Why are people so irrationally averse to talking about money? Business Technology’s resident U.S. blogger Keil Hubert argues that your ‘worth’ as a person or as a business leader isn’t measured by how much money you have, but in how judiciously you manage it.
Have you ever been admonished that it’s ‘gauche’ to discuss money issues in public? I was taught that principle at a very young age: a decent person should never inquire about another person’s income, financial difficulties, total wealth or anything else that might prove to be embarrassing to them. This could be a predominantly American hang up, but I tend to doubt it. While searching for the source of the original aphorism, I found this quote from British poet Max Plowman:
‘Money is a dangerous subject. Polite conversation avoids it. You may talk about economics, but not raw money…’
I know that when I’ve tried to have frank conversations about money (and the applications thereof) with friends and co-workers, the majority of them have shied away from the topic as if I’d introduced something sexually explicit. Looking at the idea from a social scientist’s perspective, this is ridiculous – and self-defeating. The only way to get good at a practical skill is to study it and to learn from other people’s successes and failures. The vast majority of us need money just to survive, so you’d think that most everyone would be keenly interested in suppressing their discomfort in order to learn as much as they practically can about the subject. And yet… many people don’t.
Back in 2014, reporter Chris Taylor wrote this passage in a piece that he did for Reuters called ‘The Last Taboo: Why nobody talks about money’:
‘So what exactly is going on here? In a society that is ostensibly one of the wealthiest in the world, why is everyone so frightened to talk about such a basic subject?
‘“It is such a loaded conversation, and there is so much subtext and hidden meaning wrapped up in money,” says Daniel Crosby, a behavioral finance expert and head of IncBlot Organizational Psychology…
‘“Money is shorthand for happiness, power, and personal efficacy, so it can be very scary,” Crosby says. “When money is short, it can be seen as a deficiency on the part of the breadwinner, and when there is lots of money, there can be fears that greed takes the place of genuine love.”’
I agree with Mr Taylor’s analysis. My observations of American culture strongly support his assessment that one’s wealth and power functionally define whether or not a person is considered a ‘success’ by his or her family, peers, and enemies. Any indication that a person isn’t fully self-sufficient suggests that there must be some reprehensible defect in their character. If you’ve been paying attention to the American Christian community’s embrace of so-called ‘Prosperity Gospel’ [2] then you’ll be familiar with the assertion that one’s holy righteousness is supposed to mystically lead to wealth. It’s implied that anyone who isn’t wealthy must lack in either faith or righteousness. By the twisted doctrine of conflating wealth and virtue, anyone who isn’t rich must be a terrible person, QED. It’s bloody appalling, but it resonates in our contemporary culture. [3]
Predictably, the social rules of conduct that people cling to in their personal affairs carry over into the workplace. An unintended side-effect of this reticence to discuss money at home and between friends inspires a lot of people to feel extremely uncomfortable discussing organizational finances in the office. Just as an individual’s financial success (or lack thereof) is misconstrued as a reflection of their essential character, so too is a department’s financial health mistakenly used as a measure of the workgroup’s – or of the department manager’s – overall worthiness. It’s utter and absolute nonsense, but it’s what people do – and it needs to change.
I spent some time arguing this in my 31st August column. A lot of the volunteer work that I do for our local Boy Scouts organisation is focused on preparing young people for living on their own once they become young adults. That involves lots of instruction on topics like responsible citizenship, emergency preparedness, ethical decision-making, and personal economics. When I teach the Personal Management merit badge to Boy Scouts, I start the program whiteboarding a typical young man’s personal budget – every expense, tax, obligation, and distraction that our notional new adult is going to face. Then we compare the agreed-to financial requirements to what a new graduate is likely to earn based on the pay rate a number of common jobs. By the end of the lesson, it’s abundantly clear that no one can live on their own and pay for a university education by working full-time at a minimum wage job; they either need to work so much that they don’t have time to go to uni, or else they need to find someone else to (like a parent or a spouse) to cover their living expenses while their paltry five quid an hour gets applied to tuition and books. It’s a deeply unsettling lesson, but it drives the point home.
That’s one advantage that the Boy Scouts program has over many other training regimens: the founders realized that a great many young men were entering the working world unprepared for their adult responsibilities – therefore, it became the seasoned adults’ responsibilities to teach the boys as much as they could so that they’d be prepared for life. I wholeheartedly agree with that mission, and it frustrates the hell out of me that there’s often no equivalent program for aspiring managers and corporate leaders. Then again, one of the expectations of leadership is that if you discover a need that isn’t being met, it becomes your responsibility to find or to create a way to address it.
Along those lines… Back when I was the resource advisor [4] for my division in public sector organisation, I realized that no one was adeq
uately teaching financial management principles to my department-level financial managers, so I built my own training regimen to address the problem. Rather than rely on lectures or reading, I adopted a performance-based mentoring program. I insisted that each cost centre manager (CCM) drafted a comprehensive budget projection for me for the new fiscal year before they put in a request for their team’s allocation – and I made my CCMs discuss their plans in front of their peers. It was immediately clear which departments had a rational, data-driven approach to drafting and prioritizing their requirements… and which departments had no clue how to manage their money. The more rational a department’s budget request was, the more funds I allocated to them – and I explained exactly why I was doing it.
At each fiscal quarter change and again at the end of the fiscal year, I insisted that each CCM show us all how their pre-FY budget plan actually worked out: how accurate had their projections been? Did they properly buffer their discretionary funds to accommodate unexpected demands? Did they overspend in any categories, and (if so) why? Did they meet their targets for executing their plan quarter-by-quarter? I then rewarded the departments that consistently demonstrated the tightest financial controls with additional funds – and penalized departments that had either wasted funds or had ended the year with inexcusable surpluses… and explained why I was doing it.
This policy made me pretty darned unpopular. Some departments demanded that our division head simply give them whatever funds they asked for, and to keep our hands (and eyes) off of their budget. Other departments insisted that it was ‘impossible’ for them to project their future spending requirements. Still others were so cavalier with their spending that their ‘budget’ plan was utterly worthless. Finally, some department managers demanded that all division funds be allocated proportionally based on the number of assigned personnel. I soundly rejected all of these arguments. When asked why, I offered two simple counterarguments.
First, the departments had no right to privacy when it came to the use of company funds. The department heads and financial staff were stewards of company resources and, as such, were wholly accountable for everything that they did (or failed to do) with company resources.
Second, our allocation of company funds had steadily decreased every fiscal year. When I started as the RA, we had a combined division budget of £550,000 for about 600 workers. By the time I left the company, our allocation had dropped to £275,000 for 550 workers. Several divisional functions – like critical infrastructure – were being starved below the point of operational sustainability. Every dollar mattered. Therefore, no one had a right to squander desperately-needed funds.
These two guiding principles, I argued, compelled us to conduct all of our financial management duties in public. Our records, our decisions, and the logic that we used to regulate our spending needed to be transparent – both to upper management and to our employees – so that everyone could be assured that we were all doing the best that we could do with the resources entrusted to us. Our watchwords were ‘transparency’ and ‘accountability’.
I took that concept a step further for my own IT department, and posted our financial plan on the door to my office. Anyone visiting our department could look as see what we’d budgeted for, how much we’d spent to-date on each category, and how much money we had left for a given function (like fuel, computer parts, training, etc.). We also included all of the requests and requirements that we’d accepted from our internal ‘customers’ that fell below our annual funding threshold. That way, if someone’s pet project didn’t get funded, they could see exactly where they were in our prioritization scheme. They might not agree with our decision, but they knew where they stood.
As you’d expect, my approach wasn’t warmly received. A number of our senior managers were incensed that I was requiring them to ‘come clean’ about their financial management decisions – specifically, about their bloody terrible decisions. One department was so careless with approvals that they accidentally authorized the spending of the same £11,000 to two separate vendors in the same week (and had to be bailed out by the rest of the division at the end of the FY). Another department haughtily demanded £26,000 for ‘miscellaneous administrative expenses’ but refused to explain what those expenses might consist of. A year later, I assigned one of my CCMs to audit that account… and she uncovered damning evidence of long-term procurement fraud. Many of the skittish managers who had fought our transparency program were (rightly) terrified that disclosures like those could scuttle their career ambitions; frustratingly, their response to increased scrutiny was to pull their metaphorical blinds tightly closed rather than getting their financial house in order.
I understand why people would be embarrassed. Some of the things that we learned by dragging departments’ spending practices into the light were poltically explosive. That being said, every problem that we unearthed got addressed swiftly and decisively. Mistakes got corrected. According to the financial guru who taught me the RA business, that was our primary mission: to optimize the utility of our limited resources by finding and correcting fraud, waste, and abuse of company funds.
That’s why I’ve always been deeply suspicious of companies that refuse to discuss departmental- and workgroup-level budgets. I’ve worked in offices where any discussion of financial matters was strictly verboten. In one memorable example, our managing partner had to personally approve every purchase request – and would often refuse an inherently-obvious small purchase on Monday, only to approve an equally-obvious wasteful purchase on Tuesday. This fellow once decided that a £500 catered lunch was fine, but that a £1 ream of copy paper requested on the same day was unacceptable. When asked what in the hell he was thinking, he huffily insisted that all information about budget matters was ‘confidential’. I understand what really motivated him: if he’d shown us the actual numbers, it would have become clear to everyone that the gentleman was either unable or unwilling to manage his department’s money effectively. We’d all lose confidence in him, and would be less inclined to blindly obey him on other matters.
I understand and respect the need for operational security through the exercise of careful control over sensitive information. Suggestions of willful financial misconduct can cripple a company’s brand. That being said, financial management is a critical element of business leadership skills. If we fail to teach sound financial management principles to our aspiring young managers, then we set them up to fail once they finally attain a position of power – exactly the same way that set our young adults up to fail once they leave home when we fail to teach them personal financial management skills. The thing is… fear of embarrassment should never justify a person’s harm inflicted on others, even through passive omission.
The easiest and most effective way to teach employees how to manage company funds is to be transparent with them in how and why we make financial decisions for the office. Give them a fair fighting chance to learn. If something embarrassing comes out as a result, embrace it – turn it into a learning opportunity. Most embarrassment is fleeting; personnel development lasts (near as makes no difference) for a lifetime.
Do right by your people.
[1] According to Wikiquote, Mr Plowman said that in an article called ‘Money and The Merchant’ in Adelphi magazine in September of 1931.
[2] Which is insanely popular where I live in Texas.
[3] It shouldn’t come as a surprise that Psoperity Gospel doctrine grew up during the post-World War 2 economic boom (a.k.a. the ‘False Golden Age’). A great many of our current cultural conceits (like the isolated nuclear family, the superiority of suburban living, etc.) were cynically manufactured during that bubble.
[4] A fancy name for senior financial administrator for a ~500 employee business unit.
POC is Keil Hubert, keil.hubert@gmail.com
Follow him on twitter at @keilhubert.
You can buy his books on IT leadership and IT interviewing at the Amazon Kindle Store.
Keil Hubert is a retired U.S. Air Force ‘Cyberspace Operations’ officer, with over ten years of military command experience. He currently consults on business, security and technology issues in Texas. He’s built dot-com start-ups for KPMG Consulting, created an in-house consulting practice for Yahoo!, and helped to launch four small businesses (including his own).
Keil’s experience creating and leading IT teams in the defense, healthcare, media, government and non-profit sectors has afforded him an eclectic perspective on the integration of business needs, technical services and creative employee development… This serves him well as Business Technology’s resident U.S. blogger.
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