The Squeeze 3

Robbing From Peter to Pay Paul.

'Used to be a Marketing only phenomena, limited only to paper credit. End-of-year comes, book-in the January orders for the "How We Performed" presentation to make the year look better than it was. 'Not really lying, since the numbers didn't translate into Accounting practice. And it was all in-house stroking, marking out your turf, and - in some ways - sort of "reality": the last two weeks of December and the first week of January, no one was really working, Anywhere (obviously we're not in retail). Certainly shipping was clogged up by Christmas commerce (we're not seasonal, either). You could sort of, maybe, wink-wink, pretend that these booked orders represented What We Did This Year.

Now it's expanded to Profit-Sharing reality.

On a quarterly basis.

We have an employee Profit-Sharing Plan, in place for over 25 years. We have a new Executive Management Team, on board for almost 3 years. The Execs quickly understood the benefits of Profit-Sharing, albeit in a Plan revised to have "weighted" participation (read: the higher you are, the more you get). This was a much better plan than those that tie Exec Bonuses to any particular target goals: with our plan, all the company has to do is make a gross profit to get a share.

But this is real money, not paper puffery, so when the first quarter of the new regime rolled around and the profits were not so nifty, a few of the newbies squawked to the new Prez: "But you promised..."

To give him his credit, he held out for a year or two. And then one of the Super Executive Plans accidentally tied up shipments for 3 weeks (one has to assume that they didn't want to have shipments come to a standstill).

This was going to be a hell of a bad quarter. To say that we had "profits" was akin to saying that the sun shines on the North Pole in December. Yeah, there's a hint of hopeful light around the edges, but really . . .

A bit of a Squeeze.

Well, honestly, we did have hopeful light! All of those June orders that didn't go out the door would boogie down the highways in July along with the regular July flow. Yes! YES! So, let's just book those orders-not-shipped as Profit and Participate in it. YES! (Ummm, and ignore the fact that the Super Exec Plan had laid off a warehouse shift and there was nobody around to step up the pass-through.)

History becomes the present. That was last June. By end-of-quarter September, we needed to book-in October to make the Profit-Sharing Plan for Q3. Then in December, the year-end wasn't quite going to make it, so January (and a wee bit of February). . . . Now, in March, we need to book-in April, plus a dash or two of May. . . .

The Squeeze.