The value of values
Unfortunately, at the time of receiving the gift packs sent to the finalists by SAICA, I was in Mozambique investigating a case of theft by one of the local farmers in the region. It was a lengthy forensic audit and at that time, I had to get my entire team from procurement, finance, HR and even the legal team to focus on the investigation and try to resolve it as quick as possible. While we have managed to resolve the issue (after a gruelling month), it made me think and I started to weigh up the costs (actual, opportunity and emotional) of this exercise.
These are summarised below:
- The procurement team was needed in the investigation as they procure from the farmers, but to create time to focus on this, they were pressured to get inventory as quickly as possible so operations can continue efficiently in their absence. This led to a reduction in time spent on sourcing competitive suppliers.
- The finance team focused on the internal audit, which led to taking an eye off budgets numbers. Luckily, each department monitors their own, but this had the potential of being a disaster.
- We had various recruitees in the pipeline: a maintenance manager and three sales representatives. Owing to the involvement of the HR manager in the investigation, the staff induction was brief, which I believe would increase inefficiencies for the first few weeks of their employment. This directly impacts sales, which has a direct impact on profit and loss.
- The emotional cost of all other employees in the company. First, the uncertainty around COVID-19 and now this − potential job losses, salary reductions, etc. Staff members were trying to process this and it inevitably led to a drop in productivity and output.
- And, of course, the legal costs.
Through this process I started to fully appreciate the financial benefit of a strong value system and its direct impact on the efficient and effective running of a business. I know it is the core of the CA(SA) profession, but it is something that we take for granted and only acknowledge its true importance when it isn’t there, much like air. Many entrepreneurs see compliance as a pain and possibly a stumbling block to growth, but to have those processes intact is crucial. This does not mean that your business is safe (as in the case above) and things will still go wrong, but it becomes a question of whether your system is strong enough for your company to bounce back.
The custodians of the values in a business are the leadership within. One needs to be strong, decisive, consistent and, most importantly, the environment needs to be safe for others to speak up against any contravention of company values. Without the support from staff and their account of events, we may still not have solved the case, or if we did, it would have taken twice as long.
My learning point that I would like to share with entrepreneurs out there is to value the values. It is not a ‘cost centre’, and while we are all chasing PE or EBITDA multiples, remember that values too add value to your business (and potentially more than you realise).
So, value the values.