The mortality of profits and the lack of shame.

Going out on a psychological bent, one thing that continually stuns me is the lack of shame by senior managers of failing companies’.

The credit crunch present numerous examples, where there apologies presented in front of government committee hearings are just so pathetic as to make one sick to the stomach. Board meetings can be the same.

Rather than being ashamed or even angry over company or investment losses, the managers tend to just ignore any questions pertaining to them.

One CFO I encountered presented spreadsheet after spreadsheet of fanciful financial projections, all the while avoiding answering the simple question of ‘has the firm ever made any revenue at all?’

I tried to explain the investors were an insurance company and that the money came from people’s pension funds; hence someone’s retirement depended upon the firm making a profit; and that we were morally honour bound to make one – regardless of any legal fiduciary arguments.

I was met with either rolling eyes or cynical grins.

Somehow it didn’t seem to get through, or perhaps it was because it did get though, that the managers refused to acknowledge that there were consequences to firms losing investors money. That people hurt at the end of the day because of the messes they created.

A quick search of the definition of shame defines it as: A painful emotion caused by a strong sense of guilt, embarrassment, unworthiness, or disgrace.

The managers present, displayed none of these.

In fact their attitude was that because they had all gone to prestigious ‘red brick’ universities or had 20 years plus experience, they were some how entitled to their positions regardless of fact that they had not made money for their investors / shareholders.

The point is, in many turnaround situations, senior managers don’t have a moral reason as to why they must make money for their shareholders. They see it something you ‘hopefully achieve’ – a nice to have – not a need to have – and worse they don’t understand the ‘why the need to have’.

As such, without this moral imperative they may acknowledge the importance of profit intellectually but emotionally they don’t understand it. As such failure in these firms under that type of management is inevitable.