Sunday, August 23, 2009

Toxic Management

One of the Blogs I read sent me to the following site http://politiken.dk/newsinenglish/article766260.ece.

It is a study by a Danish expert describing a Danish hospital executive that actually caused his employees to become ill. That is ironic. Where people go to get well is being served by folks who are sick of their work.

I have heard more about this since coming to Hillsboro. It tells me that much of the "new fangled" stuff is leaving out the most important part of managing people. Relationships and behavior of the staff make a ton of difference when dealing with customers. I listen to the Manager Tools podcast every week. If there is one thing I have learned by listening, it is the communication skills of the manager helps create the environment where employee behavior creates the work making the organization successful.

The problem with these toxic managers is that they appear to be doing some good things at the expense of the people who support their work. Workers hope that these managers will be found out and fired. The trouble is that it takes time to see the good people going out the door for Boards to see the trend. In the mean time, good people are gone and performance suffers with the lack of experience of the new employees.

Managers seem to think it is the "bad attitude" of the folks leaving rather than understanding the real problem is the managers themselves.

Boards of Directors, Governing Bodies and senior managers need to spend more time in the hiring process evaluating the potential executive. So much rides on the success of the organization's health that they must select managers who can manage people well and get the job done. This is one reason I spend time at the Manager Tools web site.

Still, there are still too many bosses that believe that they have the God given right to act that way because they are in the "Boss" position.

In graduate school, I read and studied Douglas McGregor's Theory X (the drill sergeant)/Theory Y (relationship manager). The role of an organization's leader is to do two things. The first is the successful completion of the work the organization is there to do. The second is to get people to do the work willingly. Work can be enjoyable and fun while getting the main purpose of the organization accomplished. A tyrant boss can get things done—for awhile—then the organization will deteriorate.

Organizations have a duty to teach "management" and have that be a key trait before making people managers. Just because you are smart, have a degree or are competent in a field of work doesn't qualify someone for a manager's role.

Monday, August 17, 2009

Gallup Poll Finds 57% Believe Stimulus Having No Impact Or Hurting Economy.

I subscribe to a news service from the International City/County Management Association. The item listed below came from today's issue.

USA Today (8/17, Heath, 2.29M) reports, "Six months after President Obama launched a $787 billion plan to right the nation's economy, a majority of Americans think the avalanche of new federal aid has cost too much and done too little to end the recession." A USA Today/Gallup Poll "found 57% of adults say the stimulus package is having no impact on the economy or making it worse. Even more -- 60% -- doubt that the stimulus plan will help the economy in the years ahead, and only 18% say it has done anything to help improve their personal situation."

I would be classified in the 57% based on our experience with ARRA. As you know, Hillsboro received approval to resurface Ash Street to the tune of $412,000 and change.

The stimulus program was sold on having "shovel ready" projects that could be built immediately. That would get money into the economy and therefore get the economy cooking again. It seems that we won't be getting this project started in calendar year 2009 at all. Here is the timeline:

  • March--Program approval
  • KDOT project meetings indicate the projects need to go through KDOT review process
  • Project design goes from 7 sheets to 36 sheets to meet KDOT Specifications
  • Project bid letting is scheduled for December 15, 2009
  • Construction begins sometime in 2010

I really like the opportunity for the Federal government to pay for the improvements to Ash Street. BUT, getting an infusion of cash into the economy in a timely fashion is not going to happen.

This was touted as a "jump start" to a stalled economy. If Hillsboro is a barometer of the impact of the Stimulus program, then the program is a failure.

Friday, June 19, 2009

30 Year Celebration

We had a small party today to honor City Clerk Jan Meisinger. Thursday, Jan celebrated her 30th anniversary with the City of Hillsboro.

Doing anything for 30 years takes a considerable amount of fortitude and dedication. Her work has given her an interesting perspective on how humans work and interact. She would have a bunch of stories about how Hillsboro works. Knowing Jan, I know the secrets are safe—at least until the offer comes to write "the book" we would all like to write about our experiences.

Congratulations on your 30 years with the City of Hillsboro.

Sunday, April 26, 2009

Kansas impact on the Economy

Last week, I attended the KU City Manager seminar. The theme of the program was how cities were coping in this economy. The example cities/counties experienced the desperate times we hear about in the news daily.

One thing like to do at conferences with my colleagues is spend time in the halls talking and comparing notes. This year the comments are not like the stories we hear from the major media outlets. Like Hillsboro, Kansas communities are coping well during this time. The more I listened to the stories in the seminar and the stories in the hallway a theory developed in my mind. In Kansas' smaller communities, local governments do not stray far from the core purpose of what government is supposed to do! The purpose of government activities is to do for the community that we can't do for ourselves. When we gather in community living, we try to spread the jobs around. One person does law enforcement, another does fire protection. One provides water and another teaches school. And the activities go on.

In larger communities, there are more people asking for more things to be done and because there is money available, the diversity of activities grows.

This is the contrast I saw last week. Since folks want more and their government is willing to provide it times like we are seeing create pressure to keep doing the same grandiose things. In our smaller communities, I see us doing the core services well and fairly Spartan. (We certainly could use a couple more people in certain areas too.) We are living within our means and we have a sense of not getting too extravagant. The Midwest work ethic plays here too.

So my unofficial poll is this, we are doing well compared to the east and west coast. We are thankful that our community does not hurt like those I heard about last week.

Tuesday, March 31, 2009

And they say Crime Doesn’t Pay

One of the Blogs I read regularly is one called Evolving Excellence. The March 31, 2009 posting summarizes some thoughts I have concerning our financial situation. I pasted it below for you to see. One of the thoughts I had yesterday while reflecting on the GM CEO sacking was how similar it is to the actions the CIA took in the 1960's and earlier with foreign governments. If our government didn't like the leader of another country, we set about to have a coup and "bam" they were gone or dead. About the only nice thing about the past weekend's maneuvering is Mr. Wagoner only lost his job.


 

Posted: 30 Mar 2009 03:24 PM PDT

By BILL WADDELL

Bank of America got $25 billion last Fall, then another $20 billion in January, plus a guarantee against losses of $118 billion, and now the New York Times is reporting that the bank also grabbed another $5.2 billion unbeknownst to the rest of us through an outfit called American International Group. By my arithmetic, that comes to a shade over $168 billion of our cash the bankers needed to cover their screw-up.

Part of the bailout money went to cover the $20 billion+ losses of Merrill Lynch, which the B of A bought knowing full well that Merrill Lynch had lost all that money. It also went to pay hundreds of millions of dollars in bonuses to thousands of Merrill Lynch employees right before the deal closed.  The B of A then covered the bonuses with the first bailout check, and is now dragging their feet as the New York State Attorney is demanding the details.

The boss at the Bank of America - a good old boy named Ken Lewis - not only stays out of federal prison, he keeps his $10 million a year job.  Note: In fairness to Mr. Lewis, he demonstrated great personal sacrifice by settling for $10 million in 2008 while the bank was in D.C. with its grubby hands out.  The previous year he took home $20 million.

Contrast that sad story with GM.  They get $9.4 billion - 95% less than the shifty banker got.  And now for reasons Mr. Obama has yet to explain, if GM wants another dime, the big boss has got to go. Rick Wagoner is fired.

As readers of Evolving Excellence well know, I am hardly a member of the Rick Wagoner fan club, but no one has ever breathed an insinuation that he is sneaky, devious or in any way dishonest - like the bankers and brokers with their bonus shenanigans.  No State's Attorney's Office has reason to investigate Wagoner, or his management of General Motors  

What are we to think of this other than to draw the obvious conclusion:  The folks in the financial community can play as fast and loose with ethics, the law and other people's money as they want without consequences? Manufacturers, on the other hand, can't even fail, let alone wallow in the self-serving ethical sewer the bankers and brokers inhabit, without losing their jobs.

What's up with that???

There might have been some logic behind it had Obama demanded that GM put a manufacturing pro in charge like Alan Mulally at Ford where a bailout wasn't needed, but no.  Wagoner is being replaced by Fred Henderson - another in a long line of career GM accounting and finance guys a whole lot like Wagoner.  So what's the deal?

We are told we have to follow through on bonuses to sleazy bankers and Wall Street shysters or else they won't be able to attract the best talent.  But throw the manufacturing bum out on his ear - after all, anybody can run factories ... is that it Barack?  Screw the manufacturers and fawn over the bankers and brokers? 

Why didn't UAW President Ron Gettlefinger get canned part of the mandate? Didn't the union have an awful lot to do with the mess at GM? Or maybe canning Wagoner is Obama's way of helping his union backers by giving GM management a hearty head slap. 

Whatever this deal, it is, like just about everything Obama has touched in his first few months on the job, it stinks. Bankers and union bosses sail through the economic mess unscathed, while manufacturing management and manufacturing workers get the shaft.

Most laughable is that the auto industry crisis is largely the result of bankers so fouling things up that no one can get a car loan.  If the Bank of America had found their way clear to make just a little bit of the $168 billion available for people to buy Chevys, maybe GM wouldn't be in such dire straits.  Just a billion or two of it would have helped, but no, that hasn't happened. 

You blew it Rick.  You have acted honorably, and naively thought you were dealing with honorable people. Shoulda paid yourself a whopping bonus out of the $9.6 billion instead.


Thursday, January 22, 2009

The wonderful world of municipal finances

This is a long and involved posting about the City's 2008 and 2009 finances. I didn't expect it to be as involved as it ended up. It is technical and really designed to supplement the article that appeared in the Free Press last week. This is their story. Hillsboro Free Press - City intends to monitor cash flow in troubled economy

The City of Hillsboro is starting 2009 as a number of other organizations—watching where and for how much our revenue stream takes us this year. Because of the national economy, how we operate the many facets of what we call the City of Hillsboro will be different in 2009 compared to any recent year of operation.

For most of 2008, I watched two of the city's funds—electric and water. Earlier in the year, I reported to the city council that the utility funds were under financed. We passed rate increases in Water, Sewer, Electric and Sanitation. Because of the cooler, wetter summer, water consumption was lower than the recent history shown here.

 

Water Consumption.

 

in Gallons

  

2002

112,894,350.00

2003

103,875,606.00

2004

102,557,808.00

2005

93,061,646.00

2006

99,762,566.00

2007

91,054,053.00

2008

87,229,292.00


 

We all felt the hurt of rising fuel costs during the summer of 2008. In the electric utility, we felt the hurt of fuel costs in the cost of power. The cost of power always includes cost of fuel as one of the components. In 2008, our fuel adjustment was $432,525. When we forecasted the rate adjustment, we were expecting $272,613. Another way of saying this is the projected fuel cost was $0.0098 per Kwh. In August, we paid $0.031 per Kwh. The table below shows that the cooler weather this summer also affected the electric utility.

 

Total

Total

 

KWH

Sales

2,001

21,301,884

1,898,523.03

2,002

21,966,858

1,942,454.45

2,003

21,330,321

1,904,157.48

2,004

21,583,919

1,993,473.74

2,005

22,478,221

2,069,403.19

2,006

22,512,665

2,064,434.00

2,007

22,911,018

2,133,872.89

2,008

22,664,202

2,067,733.46


 

Traditionally, the City's general fund receives a transfer from the utility funds. Since the cash flow here was so low, we did not transfer the full amounts. Since every action has it consequences, the impact on the general fund was that $125,000 that it would have been received wasn't. We finished 2008 with a lower cash balance there as well. The bottom line for us is that we will be looking at possible rate changes in 2009 as a result of the lower than projected revenues. I am working on recommendations to the City Council now.

The rest of this post will be for the die-hard finance person interested in seeing how the municipal finance world works. If you bail out now, I won't be offended. It is stuff I need the keep the City Council updated on to fulfill our financial accountability responsibilities. Don Ratzlaff's (Hillsboro Free Press) story about our efforts covers the basics.

So the question "Larry, why should we care about these cash flows?" The Kansas "cash basis law" requires that we keep positive balances throughout the year including having a positive balance at the end of the year. As a result of not having a larger cash balance several months will have negative balances, thus violating the law. I know this now because I have projected the revenues and expenditures of several funds to see this.

The City of Hillsboro has 39 separate and distinct funds. It is somewhat like running 39 different companies and each of them must be profitable every month and at the end of the year. A large number of these were created for what is called a "special purpose." We have a number of funds for the Public Building Commission, Recreation Commission and several unique funds like the tree fund, K-9, DARE, paying sales tax and employee withholding taxes.

I said two paragraphs up that I was projecting the revenue/expense stream of several funds. What I am actually tracking are 17 distinct funds. These are the funds where a considerable amount of business is being done. Here is a list:

  1. General

  1. Library

  1. Recreation
  2. Special Highway (Gas Tax for repairing roads)
  3. Industrial
  4. Special Law Enforcement/Fire
  5. Family Aquatic Center
  6. Equipment Reserve
  7. Sales Tax
  8. HCMC Plant Property and Reserve
  9. PBC Family Aquatic Center
  10. Capital Improvement
  11. Bond and Interest
  12. Water
  13. Electric
  14. Sewer
  15. Sanitation

An example of the complexity of the cash flow process is tracking the General Bond & Interest fund. It receives payments from other funds (City of Hillsboro companies like water and sewer) to pay debt issues. These debt instruments receive principal and interest deposits at least two times per year and are then paid twice a year. What makes this fund "fun" to watch is that the first series of payments start February, March, and April and the second set start in July and go through October. Each debt issue requires payment in the Bond & Interest Fund the month before it is to be paid. The Bond & Interest fund is also property tax supported, the property tax revenues received from Marion County must be in the Bond & Interest fund as well.

One of the more unusual flows of cash occurs with the Family Aquatic Center. When the sales tax issue was approved to build the pool, a Public Building Commission (PBC) was formed to be the owner of the pool during the duration of the pool debt. Sales tax is deposited in the General fund then transferred to the Family Aquatic Center (number 7 on the list above) as rent. Then the Family Aquatic Center makes a payment to the PBC Family Aquatic Center (number 11 on the list above) and that fund makes the pond payment. In my view, there is one too many funds in that transaction—that being #7 Family Aquatic Center.