not own your career. Your parents do not own your career. Your friends do not own your career. Your teachers do not own your career.

You own your career.

Think about the cares and concerns that you must deal with on a daily basis. Work is certainly one of them. Also, you might have a family, pets, a house or apartment, a vehicle, relationships, and so forth.

All of these (and much more) require daily care and maintenance.

Guess what? Everyone else I mentioned — even your friends and relatives who love you and want to see you be successful — have their own list of items that take up precious time out of their day. Their primary vested interest is in themselves and what can benefit them.

The last thing you can expect them to worry about is the long-term progress of your career. If you sit by and wait for someone else to “hold your hand” through the ups and downs, challenges and threats of your career development, you will be in for disappointment.

Maybe you have never considered that your career is yours. Maybe it is time for a wake-up call to start thinking and acting like an owner.

How does an owner process decisions? What are the behavior patterns of an owner? Here are a few thoughts:

  • Long-term thinking – As compared to a short-timer who is here today and gone tomorrow, someone who takes ownership is in it for the long haul. If short-term challenges arise, don’t immediately cut and run. Evaluate the prospect of long-term upside potential to decide whether to press on or change course. Either way, when you own your career, you make decisions that will benefit you in the long-run.
  • Vested interest – As compared to someone who will just use up and wear out valuable resources and capital, an owner seeks to maximize return on investment. This means an owner is willing to make sacrifices to obtain a greater reward in the future. Effective career development takes time, thought, energy, and even money. Someone with a vested interest — ownership — is more likely to undertake these sacrifices.
  • Protective and responsible – An owner is not reckless, but wise and thoughtful in stewarding resources. When you take ownership of your career you are more likely to make good choices to maintain your integrity and guard your reputation. You will desire to seek ways for self-improvement to be the best you can be in your chosen field.
  • Active vs. passive – An owner is goal-oriented and aggressive. Rather than letting life and work happen to you, be the one who makes things happen.

Much more could be said about the motives, goals, and enduring success of someone who takes ownership. What is one specific change you can make today to shift your thinking and actions toward taking ownership of your career?

Apply the Four Steps of Learning

I wrote previously about the four stages of learning. We progress from unconscious incompetence (“you don’t know what you don’t know”), to conscious incompetence (“you know what you don’t know”), then conscious competence (“you have a solid grasp on the subject matter, but you have to think about it”), and finally unconscious competence (“you know the subject matter like the back of your hand”).

How does one apply this paradigm to learning?

Consider a person who is unaware (i.e., unconsciously incompetent) of the concept of emotional intelligence. Perhaps this person has a measure of EI without consciously realizing or understanding it. Or perhaps this person has developed habits of thought and behavior that discourage self-assessment of blind spots and drive away others.

What should a person do in this situation?

  1. Survey the landscape. Become aware of what you don’t know so that you can progress beyond unconscious incompetence (a.k.a., “utter ignorance”). Google and Wikipedia can make this initial process quite easy. It’s not that you’ll become a subject matter expert from reading Wikipedia articles, but you will at least have a place to begin digging deeper. Perhaps the impetus behind your pursuit of learning is a challenge or weakness you want to overcome, or an opportunity or strength you want to develop. For instance, if you are trying to figure out why your relationships are failing or if you want to get ahead in your career, perhaps you will stumble across the concept of emotional intelligence. You are now beginning to become conscious of your incompetence (or “areas for improvement,” to put it euphemistically).
  2. Outline the core concepts that you need to learn, and make a plan. This will set you on the path toward conscious competence. As you progress in your learning, you might discover that areas you initially thought were important turned out to be peripheral. This is part of the process of graduating from conscious incompetence to conscious competence. For example, perhaps you discover the importance of knowing yourself (intrapersonal skills), as well as developing interpersonal, communications, and relationship skills. Instead of unconsciously “floating along” with your habits that run counter to sound EI principles, you are ready to overcome your weaknesses and challenges.
  3. Consistently and systematically pursue the discipline of learning. This will get you to the level of conscious competence. You will learn how the different areas of the subject relate to each other, as well as how the subject relates to other fields and disciplines. You will overcome your ignorance and unlearn bad habits that were setting you back in ways that you had not previously realized. You will replace these bad habits with positive patterns of thought and behavior.
  4. Recognize where you came from once you reach unconscious competence. Though it’s thrilling and rewarding to know your subject matter so well that it’s “second nature,” the danger is becoming unapproachable. Guard against talking over people’s heads, patronizing or insulting them, or being impatient with them due to your perception of their ignorance. Chances are, if you can gently help them toward attaining conscious incompetence (so that they start to acknowledge what they don’t know), you will be the first person they will ask for tips on how to reach conscious competence.

Finance professionals should never stop learning. We have to constantly apply ourselves to develop and grow. We can routinely progress through the four stages and apply the paradigm of learning whether we are developing technical skills, knowledge of our field and industry, social and relational skills, or more.

In what areas could you benefit from working through the four stages of competence? How can you help others achieve success in the process?

Understand the Four Steps of Learning

Think about the last time you tried something new. Perhaps you started a new job. Or maybe you took up a hobby that required a particular skill set, such as sailing.

Continually learning characterizes our growth and development throughout life. Early on we learn to communicate using gestures and language. We develop physical and cognitive abilities to overcome obstacles and accomplish our objectives. Especially in the modern world characterized by rapid change, we constantly have to adapt to new challenges and opportunities.

I was recently talking with someone about emotional intelligence and its contribution toward career success. Just as I had been ignorant of the topic prior to reading articles and delving into a study course recently, this person had never heard of EI or EQ.

After explaining emotional intelligence on a cursory level and sharing a resource about the topic, I mentioned the following four-step paradigm that I was exposed to in a training course:

  • Unconsciously incompetent – You don’t know what you don’t know. If you are ignorant about the existence of an area of study or a skill set, you are incompetent without even being aware. Someone who has never heard of accounting doesn’t even realize his ignorance of debits and credits, general ledgers, and account reconciliations. Or perhaps you mistakenly believe you are proficient in some area, so you don’t realize that you need further training and development. A person in that state is unwilling and unable to learn until progressing to the next level.
  • Consciously incompetent – You know what you don’t know. You have some depth and breadth of knowledge about the subject matter, but you remain ignorant of many basics and details. If you have heard of accounting and know about terms like debits and credits but are unaware of what they mean and how the concepts are applied, you are consciously incompetent.
  • Consciously competent – You know what you know, but you have to focus and think about the subject matter. If you have a working knowledge about the mechanics of debits and credits and can clearly explain the concept, perhaps while pausing to think about it, you are probably consciously competent. You can still progress one step further.
  • Unconsciously competent – Your mastery of the knowledge and skills has become “second nature.” You know the subject matter “like the back of your hand,” and you can perform “practically in your sleep.” If you can explain and apply concepts such as debits and credits, ledgers, reconciliations, revenue recognition, and more, without missing a beat, you are an unconsciously competent accountant.

To put this in perspective, consider someone who didn’t know about emotional intelligence and had perhaps unconsciously developed habits that ran counter to sound EI principles. Becoming aware of emotional intelligence could be the first step toward new levels of professional success.

Soon I will share some practical tips on applying the four stages of learning.

Seven Practical Ways to Gain Confidence

I wrote previously that a finance professional should always be confident. This is certainly enhanced when you are prepared. I had a few job interviews early in my career for which I was not adequately prepared, and this showed in my level of confidence. I did not get a second interview in those scenarios.

My success has always been enhanced when I have been confident. Here are seven insights drawn from Kent Sayre about increasing your confidence:

  • “What’s the worst thing that can happen?” Step back from your stressful situation and have a dose of reality. Compared to what you might gain if you successfully navigate through a stressful situation, the worst case scenario might not be so bad after all. Do your very best, and if you can’t control a particular variable, there is no sense stressing about it.
  • Vividly (i.e., using the five senses) imagine yourself achieving success in doing something for the first time. Consider a past situation in which you were successful, and relate your new experience to your past success.
  • Copy a confident person. Talk with confident people and be around them. Try to carry yourself in the same way.
  • Consider what you would be thinking, saying, and doing “as-if” you were confident. Act confident, and develop these patterns of thinking, speaking, and acting into habits.
  • Maintain a proper perspective. Ponder how important the situation you are facing will be to you when you are on your deathbed. You may not worry so much when you consider the big picture and understand that your current situation isn’t as important, long-term, as it presently seems to be.
  • You will fail to achieve anything 100% of the times that you don’t try. Believe that you can get help from others, and then ask. This might or might not work, but you won’t know unless you try.
  • Your internal voice might nag you with negative thoughts and feelings. Think of this voice as a clown’s voice or Mickey Mouse’s voice. Laugh at it, move on, and conquer your fears.

I especially appreciated the tip about considering best and worst case scenarios. Sometimes we can stress over vague fears and lose our confidence. If we can quantify what we are concerned about, we can find ways to accept, avoid, reduce, or share risks. If we are unable to quantify our fears, we have no need to be afraid. Instead, we can focus on the positive benefits from success and leave behind vague, general dread.

The Importance of Emotional Intelligence

How can you relate to people whose backgrounds and motivations are different from your own? How can you creatively tap into and channel others’ motivations for recognition and accomplishments beyond paying them more money? As a finance professional, should you primarily focus on numbers or people? How can you develop a reputation for being approachable and collaborative?

Developing emotional intelligence can help us become mentally active to recognize, analyze, understand, and manage intense feelings — whether our own (intrapersonal) feelings or the feelings of those around us (interpersonal).

Social and leadership skills can be developed over time, and they tend to become more important as a finance professional moves to higher levels within an organization. Technical skills and cognitive ability are vital, but don’t neglect emotional intelligence. Customers, employees, coworkers, and investors are among the groups with whom aspiring CFOs must learn to build relationships, channel motivation, manage conflicts, and develop win-win solutions.

I recently completed a Continuing Professional Education (CPE) self-study course on the difference between IQ and EQ (Emotional Quotient). The course helped me understand basic concepts and models of emotional intelligence.

Here is an outline of fifteen components of EQ organized under five major categories:

Intrapersonal Skills:

1) Self regard
2) Emotional self awareness
3) Assertiveness
4) Independence
5) Self actualization

Interpersonal Skills:

6) Empathy
7) Social responsibility
8) Interpersonal relationships

Stress Management:

9) Stress tolerance
10) Impulse control

Adaptability:

11) Reality testing
12) Flexibility
13) Problem solving

General Mood:

14) Optimism
15) Happiness

Daniel Goleman, author of Working with Emotional Intelligence, divides EQ between personal and social competencies:

Personal:

  • Self awareness – emotional awareness, accurate self-assessment, and self-confidence
  • Self regulation – self control, trustworthiness, conscientiousness, adaptability, and innovation
  • Self motivation – achievement drive, commitment, initiative, and optimism

Social:

  • Social awareness – empathy, service orientation, developing others, leveraging diversity, and political awareness
  • Social skills – influence, communication, leadership, change, conflict management, building bonds, collaboration and cooperation, and team capabilities

What are signs of a high EQ for a financial professional to recognize and develop? The course suggests several:

  • Express feelings with three-word sentences beginning with “I feel …”
  • Do not disguise thoughts as feeling by using “I feel …”
  • Do not be afraid to express feelings
  • Do not be dominated by negative emotions
  • Effectively read non-verbal communications
  • Let feelings lead to healthy choices and happiness
  • Balance feelings with reason, logic, and reality
  • Act out of desire, not duty, guilt, force, or obligation
  • Be independent, self-reliant, and morally autonomous

Among negative behaviors to avoid, the course lists blaming others rather than taking responsibility for one’s feelings, analyzing others when they express their feelings, trying to make others feel guilty, lying about feelings (or exaggerating/minimizing them), letting things build up, reacting strongly to minor issues, being unforgiving, acting on feelings rather than talking about them, and playing games and being evasive rather than direct.

Assess yourself based on the following questions that apply Goleman’s model from Working with Emotional Intelligence:

  • Do you understand both your strengths and your weaknesses?
  • Can you be depended on to take care of every detail?
  • Are you comfortable with change and open to novel ideas?
  • Are you motivated by the satisfaction of meeting your own standards of excellence?
  • Do you stay optimistic when things go wrong?
  • Can you see things from another person’s point of view and sense what matters most to him or her?
  • Do you let clients’ needs determine how you serve them?
  • Do you enjoy helping colleagues develop their skills?
  • Can you read office politics accurately?
  • Are you able to find “win-win” solutions in negotiations and conflicts?
  • Are you the kind of person other people want on a team?
  • Are you usually persuasive?

In summary, to develop EQ, the course suggests knowing your own emotions, motivating yourself, recognizing emotions in others, managing your emotions, and effectively handling relationships.

A Brief How-To Guide for Avoiding White Collar Prison

We are all familiar with examples of high level financial executives who landed in white collar prison due to their indiscretions. Think of Enron, WorldCom, and Madoff as just a few examples. How can these situations be prevented?

I wrote previously about the fraud triangle and followed up with a post about a model that expands this from three to five elements. Organizations can do their best to hire people who do not have the pressure to commit fraud or the desire to rationalize fraud. However, the bottom line factor that organizations can directly manage, largely through internal controls, is reducing the opportunity for theft, irregular financial reporting, and other frauds.

Although an organization’s management has the primary role of preventing opportunities for fraud, each employee can prevent the temptation of committing fraud by mitigating pressures and overcoming rationalizations.

Of course, one’s ultimate career goals, as well as ethical responsibilities, go well beyond staying out of white collar prison. So here are some tips for avoiding getting anywhere close to the line of unethical or illegal activity:

  • Eliminate the pressure to commit fraud by having your own financial house in order. This applies on at least two fronts. First, your temptation or pressure to steal from an organization will be reduced if live within your means and keep your debt levels low. Employees sometimes are driven to cross the line by having personal financial pressures. Secondly, if you encounter a situation in which someone pressures you to commit financial reporting fraud, you can more easily say “No!” and walk away from your job (and paycheck, bonus, and stock options) if you have savings in the bank and low personal debt levels.
  • Eliminate the opportunity to commit fraud by making yourself accountable. A value-adding financial professional will undertake implementation of sound internal controls. Top financial executives are not “above the law,” and they should demonstrate this by the tone they set through words, actions, and patterns of behavior. Some well known frauds have been perpetuated because senior management exempted itself from internal control standards.
  • Eliminate the rationalization to commit fraud by maintaining your integrity. Have nothing to hide. Make good on your promises. Draw a personal “line in the sand” that you will be unwilling to cross even if pressures and opportunities arise. Create options and alternatives for yourself in order to gain walkaway power. Be ready to take decisive action rather than hesitating and giving yourself time to rationalize what you know is a fraudulent course of action.

Again, go beyond the aspiration to avoid white collar prison. Maintain the highest levels of ethics and integrity. I will explore models of ethical decision making and behavior in future installments.

17 Principles to Safeguard Assets and Ensure Organizational Effectiveness

One of my favorite aspects of being a financial professional is knowing that others on the management team and in my organization are relying on me. I am expected to handle key functions within the business, and if I do my job well I can contribute integrally to the organization’s success. This can provide a constant sense of urgency but also a rewarding feel of satisfaction and significance.

Among the not so glamorous yet important features of an organization’s structure are internal controls. Accountants are expected to implement sound measures to safeguard assets and reasonably ensure that management’s objectives are achieved toward effective operations, reliable financial reporting, and legal and regulatory compliance.

Even if this sounds boring, take consolation in the fact that your organization’s survival and success depends on it.

The Committee of Sponsoring Organizations (COSO) first released its Internal Control-Integrated Framework in 1992. This document defined internal control and provided accompanying standards. Over twenty years later the framework is still highly relevant.

In May of 2013 changes were made that kept the core intact and added, among other things, seventeen principles to help with implementation of the framework in light of changes over the years. A recent article in The CPA Journal discusses these seventeen principles as organized under the five categories of internal control within the COSO framework.

    • Control Environment

1) Commit to integrity and ethical values – this largely entails setting an effective “tone at the top.”

2) The independent Board of Directors should oversee internal control – among other things, objectively evaluate managers and ask appropriate questions.

3) Establish appropriate authority, responsibility, and reporting structures.

4) Attract, develop, and retain the right talent to achieve objectives.

5) Hold employees individually accountable for fulfilling organizational objectives.

    • Risk Assessment

6) Be able to identify and assess risks by having first formulated objectives with sufficient clarity.

7) Identify and analyze risks throughout the organization to determine how they should be managed – choose whether to accept, avoid, reduce, or share risks.

8) Consider potential fraud risks, including misappropriation of assets and alteration of records, that could deter the organization from achieving its objectives.

9) Be ready for changes, including within the external environment, business model, or leadership, that could impact the internal control system.

    • Control Activities

10) Mitigate risks to acceptable levels by choosing and implementing appropriate control activities.

11) Technology is a special category of importance for implementing control activities that help enable the organization to achieve management’s objectives.

12) Policies establish expectations and procedures put these policies into action in order to deploy control activities.

    • Information & Communication

13) Support internal control functions with relevant and timely information – capture data, transform it into information, and protect its availability and accessibility to appropriate parties.

14) Communicate internally regarding internal control objectives and responsibilities.

15) Communicate with appropriate external parties regarding internal control, carefully considering the timing, audience, and nature of the communication.

    • Monitoring Activities

16) Have ongoing evaluations to determine whether internal controls are working effectively.

17) Communicate internal control deficiencies to senior management and the board of directors so that they can timely take corrective action.

In short, internal controls help management set a proper tone, define organizational objectives, and run the business effectively. A leadership-oriented financial professional who wants to be indispensably valuable within an organization should study and understand how to effectively choose, implement, and monitor internal controls on an ongoing basis.

Four Ways to Be Detailed and Thorough to Tie Up Loose Ends

The best leaders can see the big picture and articulate a clear and compelling vision for their teams, along with clear strategies, goals, and action steps. To balance this, I have appreciated from personal experience the value of a leader who minds the details. I am not talking about micro-management, but rather a thorough attentiveness to the key underlying drivers of success.

Letting things “slip through the cracks” is inexcusable for a finance professional upon whom others are relying to handle many details. Every matter subject to your oversight must be managed effectively. Have a zero nag threshold so that your coworkers and superiors know they can rely upon you.

Make persistence a matter of personal policy. For example, I have frequent processes that require information from colleagues on the other side of the world. Sometimes it takes them awhile to obtain the necessary documents, so I have a policy to follow up routinely and systematically. This is always done politely and professionally; they know that if they need something from me, I will reciprocate in being approachable and providing them timely information.

Here are some tips for making sure nothing slips through the cracks:

  • Slow down. We have all heard the adage, “Slow down in order to go faster.” This is a true irony. Trying to accomplish tasks at breakneck speed can lead to costly mistakes and rework. I learned early in my accounting career that it is better to do things right the first time to avoid the frustration of errors.
  • Check everything twice. Sometimes you will have the luxury of a coworker who can provide a “second set of eyes.” Other times you will be on your own to make sure that your projects are completed accurately. Get in the habit of finding ways to reconcile and “tie out” every number you calculate as you complete your projects.
  • Survey the context of your project to determine what you are missing or what you should omit. Make sure that nothing slips through the cracks.
  • Have a system. For example, I double check my email inbox at the end of each day to make sure I did not fail to respond to a matter of importance. Occasionally I have found that I almost let something slip through the cracks, thereby demonstrating the value of taking a little time to quickly go over everything. Other times I will re-read an email to glean a tidbit of information that I had skimmed over previously. In any case, my simple system is an effective way to give myself peace of mind that I am not missing anything important with regard to my emails.

Mind the details. Be thorough. Tie up loose ends. Don’t let anything slip through the cracks. You must not wait for others to catch your errors or omissions. You must set your nag threshold at zero and earn the reputation for trustworthiness that every aspiring financial leader needs.