This story is real. Some minor facts have been changed to protect the innocent, but the main points illustrated are based on actual experiences.
Democracy is a good thing. But like most good things, if taken to the extreme, the results can be disastrous.
To many, it’s almost impossible to separate “partnership” from “democracy.” Many partners in CPA firms believe strongly that the firm should be managed in a highly democratic manner. They often feel that being a partner entitles them to be “involved” in managing the firm and making decisions. They feel that this is the democratic way.
One area where the democracy mindset is tinkered with is when a firm adopts the compensation committee (CC) approach to allocating partner income (there are many other examples). This is a tall leap for partners to take. They are asked to entrust the most significant and sensitive aspect of being a partner – their compensation – to a small group of partners who function as judges. They are told that if the partners don’t trust the judges, the system won’t work.
I have seen many firms who move to the CC system doggedly try to retain some semblance of democracy by adopting a rule that every partner eventually gets a chance to serve on the committee. This is done by limiting the re-election of committee members.
Let me illustrate how this can backfire. Many of my clients ask me to attend their CC meetings for the first two or three years to keep them on track. One firm that I worked with did a great job of objectively evaluating the performance of each of their eight partners. During my first year with one firm, I witnessed the CC doing a fabulous job of evaluating each partner’s performance. One of the partners had a terrible evaluation and actually had his pay reduced as result. This partner was as close as one can possibly get to being fired.
Lo and behold, in the second year of the CC at this firm, this probationary partner was elected by the partner group to the committee to replace a member who was required to step down. How crazy is that?
The moral of story is this: The partners have to trust the judges for the system to work. But in order to trust the judges, all the judges need to be credible to the other partners.
My advice to firms is to allow CC members to serve an unlimited number of terms, thereby resisting their democratic urge to give everyone a chance. Most firms have at least one partner who is not viewed as credible by the bulk of the partners.
The Artist – It’s a Hoax, Folks
Theatrical poster
It seems that a couple of Hollywood types – say a producer and a director – were having their way with a bottle of 24 year-old Bruichladdich one evening. Instead of the inebriated effect that fine Scotch has on its imbibers, it caused these movie moguls to wax whimsical and cynical.
The producer sarcastically asserted that the importance of dialog in movies is totally overblown. As evidence of this, he pointed out the fascination people have with texting, having observed on multiple occasions his daughter and her friends texting each other…while in the same room!
The director said “As preposterous as your point is, we both know the only things that are important in selling a movie today is a frenzied marketing campaign by the movie studio followed by rave reviews by critics desperate to outwit each other by anointing some artsy-fartsy movie as the second coming of Gone With The Wind.”
“That’s brilliant!” the producer blurted out. “We could make a low-budget throwback movie – say, a silent movie – no one has made one since the talkies came out in the late 1920s. The movie will be seen as cool because it’s so countercultural. And the public will play along – they’re so fickle they’ll embrace any new trend.”
“Yes indeed!” countered the director. “We’ll do it in black and white so it has that film noir mystique. We wouldn’t need an expensive screenwriter because any numb-nutz can ‘write’ a script for a silent movie. And we could use unknown actors because if they aren’t speaking, who needs top line stars?”
“Our costs would be practically nothing,” the producer mused, sounding very much like an accountant.
He continued to brainstorm: “It will all be an elaborate hoax on the international movie-going public to prove how easy it is to program humans into believing what one wants them to believe. It’s done every day in politics. Why not movies? Between the two of us, we have enough top drawer movie critics in our back pockets that we can coax them to play along with this farce and write enthusiastic reviews.”
“It’s diabolical,” giggled the director. “Kind of like a Jackson Pollock painting. If a mentally disturbed artist can make millions by throwing containers of paint on a white canvas, think what we can do with a movie.”
“You know, this has been done before,” the producer recalled. “Orson Welles in 1938 terrified millions of gullible radio listeners by creating a fake news broadcast about an invasion from Mars. For a few hours, people were stuck in a kind of virtual world in which fiction was confused for fact.”
“We’ll need a catchy name for the movie,” said the director.
The producer had it ready. “We’ll call it…The Artist.”