November 2018 Newsletter – CFO Assessment Engagements and ‘The Hawthorne Effect’

CFO Assessment Engagements and ‘The Hawthorne Effect’

Gary Cohen, Principal

Many of you have reached a point where your company has grown with more locations, additional products or services, and an increased number of employees. As your company has grown, you may have come to a realization that increased efforts and new thought processes are necessary to maximize revenues and profits, properly staff the accounting and finance department, maximize technology and maintain an edge on your competition. This is often the point where there is a contact made with Nperspective as we have developed a methodology of assessing, organizing, communicating and executing CFO engagements which is most helpful to decision-makers. One very interesting side product of our engagements is what is known as ‘The Hawthorn Effect.’

What is The Hawthorne Effect?

‘The Hawthorne Effect’ is based on experiments conducted from 1924 to 1932 at the Hawthorne Works in Cicero, Illinois, on lighting changes and work structure changes such as working hours and break times. The results were originally interpreted to mean that paying attention to overall worker needs would improve productivity. Later interpretations suggested that the novelty of being research subjects and the increased attention from such could lead to temporary increases in workers’ productivity. This interpretation was dubbed ‘The Hawthorne Effect.’

Dynamics of The Hawthorne Effect in Conjunction with CFO Engagements

Recently, I conducted a two-day Assessment Engagement where I met with a company’s owners, management team and members of the accounting department. Next, I delivered my report which recommended many items, several dealing with improving efficiencies in the accounting department. A week or so later I received a message from the business owner telling me how there was a sudden improvement in his accounting department as to meeting goals and deadlines. I related that his is very common in all settings – whether an office, a manufacturing facility or other workplace and it is known as the ‘Hawthorne Effect.’ Due to changes, scrutiny and increased attention, there were resulting improvements in work efficiency. This was due to a combination of factors including the good feeling one gets when they receive more attention and the concern that one’s job/position is being more closely evaluated.

Harnessing the Power of The Hawthorne Effect

Unfortunately, the positive gains from ‘The Hawthorne Effect’ are usually temporary. What this time period after the Assessment really allows is the ability to take those steps that were circled on the Assessment Report as crucial in one’s accounting department and critical to company performance. It is also paramount to use our guidance in moving forward efficiently and effectively while the ‘Hawthorne Effect’ continues for a longer period of time with an outside presence working with your company.

In Conclusion

In so many aspects of our lives, increased attention has positive effects – with our families, those we mentor, our colleagues and, for us at Nperspective, the clients we serve. Nperspective has assisted many clients in improving their efficiency, effectiveness and financial results. Our experience and knowledge, when combined with ‘The Hawthorne Effect,’ can have powerful and positive effects on your company’s strategic plan and performance. Gary Cohen has served in corporate financial management roles for over thirty years and for three multi-location companies with up to five dozen locations with a focus on strategic planning, improving operational efficiencies and maximizing financial outcomes. If your company or a client can benefit from our experience and knowledge, please contact us:

Gary Cohen  407.462.4304 gcohen@npcfo.com
Gary Colbert 941.323.9555  gcolbert@npcfo.com
Russell Slappey 407.448.1781  rslappey@npcfo.com
Alma Kadragic 954-651-8044  akadragic@npcfo.com