Equality of Opportunity

I’ve been doing a lot of thinking lately about the words we are all created equal. I’ve also been thinking about equality of outcomes and equality of opportunity. I always thought the system was responsible for equality of opportunity, but the outcomes were up to the individual. Such thoughts made me comfortable that my success was due to good choices and hard work and the same was available to anyone no matter what their color or creed.

I’m also a big believer in numbers; I’m a CPA after all. That means I also believe in things like the law of large numbers and reversion to the mean as sample populations get larger and larger. What I wasn’t doing was reconciling those two beliefs. Yes, I can point to “bad choices” or other circumstance when it comes to any single individual and the life outcomes they attained. The reality is that if those same outcomes apply in disproportionate ways to larger and larger sample sizes or one whole group versus another whole group, then there must be an explanation beyond individual choices.

One apparent answer is the system is set up for one group to succeed disproportionally more at the expense of other groups. When the difference in the groups is skin color, the answer points to a system that favors one race over another. If calling such an occurrence systemic racism causes you to be uncomfortable, then that is a good thing. You should be uncomfortable with an unfair system that gives some individuals a leg up simply because of their skin color. That is not what the founding documents of this country called us to aspire to achieve.

Yes, we have come far as a country, but we have not come far enough and where we are is not good enough. We must be better if we are to be the country we are supposed to be.

Risk Appetite

COSO recently released a paper looking at risk appetite. Risk appetite is a vague and usually misunderstood concept related to internal control and risk management. Risk must be taken to move a business forward. Even the simple act of opening a store or posting something for sale on a website involves taking on some risk. Don’t believe me? In order to sell something online, a website has to be set up and arrangements made to accept payment. Even if a person does all that on their own, they are taking a risk that the time they are investing on such an effort will provide a greater payback than spending that time on something else.

At a very simple level, risk appetite is how much risk an organization is willing to take. However, too often risk appetite is used interchangeably with risk tolerance. Risk appetite is different because risk tolerance is more about how much variability in outcomes the organization is willing to tolerate, while risk appetite is about how much risk the organization is willing to take on in the first place. Organizations need to consider risk appetite when developing strategy and plans.

If a strategy that calls for a lot of risk is misaligned with an organization’s risk appetite, the strategy is destined for failure. That sounds obvious, but the reality may be less easy to spot. An example from the document discussed an organization that had a strategy “to grow business by expanding global manufacturing locations.” However, when it became clear that some global locations presented risk that exceeded the manufacturer’s appetite, the strategy was updated: “To grow business by expanding to global locations within established infrastructure requirements and governmental regulations.”

Most people would agree the revised strategy involved a lower level of risk that apparently was in line with the organization’s lower level of risk appetite, but also limited the potential benefit from manufacturing across the globe. The point is that an organization needs to understand its risk appetite to understand if it can accomplish the strategy and goals it sets out. If the risk appetite is not aligned with the strategy, then either the strategy or the risk appetite needs to be changed.

Musings about COVID-19 and the Return to the Office

These are some random thoughts I’ve had lately about work, life and press coverage under the COVID-19 pandemic.

  • Do the people who write the articles about never seen before numbers of unemployment claims and rates of unemployment implying that these things seemingly came out of nowhere really not realize this didn’t just happen, but was caused by government-mandated shutdowns never seen before in the history of our country?
  • Is it misguided to think that after proving you can be at least as productive from home as in the office that you will be allowed to continue to work from home several days a week even when the pandemic is completely over?
  • Do people who report the total number of infections realize the number will never do anything but go up? The real numbers we should be looking at are the trends in new daily cases and the number of people with the virus active.
  • Why has the primary focus of school become providing day care and lunch instead of teaching and learning?
  • Is it wrong to want to scream when you see yet another article on what you can do to fill all the extra time you have when you actually have more, not less, work to accomplish because of the pandemic?
  • If we have never developed a vaccine for things from the common cold to HIV, what makes us think we can develop a vaccine for this virus in a matter of months?
  • What happens if we never develop a vaccine? Do the powers that be embrace the concept of herd immunity and if so, was the delay in obtaining that herd immunity worth it in the long run?
  • I never realized how separate the supply chains for restaurants and grocery stores were; I figured the food all came into one place and then was split up, but it’s clear that it doesn’t work that way.
  • Did you realize how much you can save by not paying for gas, entertainment and travel?
  • Did you notice the definition of essential changed, maybe for the better?

That Dreaded Question

How are you doing?

I’ve run out of ways to answer that question. Now I dread getting it, but somehow, I keep asking it myself. Well, I recently read a great article from Quartz at Work on questions to ask instead of how are you doing? I’m going to include five of them in this blog along with my answers.

What surprising thing have you been stocking up on (besides toilet paper)?

In my case, it is chocolate filled Belvita cookies. My daughter loves those things … and did you know not every Sam’s Club stocks them?

What’s the easiest part about the stay at home requirements?

This one is easy – not having to drive 2+ hours each day!

What is something you miss that surprises you?

I’m not surprised I missed my colleagues, but I am surprised I missed the time my commute gave me to separate work from home and to call my family spread out across the country.

Which member of your family have you been thinking the most about during this time?

This one is hard because I worry about my mom(in-law), dad, sister and children. They are spread across five states and one foreign country, so everyone is in a different situation, but the one I worry about the most is my daughter in Tokyo. I don’t worry because she is in Tokyo, but because she is the only one living, and therefore cooped up, by herself. Whenever I get too worried, I remind myself she lived in New York before moving to Tokyo and therefore things could be much worse!

What time of the day is the hardest?

No one wants to admit it because we all want to put on a brave face, but at some level, this whole experience stinks. It is healthy to admit that and admit when those hardest times hit. For me, it is currently 5:30 p.m. I want to shut everything down and “go home” for a little while, but I am battling myself to do “just one more thing.” I have a hard time admitting I can’t do it all and, guess what, almost always it can wait until tomorrow!

So next time you join an online meeting, ask one of the questions above instead of “how are you doing?”


I’ve been thinking a lot about routines this week. Various experts recommend setting new routines as you move from commuting to the office to working from home. My thought is that it’s not only about setting up new routines; it’s about continuing, even if modified, previous routines that were enjoyable. A few examples:

I’m an early riser and my wife is not. On weekends, I leave the room, close the door and do not disturb her as I go about doing various things. On weekdays, our routine was that I would kiss her goodbye as I left the house to commute to work. At first, I was treating work from home like the weekends, but that left a hole for both of us. After a week or two, I went back to kissing my wife goodbye as I “commuted” to the study. It’s just a small routine, but it brought back to us an important sense of normalcy to our lives.

Another routine I had was listening to a local radio station on the way in each morning. After a few weeks, I realized I missed that connection to start the day, so I set up a new routine, listen to the radio for 20 minutes each morning after breakfast as I start my day. This brought another layer of normalcy back to life and I got a little local perspective to begin each day.

A third routine for me was stopping by the local RaceTrac to get a drink on my commute in every morning. (I already achieved status to get one free drink a week and was working towards the status level for a free drink a day for a year.) Now, getting in the car to drive to RaceTrac doesn’t make a lot of sense, but the idea of taking time to get a drink for my morning in the (home) office made sense to me. So, after breakfast is finished and I’m ready to start my 40-foot commute to the office, I stop during my commute and make myself a drink to take into the office. It was just one more step (pardon the pun) in setting up my new routine for getting myself mentally ready to attack each workday.

An evening routine I developed before COVID-19 was getting home and changing out of my work clothes to something more comfortable and setting out my clothes for the next day (insert favorite geek comment here). The changing clothes part seemed less relevant given my usual attire for working from home (jeans and a decent shirt) and I was already wearing sneakers, so there wasn’t even a need to change shoes. But setting out clothes for the next day was something I could do, so I made that into my new routine. When I shut down my computer and called it a day for working, I would take that 40-foot commute to my room and get out my clothes for the next day. I found that this one activity mentally reinforced I was done working for the day and now it was time to focus on my home and family.

What routines did you give up several weeks ago that are worth restarting? What routines can you modify to give yourself that mental reset that “now it’s time to start work for the day?” What routines do you have for mentally breaking from work and transitioning to being present at home?


Say What You Mean and Mean What You Say

One of the biggest misnomers about accountants is that our work is all about numbers. While it is true that we work with numbers, the reality is that much of our work is about reading and writing. We read service agreements to determine if there is an implied lease as part of the arrangement that needs to be accounted for separately. We read stock compensation arrangements to determine key data points like grant date, the share price, and when the shares vest to determine how much and when compensation should be recognized. And we write reports trying to communicate what the numbers really mean in carefully chosen words.

Because we deal with words so often, accountants can get cranky when they see words used carelessly like the press (and in some cases, government officials) has been doing lately. I hear phrases like shelter in place, stay at home and quarantine used almost interchangeably, but that is dangerous in today’s environment. Here are the actual definitions of these phrases.

Shelter in Place – Stay wherever you are at the moment the order is in effect. This means if you are at a drug store, you stay inside the drug store. If you are at your office, you stay in the office. If you are home, you stay in your house.

Quarantine – Isolate yourself from everyone else. This means you can’t leave the quarantine zone, whether that is a room, a house or a city.

Stay at Home – This one is simpler, yet more complex. Basically, the idea is to get home and stay there. The order may allow you to leave at certain times or for certain activities (essential work, getting food, etc.), but the idea is to stay at home and don’t leave unless absolutely necessary.

If you don’t think the right words matter, think about someone interpreting shelter in place as stay at home when a tornado is hitting the ground. That kind of misinterpretation could kill someone, which is why it is important to use the right words every time. If you use the wrong words, especially use them incorrectly over and over, people may lose sight of the actual definition of the phrase when it’s a matter of life and death.

We can’t control other people using the wrong words, but at least we can set the right example. Use the right words and for now, stay at home even if that’s not what the press is saying.

Keeping it Normal

Life will be anything but normal for several weeks, but that doesn’t mean we can’t have a little fun and remind people there are some good aspects about working from home. To add a little fun, and say hi to my team, I sent “traffic reports” on my “commute” to the office every morning on our instant messenger service (group broadcast function). Here are the messages from last week:

Traffic was light, but I did have to change lanes several times to avoid the cat toys the cats left in my way in an attempt to trip me up. I hope your week is off to a good start.

I had to pull over at the stairway to avoid getting caught up in a high-speed chase, but it was over quickly enough and didn’t hold me up long. I later heard on the police blotter that while Velcro was sure he was younger and faster, Violet decided to prove she was older and had more insurance. I hope your day is off to an exciting start.

Traffic was reduced to one lane today as the fort constructed for the purr-babies partially collapsed like the leaning tower of Dallas and most of the lanes were closed for safety. However, traffic was light and I was able to make it through in almost the same time as normal. I hope all your paths are clear today.

Traffic was light and the temptation to speed was almost overwhelming, but I caught sight of the Fuzz in her favorite hideaway ready to swat me with a ticket, so I kept my speed right at the limit and made it to work without a hitch. I hope you find a smooth pace in your work today.

Animal control made an early morning sweep (i.e., my daughter relocated the cat carrier to the garage) and all suspects went into hiding so my commute was clear sailing all the way in. Hope you have clear sailing all day today.

What are you doing to keep the team engaged and having a little fun?

Forced Change

While much work must be done at a certain place (construction, brick and mortar retail, barber service), Covid-19 is forcing many organizations to face the reality of letting employees work from home if the work can be performed away from the office. In our profession, the fact is that almost everything can be done without going into the office. So, across the country, organizations are implementing, sometimes under duress, telecommuting for their employees on a full-time basis. Organizations that already embraced telecommuting, even on a part-time basis, are making the transition with relative ease.

Those organizations already had the basic infrastructure set up; VPNs and security tokens were in place. Employees already practiced connecting in from home and were used to forwarding calls or using a cell phone as their primary number. If organizations are new to telecommuting, they need to think through how remote access will work. How will data be secured? Does the computer in the office need to be turned on to access it remotely or does everyone have access? Do people know how to get into servers, systems and data? Do clients know how to contact you if you’re not in the office?

Numerous articles are being published that cover all sorts of aspects about remote/from home working. I won’t try to cover all those issues here, but I want to mention one thing not to forget. Even after you work through all the technical issues, you still have at the core people in your organization you’re responsible for leading and interacting with. Out of sight, out of mind will not work in this environment. At first, you might need to be deliberate about your interactions. Set up time to talk to each other. Those hallway conversations aren’t taking place and people will be starved for information. Make sure you’re asking how they’re doing, what problems they’re facing and how do they suggest resolving them. (Yes, make them take ownership of the resolution.)

If done right, this forced experiment may result in a realization that telecommuting, even if only on a part-time basis, works and that employees are happy you’re willing to work with them and help them adapt during this tumultuous time. If not handled well, your employees may come out the other end looking for opportunities at organizations their friends tell them handled the situation with flying colors.

Not the Time to Panic

After one of the worst weeks ever on the stock market, here are the top seven things you should be doing with your retirement savings:

7) If you need to feel better, look at your return over the last 10 years, not the last 10 days.
6) Keep contributing – you’re buying stocks on sale.
5) Don’t rebalance unless it is time you do that according to your preset plan.
4) Keep following your preset plan; trust your judgments when you weren’t filled with fear.
3) Don’t look at your balances every day; keep on the same review schedule you already set.
2) Remember, you will suffer more “big losses” over your lifetime; this is just part of the normal investment cycle. Over time, your gains will overcome your losses.
1) Whatever you do, don’t panic.

For some of you, this will be the first big downturn you’ve suffered in your working lifetime. These things happen. I’ve seen several major downturns/bear markets in my lifetime and the key is to keep your plan in mind. A good plan takes into account that the market will periodically suffer major downturns that last more than a few days. A good plan is like Linus’ blanket. With it, you can handle anything. Without it, you will turn green and get sick at the slightest event.

Take Your Own Advice

Many larger companies and firms implement an annual salary treatment process, so all salaries are adjusted at the same time every year no matter when you were hired. In some companies, this occurs in the fall and others in the spring. My employer adjusts salaries every spring, March to be exact. As I eagerly anticipate seeing what change is in store for me, I started thinking of advice we often give others when asked about financial matters.

  1. Getting a raise is the perfect time to increase your contributions to a 401(k) or other retirement savings. Taking a portion of the raise means you’ll never miss the increased contribution because you were never getting the extra money in the first place.
  2. If you’re already maxing out the tax advantaged contribution to a 401(k), consider switching a higher portion of your contribution to a Roth 401(k) if that’s available from your employer. The increase in salary can be used to offset the higher taxes you pay now but will give you the ability to earn a tax-free return on those contributions forever.
  3. If you’re maxing out your Roth contributions or you do not have that option, consider increasing your contributions to a Health Savings Account (HSA), if you’re eligible. You can contribute to an HSA if you participate in a high deductible medical insurance plan. The magic of an HSA is that contributions are made tax free, earnings are tax free and withdrawals for medical expenses are also tax free. There is no better way to save.
  4. If you’re already maxing out your HSA, consider putting a portion of your salary increase away for current medical expenses and don’t touch your HSA for those costs. Instead, save your HSA for retirement. As long as you use the withdrawals for medical expenses, it’s a better tax deal than a Roth or regular 401(k), and according to every prediction I see, we’ll all need plenty of money to cover medical expenses in our retirement.

Finally, if you’re doing all of the above, then consider taking a well-deserved vacation with your extra income, because you’re already well on your way to a secure future.