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Long before a crisis hits,
Long before it shows in the financials
Or in the KPIs,
The signs are there...
Dan's eyes were gritty, and he already had the beginnings of a headache. He hadn't slept well, waking several times during the night and finally giving up on sleep long before the alarm went off at 5:15 a.m.
Dan was the CFO of Greycor, a manufacturer of domestic consumer goods. He had been with the company for three years now and was proud of his achievements: Revenues had grown from $36 million annually to more than $250 million. He had also survived the challenges of the Sarbanes-Oxley Act (SOX) implementation and felt that things were going well-until late yesterday, that is, when he got the preliminary Q results.
Now he was scheduled to talk to Marc, his CEO. He wasn't looking forward to it; Marc didn't like surprises. Dan had practiced his opening remarks repeatedly on his trip to the office that day. He hoped that a little humor would ease the pain of what he had to report and perhaps save him from Marc's rarely seen, but legendary, wrath. No such luck.
Marc started slowly: "So, you are telling me that our sales have declined precipitously, costs are increasing in both SAG and production, and income has declined by 35% since last quarter? And we're no longer making cost of capital?" Dan nodded unhappily. He started to give Marc some reports that he had been working on late the previous night, but Marc cut him off. "Why didn't you tell me about this earlier?
"We just finished the initial cut yesterday, and I spent most of the night analyzing the results. I came to you as soon as I knew," was Dan's somewhat lame response.
This did little to defuse Marc. "Dan, I want to know three things from you by the end of the week. First, what happened; second, why it happened; third, why I didn't know about it before. I have to start calling board members and our shareholder services area to get in front of this, so go get me my answers. Now."
Dan felt stung and even said, "Marc, I'm just the messenger!"
Marc's response was sharp. "That's not...