Culture Corner: Communicating with finesse – when it’s not all good news
Each month, we interview a Richter partner to gain insight into how our leadership finds balance and focus in a demanding job, and what non-technical skills contribute to career success.
Even the best entrepreneurs can hit a bad patch that may threaten the survival of their businesses. Recognizing the warning signs and taking decisive action to turn the situation around can be the difference between disaster, and embarking on a new growth phase. But how do professional advisors navigate these difficult conversations? We turn to Partner Fred Fuchs for his insights on how to manage expectations with delivering the not-so-great news, while helping clients every step of the way.
You have many close clients, and have advised many through some tough financial times. How do you manage a client’s hopeful expectations when the reality of their situation might not align?
Fred Fuchs (FF): I guess the answer lies in: what is our service offering and how do we ensure it aligns with the client focus? We’re up-front with our clients and together, we deal with it. When it comes to tough situations, we support them by focusing on their immediate needs such as banking, cash flows, etc. and helping them through the process. We’ll talk to the bank with them, try to get the most holistic picture possible, and so when we present our recommendation, we can say we are fully behind it, and that it’s in line with the best outcome for the client. We try to ensure that our expertise is there to help them get through a difficult time.
We also make sure to have an action plan to go forward. We are fortunate here to have partners who can help in restructuring on a go-forward basis, who deal with these tough situations on a daily basis and have the banking contacts that assist our clients in understanding their future options. We also have specialists in real estate, retail, manufacturing, etc., ready to help clients get through hard situations.
I worked on insolvency files back in the early nineties, and worked through many difficult situations. Clients can sometimes be stressed and focused too much on the financial statements to present to their banker, but that’s never the root cause of their problems. Years ago we faced a difficult audit and the client was clearly struggling. At the end of the day, we asked the client: why are we focusing so much on financial statements, when you should be focusing on operations? For your own survival, this is the right road. We put our “owner’s hat” on all the time. Many times we walk into a client and the talk is too much about just financials. Sometimes a conversation needs to include other facets of the company, and with restructuring.
In my many years some clients don’t want to hear this and think they know better, that’s fine, some survive, and some don’t, unfortunately. But we’ll always present a true picture of the financial position of the company; and sometimes, we’ll walk into our insolvency partners’ offices and ask them to help.
“We don’t play games, we have honest conversations.”
Is there a certain finesse that comes with delivering bad news, or is straight forward honesty always the best policy?
(FF): I personally believe you go right for the jugular! Kidding – but you have to tell the client the situation in the fairest manner. We don’t play games, we have honest conversations. We present what we see, then we go through the financial numbers, and when it comes down to it we ask questions or provide guidance – they may need to find financing, perhaps. Most people respect you more if you come with an honest approach. It’s true, not all clients appreciate the truth, but we have to be honest with ourselves and the clients. When I present the numbers, some clients may disagree, but we’ll show the real numbers, and then put our heads together for a new approach.
If one of your team members comes to you with a problem or issue, how do you help them through it?
(FF): It depends on the situation, but if dealing with a financial statement or technical issue, we’ll talk it through. I try not to give the answer right away; I want them to figure it out themselves. Sometimes it’s so complicated that we have to run the numbers together. But in most cases, when I think they would know the answer, it’s about empowering them, rather than telling them.
How do you motivate your team to stay focused when times are tough or incredibly busy?
(FF): The only way is support, one-on-one support with the team. No matter what level, I check in on them, make sure they’re ok and they know they can call me when needed. Of course, you deal with every person differently, and there are certain expectations on different people, but they all need attention, just at different times. If you’ve never worked on a file before, I’ll sit with you, so you can learn. It’s about giving back at the end of the day. Someone taught me, so I’ll teach new people. When I was just starting out we did things on paper. A manager used to work with me through every step – what he called “arts & crafts” time! – because it was a lot of stapling, taping, photocopying, etc. But you have to learn somewhere, and I like to teach new people.
What’s the best piece of business advice you’ve ever been given?
(FF): I go back to what my father always told me: honesty is the best policy. No matter how hard it is, being honest with clients and the team is the best. And if you’re having a bad day, try not to put it on your team, just acknowledge that you’re having a bad day, or stressed about something else, and people will understand.
Also, don’t hide behind things. The numbers don’t lie. We are looking at historical information that can be best used to effectively forecast the future.
Fred Fuchs is a long-standing partner in Richter’s Audit division. With more than thirty years in the firm, Fred is the market leader of Richter’s real estate sector. He is a well-respected advisor for many companies active in commercial and residential real estate, and uses his unique expertise to help business owners structure their companies, nationwide and internationally. Fred’s expertise has helped many clients through difficult times. He always ensures his clients have a comprehensive understanding of their financial situation, and provides them with the solutions that follow Richter’s standards of quality and excellence.
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