THE DEVIL’S IN THE DETAIL

How often do you go to a meeting or get involved in a discussion where someone takes control and says, “I just want the big picture, don’t frustrate me with the detail”, or words to similar effect. Maybe even you have been guilty of such phrases!

I can remember in my youth my father would oft say to me “900 thou is not 899 thou, nor is it 901 thou, it is 900 thou”, he, an engineer was referring to thousandths of an inch, and was making the point about precision. Even in my early training as an accountant at Hungerford’s, we were taught that there were instances where things had to be balanced to the cent, and I lost count of the number of instances where such precision in bank reconciliations revealed the falsification of banking records and the revelation of fraud.

It is true that these days, as leaders of organisations, there is much to be done with very limited time availability so it, on one hand, is easy to understand. However, the point that is often overlooked is the fact that whilst you do not want that level of detail, it does not mean that that level of detail is not required.

Regrettably this is now becoming a very public lesson that is being learned, and in some cases relearned by some of our largest businesses. The onset of errors that are being repeated, sometimes millions of times, are coming back to bite the organisations in question. The big catch though is that when they come back, there is now a need to most likely add interest and compensation, external penalties, legal and other adviser fees, and of course the obligatory marketing costs as the organisation goes into damage control.

The lesson that needs to be learnt from this is that you as a leader must manage the whole process. Remember the old adage “what gets measured gets done”. The first step is that you always demand the detail even if it is not discussed. Then if you yourself are not going to go through it then ensure that there is someone, either internal or external, who can properly be trusted to actually go through it in search of errors.

There are no small errors, a $1 error on a transaction which is perpetuated 13,000,000 times is a $13Million dollar problem. Then if there are three layers to the task and each person makes a $1 error, then we now have a $39Million dollar problem. The more computerised and automated our systems become the more quickly the problem can grow exponentially. The increasingly common payroll errors that have occurred repeatedly over years are a classic example of this.

How information is delivered can also have an impact. Here’s a common one with accounting information in large organisations. If the last three digits are removed from figures such that $100,000 is reflected as $100, the visual experience can actually have an unexpected impact on some people’s mindsets. People who potentially consider that the loss $100 is not an issue can easily fall into a practice of wasting $100,000 dollars because the full impact is not readily visible to their mind. By way of example if you asked that same person to give a homeless person $100 they may well say yes; but you would be surprised to see the answer when you asked them to do the same thing with their $100,000!

All jobs have good and bad elements to them and it is simply human nature that people want to do the good bits and avoid or delegate the bad ones, but in reality with responsibility comes duty. If you fail that duty then you have shirked your responsibility. Many in small business who have shirked that responsibility have paid the full price with the loss of the business and often everything they own. In large businesses and governments, someone may lose their job but to the rest of the organisation it’s just another expense.

The best small/medium business operators are the ones who have the big vision, the consistent positive outlook, and most importantly a good eye for detail coupled to well-designed systems that have built-in independent checks.

The devil, …and death, … is in the detail!