Pressure Put On Managers to Keep Variances Under Control
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Pressure Put on Managers to Keep Variances Under Control
First I had to insure I understood what “variance” meant in the financial management world and to comprehend that, I wanted to assure I understood the definition of “variance.” Variance, is the condition or fact of varying. A state of disagreement (Rogets). When looking at variances in budgeting and costing, and determining their causes, variances are not referred to as positive or negative, but as favorable or adverse. That is in relationship to contributing to earnings or reducing them (Helicon).
Finding an article that directly related to managers and a variance of some type to manage lead me to an article entitled, “Why Enron Always Happens,” by John Steele Gordon. His main topic are early railroad wars in New York in the mid to late 1860s.
The authors analogy of “our current crisis” being part of the normal ebb and flow of capitalism businesses being a “two-steps-forward and one-step-back,” as just the way in which the system works. Correcting itself when it gets to big for the situation at hand (Gordon).
Whether manipulated by greed or an over powering need for owners and managers to succeed. This system is guided by “human nature itself and thus manifests all of that natures passions, genius, obsessions and foolishness (Gordon).”
All managers face these same obstacles in running every company doing business today. Deciding to up production, to pad the income ledger a little, is wrestled with I would think, daily by some manager, somewhere. Making an ethical and profitable move in business to change variances in that same business, are whats going to separate the solid long lasting company, from the here-to-day, gone tomorrow, greedy firm of the past.
References:
Rogets II: New Thesaurus. 04-18-2006. Retrieved from:
Helicon Publishing. (2005). Variance analysis. variance analysis. Retrieved from:
Gordon, Steele, J. (2002, November 01). Why Enron always happens. American Heritage, (6), 68. Retrieved from: