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In your article "All Eyes on Reform" (December 2009) you lead off with the statement that "Public support for health-care reform is high, but some CFOs take a different view." I can't think of another publication that characterizes public support as "high." For example, the November 30, 2009, Rasmussen poll states: "The latest Rasmussen Reports national telephone survey finds that 41% of voters nationwide favor the health-care reform plan proposed by President Obama and congressional Democrats. Fifty-three percent (53%) are opposed to it." I scanned the Rasmussen health-care polls, and in every poll since September 13, 2009, the opposition has exceeded the support.
At best, the public is divided on the health-care reform issue, and many CFOs' views are quite consistent with those of most people who favor market solutions and fear large, wasteful government programs.
Dana R. Hermanson
Dinos Eminent Scholar Chair
Kennesaw State University
Editor's Reply: Several readers took issue with our claim that the public supports health reform. We should have clarified that we were speaking of the basic premise of health-care reform versus any specific proposed solution. Last November, an analysis of 30 opinion polls published in the New England Journal of Medicine (examining public attitudes today and during the Clinton Administration's push for reform) concluded that the public currently supports reform unambiguously, although levels of enthusiasm vary considerably depending on how a given position is described. An October CBS poll, to cite one example, found that 84% of respondents believe the health-care system needs to be "fundamentally changed or completely rebuilt."
From Small Things Big Things One Day Come
While I wholeheartedly agree that small business needs help, I have faith that it will hold on and will, in fact, be made stronger. As "Small Consolation" (December 2009) so clearly points out, what small business needs is access to credit — and an end to lip service. Entrepreneurs will find a way; it's what makes us who we are. Our company sees it every day — small business innovating and finding new ways to succeed in the face of adversity. From a young manufacturing company seeking capital to ramp up production on an award-winning product to more-mature companies simply trying to find a way to decrease their days sales outstanding, determined small businesses will find their way — it's why we're the engine that drives the economy. Now, if those who "support" small business could just find a way to step up.
Senior Vice President, Head of Marketing
The Receivables Exchange
In Praise of an Industry
Yes, MetLife CFO William Wheeler did a good job, as did his company ("You Don't Manage by Models," On the Record, December 2009). What I would like to add is that the insurance industry also generally did a good job regarding the financial crisis — excluding AIG, the financial guarantors, and the mortgage insurers.
Why did the industry do well?
(1) It avoided complex investments with embedded credit leverage. It did not trust the concept that a securitized or guaranteed AAA was the same as a native AAA. Many insurers knew to avoid even a native AAA like GE Capital, because the materially higher spread indicated high risk.
(2) It focused on the long term. The housing bubble was easy to see, with long-term perception — where one does stress tests, and looks at the long-term likelihood of loss, rather than risk measures that derive from short-term price changes. Actuarial risk analysis beats financial risk analysis in the long run.
(3) The state insurance regulators did a better job than the federal banking regulators; the state regulators did not get captured by those that they regulated, and were more natively risk averse, which is the way regulators should be.
(4) Having long-term — rather than short-term — funding is critical to surviving crises. The banks were prepared to maximize ROE only during fair weather.
I know of some banks that prepared for the crisis, but they were an extreme minority, and regarded by their peers as curmudgeonly. I write this to give credit to the insurance industry for which I used to analyze. By and large, they have done a good job maneuvering through the crisis so far. Keep it up.
Chief Economist & Director of Research
Ellicott City, Maryland
A Bonus by Any Other Name
If it can't be measured it can't be paid for ("What Share Is Fair?" Topline, December 2009). If a bonus is just given, it isn't a bonus, it's a gift. Control over the outcome is also necessary to the reward being effective. I was working with an owner who loved to pull out $100 and lay the bills on the desk to challenge employees to reach a goal. I talked to someone who was given the $100 challenge. He said, "The $100 meant nothing, because I couldn't affect the outcome of the goal. We didn't hit the goal and I didn't get the money. It was out of my control."
Appalled and Tickled, Too
In "An Agency Ready to Roar?" (Topline, November 2009), I was both appalled and tickled by Securities and Exchange Commission chairperson Mary Schapiro's motivational comment "[We must] act like our hair is on fire." I was appalled because her comment, while well intended, places the wrong perspective on the rather dubious task of an auditor. While they were perhaps intended to counter the increased scrutiny, her inflammatory words may turn up the heat too fast and thus could result in just as much damage as too little scrutiny.
But I was also tickled, because it occurred to me that the last person I can recall who acted while his hair was actually on fire was Michael Jackson. I am sure the SEC staff will be more prudent when performing their acts. Acts to impress versus acts to support require different actors and directors. Let's hope we have the right director and team in place to do the job.
Douglas E. Offermann
Chief Executive Officer
Homeowners Association of Shepherds Crossing
Nothing Wrong with Pizza
Regarding your article about retaining the best and the brightest without hemorrhaging cash to do it ("The War for Talent Is Still On," November 2009), I agree with all the things you listed except for forgoing pizza perks.
I think sometimes management misses the whole point of free pizza lunches — or potlucks, or company socials, and so on. These things are good for morale, especially when upper management sits down at the table with the rank-and-file. Our managing director regularly wanders into the lunchroom and eats lunch with the employees. He also cooks for the entire company two or three times a year.
These get-togethers cement relationships between management and employees. You can't put a price tag on that.
Credit & Collections Assistant
Nunhems USA Inc.