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Pro Forma Par

Apply ''pro forma'' to everyday life and you'll understand the problems it causes, writes a reader. More letters to the editor: how to help noncharismatic executives speak in public; how not to help board members do their jobs; more.
CFO Staff, CFO Magazine
September 1, 2004

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The article "A Matter of Emphasis" (July), which discussed the prevalence of reporting "pro forma" and "adjusted" earnings numbers and the questionable effect Regulation G has had on curbing these practices, confirmed the disturbing trend that I have noticed myself.

Maybe if we apply this pro forma concept to other things that happen in our daily lives, we can see the problems and the hilarity that could result. For example, imagine being on the golf course and giving yourself a pro forma par because you want to exclude the shot you hit in the water, the shot where you nearly hit the course marshall, and the other three shots where you almost broke your wrists trying to get out of the sand trap.

You justified excluding the extra five shots from your score because normally that doesn't happen. How about calling up your car insurers and telling them they can't increase your rates due to your recent speeding violations, because your pro forma driving record doesn't reflect this, since you normally don't speed. I believe the practice of publishing pro forma numbers not only taints the credibility of the immediate financial information, but it also has the unintended effect of chipping away at the hard-earned favorable reputation of all financial professionals.

The pro forma practice reminds me of the old accountant joke (which I strongly dislike) in which an engineer and an accountant are asked what two plus two equals. The accountant replies, "What do you want it to be?" The reason people keep repeating this joke is because, unfortunately, there is some truth in it.

Publishing pro forma numbers does not help!

Dave Muir
Accounting Manager
U.S. Borax Inc.
Los Angeles


Only Converse
Your article concerning live presentation skills ("You're On!" July) was spot-on concerning the threat of "disastrous trips to the microphone." We err, however, in concluding that the universal answer to this problem is communications training.

Coaches can help to discover the charisma some of us have kept hidden, but not all executives have an inner game-show host waiting to be freed. It is far more effective to address this problem from the other direction: change the task. Executive appearances yield superior results as conversations rather than speeches. The same executive who comes across as "cold, aloof, uninterested, and uninteresting" when standing at the lectern can appear friendly, engaged, accessible, and confident in a conversation.

As the chair of hundreds of corporate and government events, I have found this to be the perfect solution for all executives. Stepping to the lectern to make a speech is an extremely risky enterprise for noncharismatic individuals. Speech writing, preparing, and practicing is also time-consuming. Sitting onstage in a normal conversation where the interviewer gives the executive the cues he or she needs to deliver information in a natural, conversational manner requires less preparation and delivers uniformly better results for all involved.

Scott Shuster
Owner
The Shuster Group
New York


Knowledge, Not Gizmos
I read "Director's Cut" (TechWatch, July) with amazement. The last thing board members need to fulfill their job is another gizmo. What they do need is training and a better understanding of what their roles and responsibilities are. Ask any board member you know the last time he or she read his or her respective company's bylaws, shareholders' rights agreement, or its articles of incorporation. These "solutions" provide nothing that can't already be accomplished via phone, E-mail, and a half-decent secure Website.

Good governance requires active and independent-minded board members who understand their responsibilities and who are willing to challenge management when necessary and support them when appropriate.


Technology is not the solution — a little common sense and integrity will go a long way to solving this deep-rooted problem.

Michael Schifsky
Scottsdale, Arizona


Testing Is Tested
The author of "Casting to Type" (July) seems quite impressed with the Myers-Briggs Type Indicator (MBTI), Rorschach inkblots, and handwriting analyses as employment selection tools.

MBTI divides everyone into 16 personality-type definitions. None of them has even one negative attribute. There is no loser type, Neanderthal type, or boorish type, and, unfortunately, no magnificent-leader type. There isn't a hint that one might be autocratic, overbearing, rash, or even a touch obnoxious. Every MBTI type is just — well — nice. Recruiters need more than mushy feel-good analyses to determine who to hire.

And if you don't like the MBTI personality profile assigned you? The MBTI owner-publisher, Consulting Psychologists Press Inc., says to simply change the result to one of the remaining 15 types that might make you more comfortable. Aren't psychologists wonderfully definitive!

Recruiters require preemployment tests to improve their hiring success rate for the particular job and market circumstance. An inherent problem with MBTI, handwriting analyses, Rorschach, et al is that they simply don't do that.

And what of those not hired because they did not fit the preconceived type? Might they have been the better choice?

Lack of concern about such job-performance success predictability seems endemic in the cultish psychological-testing world, to their professional discredit.

Joe Moran
President
Abrams, Moran & Associates
Orinda, California


Besides those mentioned in your article, there are other key factors of useful preemployment testing. First, although the article talks only about companies using tests created for training or team building of current employees, such tests must be created and researched for testing candidates as well.

Second, behavior tests must catch applicants who try to fake out the test by answering in such a way that they will be perceived as "better" than they actually are. The article astutely described one manager slanting his answers on a training/team-building test a company foolishly used for preemployment testing — and that test did not reveal that he faked it.

Third, companies need to forecast two key parts of job success: (1) behavior and (2) mental abilities. Here's an expensive example: a CEO contacted me about his lousy CFO. We tested the CFO, and he scored low on crucial mental abilities, proving he lacked the brainpower to handle the job. This problem could easily have been avoided if candidates were given mental-abilities tests in addition to behavior tests.

Michael Mercer
Business Psychologist
The Mercer Group Inc.
Barrington, Illinois


Conniving Canary
Perhaps we should be more skeptical of information provided by "canaries" ("Canary Chorus," Grapevine, July). In a case involving a family member of mine, a canary lied to the prosecutor in exchange for judicial leniency. My family member is being prosecuted while the canary goes free.

Faith Dooge
Controller
Martin Binder Jeweler
Valparaiso, Indiana

Falling and Rising
Your cover story on the fall and rise of MCI ("Extreme Makeover," July) is the best I've ever read on the subject. It should be required reading at every business school and publication.

And by the way, Scott Sullivan should get life without parole. His actions were tantamount to first-degree murder.

Mark B. Solomon
President
Media-Based Solutions
Roswell, Georgia


Lost in Space
I read "NASA, We Have a Problem" (May) with great interest. I am the retired chief of the Resources Analysis and Management Office of the Lewis Research Center (now the Glenn Research Center). I was involved with at least three attempts to install agencywide integrated financial-management systems.


The main problem was, and still is, that the field centers are so different, with different missions and different cultures. There are the research centers (such as Lewis and Langley) and the mission centers (such as Marshall and Johnson). The research centers are labor-intensive, while the mission centers are hardware-intensive. This is further complicated by the fact that historically what had made NASA a unique and can-do agency was its strong management and the independence of the center directors.

Then along came NASA administrator Dan Goldin. He was going to change the agency — and he did. He drove out many competent managers and engineers, and would not listen to anyone who said, "We tried that before and it didn't work."

Now comes NASA's Integrated Financial Management Project. The managers of the project are trying to do too much too fast. NASA has become just another federal agency in which image is more important than substance. Just ask any manager or employee over the age of 45 when he or she can retire. They will tell you the year, the month, and the day.

Michael B. Hoyman
Via E-mail




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