Congratulations on your complete and well-balanced article on market structures, “Brave New Market” (October). Permit me to add my 40 years of equity-markets study to the 30 years of James Angel mentioned in your article to say, like him, that “the market structure looks really good.” “Perhaps not good enough,” as you pointed out.
Dr. Jacques Saint-Pierre
Budgets are difficult to develop and can be meaningless if you do not have the tools to use the budgets properly (“Freed from the Budget,” September). We have transformed companies that continually overspent budgets into companies that use budgets to maintain spending discipline within the organization.
Using new technology tools that provide real-time spend management techniques does not mean that business opportunities should be missed just because it is not in the budget. Leaders must manage to a budget for organizational discipline and operational performance, but the best leaders find ways that blow budgets apart through new growth or new efficiencies.
A budget can be a painful, time-consuming exercise, but there are plenty of tools now that can ease the burden across an organization. Moreover, try increasing the credit facility with your bank without a budget that demonstrates you have a plan to succeed with the money the bank will lend you.
Finally, should a firm care to get an unqualified opinion from its auditors that shows investors that there are processes in place to safeguard their investment, or pass the due diligence of a potential acquirer, then an honest pass at an annual budget is not an option.
The new generation of management is looking for a free lunch. If a task is too hard, they say, just don’t do it.
Stepping outside the trenches for a forward-looking view of at least 12 months, forced by a budget process, is an intelligent use of time. Of course, events overtake the results of the planning process: no one said the budget was inviolate! Management can always make necessary changes. However, a budget frees management to look to the important issues, not day-to-day spending decisions.
Don R. Sherwood
The Buzz on CFO.com
• Some of the recent buzz on CFO.com concerned a CFO magazine article by Russ Banham, “Healing America’s Economy: Obama vs. Romney” (October), in which economists weighed in on the Presidential candidates’ plans to revive the economy. A few readers offered their own cures. “Keynesian stimulus is the right cure for a weak economy,” one wrote, blaming “GOP deficit hawks, empowered by the Tea Party takeover of the U.S. House,” for blocking such a stimulus.
• Another reader identified “rising inequality, rising poverty, and a decreasing middle class” as the greatest threats to the economy and society and opined that “the Obama path” was the better way to deal with the threats. A third agreed with that diagnosis but added that such threats are “encouraged by a government that makes it comfortable to be poor and make bad decisions.” Mitt Romney has the better way to deal with them, said this reader.
• One commenter would take a pay-for-performance approach to fixing the economy. “If Congress was my company, the first thing I would do is cut their wages 25%, as well as the $1.5 million office budget they have,” the reader declared. “These cuts would remain in place until the unemployment rate reached 3% and the employment rate reached 95%.” Such actions might not solve the jobs problem, but they could be an effective alternative to term limits. (Incidentally, the last year the unemployment rate dipped below 3% was 1953.)
• But most of the talk on CFO.com centered on the provocatively titled story, “Internal Audit: A Dead-end Job?” (October 12). As reported by Kathleen Hoffelder, a study by researchers at Brigham Young University found that most accounting students wouldn’t even apply for an internal- audit job unless it was described as “a management training ground that performs consulting work,” as study co-author David Wood put it. More than a dozen readers rejected the implication that internal audit was a dead end. “I was a rock star in my other roles as my knowledge and connections of the corporation, thanks to internal audit, surpassed anything of my peers,” said one former internal auditor.
• Institute of Internal Auditors president and chief executive officer Richard Chambers, who was interviewed for the article, pointed out that IIA statistics “indicate that only about one-third of internal-audit departments even recruit from colleges and universities.” Said Chambers, “Few if any internal-audit departments are struggling to find highly motivated and enthusiastic applicants.” Likewise, a chief audit executive for “a large multinational company” reported “high demand for our internship and entry-level positions.” He added, “I know there are more than 170,000 professionals around the world who definitely don’t consider their job to be [a] dead end.”