Special Feature
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"Expenses may be considered investments if they help the organization gain the trust of people who will give them their target funds: the clients and partners" |
The Aquarium as Management Tool
Joseph O. Vergara
 For some managers, the value of an aquarium is not expressed in abstract terms as motivation and delegation, but in more concrete terms as earnings. It is usually the entrepreneur type of managers who view the aquarium as a tool for the raising of quality fish species as a profit venture. The questions of importance go in the line of "How long will it take for profits to pay back the investment?" or "When will the cash stop flowing out and start returning?" In other words, the ideas of return of investments come into the picture.
 While this may not readily be a main concern in an aquarium project, where there is a tacit sharing of expenses, this becomes a major anxiety if the manager’s share in the project is to finance it while the role of the other members of the team is to make it work. Like any project, an aquarium project has its costs, and benefits may rightly be expected from it. This is a classic example of investment management and a present model for measuring performance.
 In most companies, financial matters as sales figures, cash flow, profit, and the like, dominate performance management. Performance is best evaluated in quantifiable terms; otherwise so much leeway is given to judgment and discretion, which are subject to abuse and partiality. In performance management, as in evaluating the profitability or failure of an aquarium project, the manager needs to evaluate how well the activities, especially the expenses, redound to the fulfillment of the organization’s goals, whether this is in terms of market share, customer satisfaction, quality, competitiveness or wise use of capital.
 On the other hand, there are questions that need to be addressed when evaluating performance using purely quantifiable dimensions: Are the fish eating too much or is it the manager feeding the fish too much and too often that it clouds the water? Is the business expensive or are there too many expenses for the same activity or, worse, for non-essentials so that it clouds the real situation? Do the fish really stink or is something fishy going on, that it reeks? Profitability is not limited to counting gross revenue, subtracting capital investments and computing for net income. It is rather looking at how to make net income approximate the gross revenue by reducing the cost, or increasing the gross revenue by limiting the cost to expenses that shall give a higher return of investments.
 An investment here is not reckoned as cash held in trust with banks, but rather purchases and other expenses that contribute to the cost necessary to bring out the desired outputs or profits. A government office is not normally allowed to place its funds in short-term investments unless authorized by law to do so. But all government offices are authorized to spend a portion of their funds for maintenance and other operating expenses, and such expenses may be considered investments in this regard if they help the organization gain the trust of people who will give them their target funds: the clients and partners and/or Congress. Under this definition, even expenses for personal services may be considered an investment when the organization pays good money for high quality service.
 The novice manager may not readily understand how fixed expenses such as salary and supplies may be considered investments. It may then be advisable to learn a pointer or two from the bespectacled oranda for "fish of mind." Choosing the right person for the job is akin to selecting the fish to put in the aquarium. The manager does not simply buy a colorful fish because it looks beautiful but because it feels better to feed a fish that will give the needed satisfaction than to feed one that shall not. Similarly, the wise manager is well advised to employ a candidate who can do the job better since it feels better to pay the salary of an efficient person that to pay one who is not. In choosing food of the same price, it is a good investment to buy food that can enhance the color and shine of the fish, but a poor investment to buy food that simply stuffs the stomach of the fish to keep it of getting hungry. Similarly, the option to buy office supplies is better taken when such supplies are viewed to have a direct value to, and therefore positively influences, organizational profitability, and not simply supplies to be procured and stacked to finally find their way to the schoolbags of the employees’ children.
 Managers who are conscious about good performance especially at the time of performance evaluation may thus be guided by the rule: "Invest in Best."
(To be continued).