Screw Machine News. Screw Machine Promotion Resources. Screw Machine History.
Historic Editorials by Don Wood - Editor 1957-2007
Good Will
Buried in fine print within most financial statements is an item labeled "Good Will" which accountants will tell you is an intangible representing the firm's commercial reputation. Sellers and buyers of companies haggle over this, as they should, because it is a figure based on an organization's reputation for integrity under existing management. The intangibility involves how much of the Good Will is transferable, bearing in mind that without integrity there will be no good will.
We'll spare you the tawdry details about cooking the books and creative accounting which have made national headlines of late, except to point out that when an executive's income is tied to stock price, there is enormous motivation to get the price up at least long enough to cash in. And it is the cashing-in, rather than the price jacking which causes the finger pointing.
Begin from the premise that the price of a share of stock represents its value only if it is sold. Whether one made or lost money is never known until the transaction is completed. Much of the hoopla about twenty-year-olds becoming millionaires in recent years was based on the market value of stock they held...but in reality they could become rich only by getting out of the market.
Getting back to the subject of integrity and Good Will, it is obviously wrong to profit from insider information, just as it is reprehensible to jack up or run down the value of a company's stock for personal gain. Those who do so will forfeit the good will a firm accumulated through years of Golden Rule operation. In the final analysis, it is this loss, rather than jail sentences for a few officials, which is the real penalty.
Good Will is intangible, fragile, and almost indefinable. It is what those who've don business with you tell your prospective customers. It takes years to build and moments to destroy. In simplest terms, it boils down to whether one can be trusted to do the right thing when no one is watching...perhaps most importantly the person whose face we shave each day.
Don Wood
From our January 2003 issue.
Buried in fine print within most financial statements is an item labeled "Good Will" which accountants will tell you is an intangible representing the firm's commercial reputation. Sellers and buyers of companies haggle over this, as they should, because it is a figure based on an organization's reputation for integrity under existing management. The intangibility involves how much of the Good Will is transferable, bearing in mind that without integrity there will be no good will.
We'll spare you the tawdry details about cooking the books and creative accounting which have made national headlines of late, except to point out that when an executive's income is tied to stock price, there is enormous motivation to get the price up at least long enough to cash in. And it is the cashing-in, rather than the price jacking which causes the finger pointing.
Begin from the premise that the price of a share of stock represents its value only if it is sold. Whether one made or lost money is never known until the transaction is completed. Much of the hoopla about twenty-year-olds becoming millionaires in recent years was based on the market value of stock they held...but in reality they could become rich only by getting out of the market.
Getting back to the subject of integrity and Good Will, it is obviously wrong to profit from insider information, just as it is reprehensible to jack up or run down the value of a company's stock for personal gain. Those who do so will forfeit the good will a firm accumulated through years of Golden Rule operation. In the final analysis, it is this loss, rather than jail sentences for a few officials, which is the real penalty.
Good Will is intangible, fragile, and almost indefinable. It is what those who've don business with you tell your prospective customers. It takes years to build and moments to destroy. In simplest terms, it boils down to whether one can be trusted to do the right thing when no one is watching...perhaps most importantly the person whose face we shave each day.
Don Wood
From our January 2003 issue.
