Tony, a young entrepreneur who has been having serious human resource issues has called up the consultant who assisted him in employing his initial 14 staff. To his surprise, the consultant whom he expected to be on the defensive is querying him – the owner/CEO and the way he has been handling company checks and balances.
What has come to the fore is that like most owner/CEO of new businesses Tony has not really implemented checks and balances until a major crisis took place. This has provided the loopholes for the employees to do things which Tony, the company owner describes as robbery but which the employees insist is simply profit-sharing.
Tony has been in a restaurant with his friend Kale and they have been holding the discusssion with the lady consultant through phone. Tony’s mentor, Shina, a tycoon has just joined them. They simply shake hands to greet without saying anything to each other.
“Are you saying it is my fault that my employees have been stealing from me?” Tony asks the consultant through the phone.
To Tony’s distress, Shina smiles. The phone is on speaker, so they all hear the consultant’s reply. “What I am saying is that you ought to have put checks and balances in place that would have made it clear that it is against company policies to take anything including factory rejects of company products without thorough assessment and permission.”
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“Okay, I’ll talk to you later,” says Tony and cuts off the call. He looks at Shina, “Welcome sir.”
“Thanks Tony. I got your mail explaining all that had transpired,” says Shina. “It is not all your fault but mostly your fault.” Tony groans silently. Kale tries not to chuckle.
I heard your consultant speak on checks and balances and I will take it up from there. According to Investopedia, “Checks and balances are the various procedures set in place to reduce mistakes or improper behavior. Checks and balances usually ensure that no one person or department has absolute control over decisions, and clearly defines the assigned duties. The existence of checks and balances within an organisation prevents any one person or department from having too much power, and forces cooperation in completing tasks.” Shina has been reading from his iPad.
He continues, “Now, bringing it down to your situation, concerning the ‘small robberies’ in which at least four of your key staff are involved, if you had put in place procedures concerning so-called factory rejects, you could have checked the excesses. Your staff discovered you were not concerned about the factory rejects because the goods that get sold officially by the company bring in money that you consider satisfactory. So, the production manager encouraged by the operations manager simply ensured that the factory rejects were high in number, enough for them to sell and have considerably money to share from the proceeds.”
Tony starts to nod but stops, suspecting Shina would soon use the hammer on him. He glares at Kale who is nodding profusely to signify he totally agrees with Shina.
Shina continues in a harder tone, “When you were gingered up to carry out my instructions on profit-sharing which I initially and elaborately explained to you when you were starting the business but failed to implement, the production/factory manager started ensuring that the number of factory rejects were reduced.”
Kale puts up his hand like a student that wants to make a point in class. “Tony did that only after the major robbery of N3.2 million worth of goods.”
“And that was even after I told him about profit-sharing again,” says Shina, looking at Tony. “Since they would then need to meet and surpass targets to qualify for profit sharing, they had to reduce the factory rejects and increase company official sales. So two things- you could have reduced the ‘small robberies in the first place by having checks and balances in which factory rejects would be assessed by you or a trusted staff or the photos or videos taken before anyone is allowed to take them out. Or the company itself can simply decide to arrange for the sales of the factory rejects, of course at reduced prices and the money would be shared to employees at certain periods only if they meet and surpass company official sales targets.”
Tony agrees but keeps quiet as Shina is still speaking. “You should have a definite quantity of the company products for promotions and as part of the fringe benefits for employees. The CEO can of course be apportioned larger quantities, but every employee must also have certain quantities they are given regularly. If people work in a place producing something that is useful to them, it is wrong for the company not to arrange for them to have free quantities on a regular basis. And it is wrong for the CEO to just ask for any quantity he wants to give out for personal purposes at any time he feels like. If it surpasses what he is apportioned, he should pay for it”
“Please, I need to say something. The factory rejects were meant to be taken by employees for their use and not meant to be sold, there is nothing really wrong with those factory rejects, just that the shape or the look may not meet with company market standards” Tony puts in. “That is the reason I never bothered to check up on the factory rejects so employees can take them for their use.”
Shina shakes his head. “That leaves room for sharp practices. If that is not being assessed by you or a trusted person, then all they need do is ensure that there are so many factory rejects such that even after each one has taken enough for their personal use, they would still have sizable quantities to sell.”
“The operations manager was supposed to be the one doing the checking,” says Tony.
Shina and Kale look at each other and then they both look at Tony as though something has dawned on them all.
OLUYINKA ALAWODE
