Saturday, December 12, 2009

American Microcosm Shows Up Everywhere

But in one place specifically right now. My mother is an avid churchgoer and a devout Catholic. Combining her love of helping out and her innate ability to shop, she took on the role of managing the local religious store in their parish. This was a place that I had never seen open, pre-Loretta. I only recently found out that it took in $800/yr. Over the past few years, she has turned it around. It is chock full of all kinds of religious goodies, most of which you have to snatch up before someone else does. They're open nearly non-stop and have an amazing amount of patronage and volunteers. Last week they handed over $1000 for the WEEK. Her and I spoke this morning about the delusions of grandeur at the top wanting a full-fledged inventory, database, etc. Our pastor is worried they are in the red. I went off on my usual style of logic based rant full of analogies marrying economics and Air Force terms. Rather than let her try to frantically write down what I was talking about, I sent her an email. I share that with you now. I haven't written anything on economics in about a year so I figured it was time.

So we've got some applicable Air Force terms for this situation. Not that they are solely AF terms, but we use them heavily. I know I use at least 1 per day especially with my students
~"Spirit and Intent" What are you really after in a given situation? What's the true purpose?
~"Value Added" if you're doing something and there's no value added, then why do it. hopefully, the value added is high and matches the spirit and intent
~"Desired Output" speaks for itself. It's the outcome that you want. similar to spirit and intent, yet differs from the fact that this is not an ideal, but rather a tangible item like "lower prices"
~"Felt Effect" regardless of what you mean to do and regardless of the desired output you're trying to achieve, this is effect that is felt by the people affected.

In this case in particular, I personally believe that the store functions to provide a location for parishioners to get religious items. They are already in church and so this provides a convenient place to buy what they need, have it blessed, etc all at a reasonable not for profit driven price point. The spirit and intent of this ministry is to offer a community run, communal location for like-minded folks. The desired output is not turning a profit or getting rich. it is, simply, to cover costs while providing for your folks. The value added is the sense of community, the pride of the parish in keeping it going, making it better and knowing that they have helped out other faithful parishioners along the way.

Now, where are we now with this? From $800 yearly to $1000 weekly (at the holidays). It's grown and I believe the spirit and intent is being forgotten at the top. This will crush under it's own weight if left unchecked. The desired output has now become another dollar which is contradictory to the spirit and intent. Realistically, both terms should always work in concert and here they oppose each other. The felt effect is under appreciation, lack of spirit and intent which, in turn, leaves no value added. You're working as part of a machine now. It's no longer fun for you, people are leaving, they feel like employees (employees without pay, i might add). Felt effect... people are being used. No value added. Spirit and intent forgotten. This will diminish morale and in turn, your desired output of money... gone. initial desired output of making enough to cover costs to buy more to provide to your folks... gone.

I'm not making this stuff up. We learn this as supervisors in the Air Force as part of Airman Leadership School and in Basic Instructor Course to teach down here. It's a simple model that can be applied to most group dynamics, especially when they go astray. I picked up a little of this with from Air War College with some correspondence course reading I did a while back as well.

What we end up seeing here is a microcosmic view of the country at large. Grandeur build on the shoulders of greed. Even as a right-wing, capitalist, consumer I see the need for checks and balances and regulatory principles. We don't have that here, but it's a church and we shouldn't need it. Any ministry should, by and large, be driven by the need to help others in whatever realm they're charged to do so. But one rogue mindset at the top can affect all operations below it. He sees the value added as more money for the church but he's forgetting the cost. The cost of his people, not dollars, and their willingness to help which will cost money later. So the spirit and intent has shifted in his mind and left unchecked will run amok looking toward the desired output and the rest will suffer as a result.

As far as being in the red is concerned, that's as ridiculous a train of thought as it is simply untrue. If you buy $50 worth of product that can be sold at $100, you can say you're in the red until you sell because your'e out the 50 bucks. But you're not dealing with perishables that will spoil so you can't recoup your money and the church is stuck holding Herman. You're not even talking about lasting products that have lasted 2 years and will continue to sit. You're moving your product. To verify whether you're in the black or red you need to look at quarterly earnings or monthly earning. How much did you spend Jan - Mar. How much did you make? Now subtract. Is that a positive number? If so (and in this case I know it is), you are NOT in the red. This is why companies release quarterly earnings and it's NEVER in the middle of a quarter. You still have expenses out that haven't been recouped because you're mid-cycle. You have to spend money to make money and he doesn't see that. At year end if you've spent more than you've made then you're in the red - for that year. If you have money in your account, you're still in the black at that moment. If you have product you can sell (even if you don't buy more and you liquidate to go out of business) you can end up in the black or further in the black. The only time you worry about being in the red is when you have used all your capital and you have no more product to sell or not enough to break even. Until then, you're mid-cycle. Simple economics here.

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