The Role of Management
Generally, if management consulting is about advising management in business matters, then the role of management is a topic of much importance. Compass Park contends that the survival or extinction of a business is by the financial test of profits. And the primary responsibility for the pecuniary success of failure of a business rests upon management. Therefore, management is vitality concerned with 1) controlling costs, 2) expanding gross margins, and only after the first two are satisfied, 3) growing sales. Approached correctly the efficiencies obtained through cost containment and margin analysis, should increase management’s desire to increase volume. Thus the monetary advantages of larger business operations are appealing, as long as internal economies of scale are maintained. However, higher volumes demand even higher efficiencies.
Compass Park advises clients that the above statement is an historical fact you can take to the bank. In order to secure any large number of economies which present themselves with larger volumes, management must without fail and without affecting the quality of the goods or services sold, continue to increase organizational efficiency. And with increased sales volumes and size of operations must come more highly skilled managers; in particular managers who understand the importance of costs and how they relate to profits. To the unprofitable business or to the large corporation not fully able to secure economies, the road to higher efficiency levels are often paved with the obstruction and opposition from unskilled managers. At Compass Park we secure economies by either training managers in management accounting or though identifying and removing the boundaries to efficiency and growth.
In today’s business environment, symptoms often disguise root problems. Managers weak in management accounting typically address symptoms which solve nothing. In fact, addressing symptoms can be counterproductive aggravating the real problems, especially when the symptoms are addressed by management with the same biases that may have contributed to the initial problems. At this point, management spends half its time “putting out fires” instead of managing and solving the real problems. If crisis management becomes the norm, corporate decline is pervasive because the nature and causes of the problems remain. At Compass Park we first trace a symptom to its logical source; we then build a control system which eliminates the problem.
A few years ago a Chairman of the Board put it this way:
“I feel if it was not for the tenacity and management skills of CSC Capital and dynamic ‘get the job done’ type atmosphere they created, I probably would have continued to live with the problems rather than deal with the solutions. CSC Capital brought vast knowledge and ability to access and analyze the situation and designed a plan that would attack the root problems…I feel that we have not only experienced an extremely successful consulting experience, but a cultural change as well. In short this was accomplished by relocating authority. All of us realize that we must continue the fast pace forward and follow the corporate guidelines that CSC Capital laid out…Their recommendation of our new President that can manage this on-going change, I believe, was a very appropriate one.”
Chairman of the Board,
High Technology Manufacture and Distributor