AFFLUENZA

By Chuck Violand

C & R Magazine – June 6, 2014


As health care professionals around the world struggled to avoid a pandemic brought on by the spread of the Norovirus a couple years ago, another virus was running rampant within the ranks of business owners and their companies, one that continues to go largely unrecognized today. The Norovirus may no longer be headline news, but the virus to which I’m referring is still alive and well, thriving in far too many companies.

This virus can have as debilitating an effect on a business as the Norovirus has on our bodies. Unfortunately, washing our hands, coughing into our sleeves, or getting inoculated is completely ineffective in controlling its spread. To make matters worse, this past winter’s harsh weather and corresponding booming sales for many restorers places many of them at even greater risk.

The virus I’m referring to is Affluenza. Although I’ve seen the virus’ destructive effects on businesses for years, I found a clear explanation of it in Affluenza: The All-Consuming Epidemic written by John de Graff, David Wann, and Thomas H. Naylor. They describe it as “a painful, contagious, socially transmitted condition of overload, debt, anxiety, and waste resulting from the dogged pursuit of more.”

Although I have no hard evidence to support my claim, I feel the physical and mental makeup of many entrepreneurs predisposes them to carry Affluenza. Many seem to be drawn to a “work hard, reward lavishly” lifestyle, one that appears to serve as a catalyst for the virus.

Affluenza doesn’t usually manifest itself when a business is young or struggling. Most companies and their owners seem to have a builtin immunity that protects them during times such as these. As with many other business ailments, Affluenza infects a company when it is flush with cash or when sales are robust, but the symptoms go unnoticed. It’s when the company is put under pressure, or when it’s attacked by outside influences such as economic turmoil or, in the case of restoration companies, when there are no weather events to inflate sales, that Affluenza raises its head and spreads its infection with devastating, sometimes lethal, results.

Affluenza is harder to detect in the early stages when it is easiest to cure. Conversely, it’s easier to detect, but harder to cure, in its later stages when behaviors have become habits. The troubled email I received from the Chief Financial Officer of one of my clients brought this fact to my attention.

We had developed a close working relationship over a span of years, so she felt comfortable approaching me for advice. In her email, she was expressing alarm at financial decisions the owner of the company was making. Most troubling was the owner’s instructions for her to bury some of his purchases on the company income statement where they might not be noticed. Apparently he was concerned they would raise uncomfortable questions when his numbers were reviewed both by the bank with whom he was working and by me during our conferences.

This was a company that had enjoyed several years of rapid growth and financial success. They were on top of their game, celebrated as a model of success in both their local community and in their industry. It was not surprising that the owner wanted to start reaping the rewards of his accomplishments, as he had worked hard to get where he was. Unfortunately, he was choosing to make financial decisions that would contribute to his eventual decline. This brings me to the first underlying cause of Affluenza.

We haven’t learned how to handle financial success. As ridiculous as this might sound, handling finances and financial success are learned skills.Our parents are usually our first teachers, and if they were successful managing their money, there’s a good chance they passed on sound financial lessons. If they weren’t particularly good with finances, then we may have to reprogram some of the money lessons learned in our youth.

Another critical point in our lives when we’re especially open to learning money lessons is early in our business careers. The people with whom we associate in business, the mentors with whom we surround ourselves, and the business experiences we have all leave lasting impressions, sometimes affecting the financial decisions we make both professionally and personally for the rest of our lives. As with the lessons we learn from our parents, these early business experiences can have either positive or negative consequences on our behavior.

Most small businesses are started on a financial shoestring. Business owners learn how to make one dollar do two dollars’ worth of work, and they become masters of cash flow in a cash strapped environment. When their companies finally enjoy some measure of financial success after years of struggle and sacrifice, owners sometimes find themselves unprepared to handle the change. They haven’t developed the discipline needed to manage an abundance of money. So, they find ways to move it out of their lives in order to return to the more familiar world of being strapped for cash.

As with so many other personal behaviors, destructive financial behaviors can be turned around. One of the ways to accomplish this is with a concerted effort over a long enough period of time to allow our new behaviors to become habits. Although we can do this on our own, the chances for success usually increase dramatically when we have someone to help hold us accountable to stay “on the wagon.” In the case of the owner I mentioned above, listening to the advice of his CFO would have saved him a lot of heartaches…and money.

The genesis of most business problems can be traced to when a company is doing well: sales are strong, profits are deep, and cash flow is healthy. This is when business leaders lose focus, become complacent, or adopt attitudes of entitlement—another underlying cause of Affluenza.

Our decisions become driven by ego and a sense of entitlement. Growing a business demands a lot of sacrifice on the part of the owner. It can exact a heavy toll in terms of time spent away from family, mental exhaustion, and even getting worn down physically. When business begins to go well, it only seems logical that some owners would feel a sense of entitlement to lavishly reward themselves for their sacrifices: the luxury cars, the vacation home, the abundant travel. There’s nothing inherently wrong with these activities. After all, you’ve sacrificed much for these privileges. It’s when they interfere with the performance of our companies, or when they take value away from our customers, that they get in the way.

Sometimes Affluenza is driven by a swollen ego, similar to the attitude of entitlement. The primary difference is that, with a swollen ego, we use Affluenza to draw attention to ourselves or to maintain an appearance of success. An ego that is out of control is one of the most difficult areas to address with a business owner, as they are usually the last ones to recognize when their egos have gotten out of control.

Sometimes Affluenza doesn’t manifest itself with purchases or financial decisions. Instead, it shows up in subtle behaviors or in attitudes toward other people.

We forget what it’s like to have a boss. Few of us are plopped into positions of authority overnight; we usually grow into them over time. As our companies grow or as we rise through the ranks in our businesses, it’s easy to forget what it’s like to be one of the “workers.” The Queen of Mean, Leona Helmsley, is famous for her off-handed comment about “the little people.” Few of us would be brash enough to make that comment, but how often do we unconsciously telegraph a similar message with our behavior?

When we’re the boss, we can ignore feedback we don’t want to hear. We don’t have to ask for opinions, but we can freely give our own. We don’t have to follow the chain of command we put in place if we feel like meddling. And we sure don’t have to go to the boss to ask for a raise. All we have to do is write ourselves a bigger check. Every one of these behaviors, every one of these actions, is viewed differently from the other side of our desks. Great business leaders make themselves aware of how their words and actions are perceived by others and how they impact the people in their organizations.

One of the strategies adopted by companies to combat Affluenza is to increase sales. While there’s nothing wrong with increasing sales, doing so doesn’t cure the disease. It simply masks the symptoms, bringing temporary relief to the pain, much like taking an aspirin to treat the Norovirus. While it might alleviate the symptoms of the disease, it does nothing to treat the underlying problem and will sometimes backfire and actually feed the virus.

As a business advisor, I’ve witnessed the terribly harsh effects Affluenza can have on previously healthy companies. I’ve worked for years to restrict its spread, but regrettably I have not always been successful in my efforts. There are times when the virus gets such a strong grip on a business owner that he becomes blind to the harmful effects it’s having on his company or he enters a state of denial about what’s taking place.

As we learn lessons throughout our lives, we frequently adopt rules to help guide our future decisions. One of the rules I’ve adopted to help avoid Affluenza and to help others to do the same is the “Alex Bevan” rule.

When I was in my early 20s, I owned a night club, and one of the entertainers I hired was a popular Cleveland recording artist named Alex Bevan. In getting to know Alex, I learned he lived a very frugal life. I found that interesting, considering his popularity and success…and the popular image of recording stars living lavish lifestyles. Alex told me his father advised him early on to “always live like you don’t know when you’ll get your next gig. That way, you’ll never have to compromise your values to get it.” That was great advice for a recording artist. It’s also great advice for business owners trying to avoid the spread of Affluenza in their companies.