In every industry, there are “best practices.” Usually, these are recipes for success: do things according to a few broad guidelines and the results will work out in your favor. But what happens when they become formulas for failure?
Typically, best practices are the means that a particular company used to get ahead of the competition. Once the original company starts doing better than everyone else, the followers jump on board, and they become “industry practice.” Do you want to stay in the game? Then you better be doing best practices.
When applied toward benign areas, like “good customer service,” how harmful can they be? However, in the context of financial accountability, they can be the equivalent of everyone else jumping off a bridge. What you share, or rather, what you don’t share, about your finances matters very much– regardless of what others are doing.
A recent article in CFOZone (perhaps not a trade that most of our blog audience reads, but an informative source for finance wonks like me) sums it up perfectly: “Ultimately, industry practice is not best practice if it does not address this question: ‘What would your stakeholders, your customers, your employees, your partners, your investors think of your practice?’”
Reputation is important. In accounting, and in advertising, there are liabilities to what we do. The more transparent you are, the better off you’ll be. Accountants need to make sure our companies are disclosing the proper information so that investors and shareholders can make educated decisions. Advertisers need to make sure consumers are empowered enough to make the right decisions. It’s the surest way to make sure you stay in business and out of trouble.
As Mary Adams, author of Intangible Capital: Putting Knowledge to Work in the 21st Century Organization puts it “Reputation is the new bottom line.”