The year was 1993. A large, U.S.-based owner-operator of a chain of convenience stores was emerging from Chapter 11 bankruptcy. The CEO, let’s call him Paul Van Halen, needed outside help to lead his business back to profitability and a state of positive cash flow. Mr. Van Halen hired our consulting firm, Gemini Consulting, to develop and co-lead with his team a Business Transformation to get his firm on the path towards profitability. The Business Transformation was an extensive front-to-back, wall-to-wall, floor-to-ceiling change program requiring an integrated, multidisciplinary, multi-initiative approach. Strategy, operations, organization development, employee re-skilling, store point-of-sale information technology, and re-architecting of the convenience stores.
Among the analytics we performed at the start of our involvement with Paul’s firm was a financial decomposition. Our team member tasked with the financial analysis brought something strange to my attention. When I read the latest annual budget and income statement, I noticed something rather bizarre. “Murder” was included as a line item. The budget was $1,000,000 per year for murder. Not an insignificant amount of money.
“Paul,” I asked the CEO, “what is Murder doing in the financials?”
The CEO replied, “That’s how much we pay out to families of store employees who are murdered during a year.”
“You see about ten of our employees are murdered every year. We pay each of the murdered employee’s family $100,000. The employee, more often than not, is the family’s main breadwinner. The $1,000,000 is set aside for those families and is essentially life insurance.”
“Okay. We’ll have to do something to cut back murders.”
Intervention: re-architected store layout, more visible close-circuit TV cameras, plexiglass shields at check-out stands, training employees on standard operating procedures in the event of a robbery, working with local law enforcement to increase drive-by’s, and improved relations with neighborhood gangs. The net result: fewer murders. Murder still remained a line item, but we cut the budget in half due to a lower murder forecast.
There is always something bizarre (and memorable) in each of the 200+ projects in our portfolio.
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