Tuesday, May 10, 2011

Window dressing

Used as a figure of speech, window dressing implies something done deceptively to make accounts look better than they actually are. Window dressing is a sign of lazy or incompetent management.

When you work in a corporate environment, at the end of the fiscal year, you often hear staff complaining that when inventory runs low they are not allowed to replenish properly. When an existing staff resigns, he or she is not replaced. Money becomes tight. Staff becomes stressed. Suddenly the company seems to be running on an all-out tight budget.

In my opinion, this is a sign of lazy and incompetent board of directors. These people are paid the whole year round to run the company properly, not just to window dress the financial statement for presentation to the shareholders. This is deceptive behaviour.

The other deceptive behaviour is raising prices. This is fine when real competition exists with  other companies because it shows that you have improved on your product or service and you deserve to be rewarded. A good example is Apple Inc. However, when no real competition exists or there is strong collusion between competitors, the board of directors takes the lazy way out to increase profit without actually improving on cost, productivity, quality or service. Examples are the telecommunication companies and (especially) the utility companies. They take it as their God-given right to increase prices every year. This is the lazy way to increase the company's profit without doing anything. Is this the way of capitalism? No wonder America is in dire straits now.

After the fiscal statement is prepared, life returns to normal down at the office floor, the factory floor, the retail floor, or wherever the bottom floor may be. The board of directors can rest for another year now, having secured their pay rise and bonus. Who needs to work?

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