I know our 400,000 square foot building with up to 300 employees uses an enormous amount of heat, electricity, and water and I wonder, does the company president know what those bills are? Also what about other expenses for everything from lightbulbs down to toilet paper. Does the CEO know all these numbers? For example, do they get a spreadsheet listing what the bills are so they could say “hmm… why was our water/gas/electrical bill so high last month?”. Also do they know how much it costs to say mow the grass, shovel the snow, or other maintenance?
Also do they physically sign any checks themselves or are all bills just handled thru accounting?
My first boss spent a lot of time at the office and spent a lot of time looking at financial documents and spreadsheets. He signed checks, although others were authorized to sign as well.
My second boss, I met once in 10 years. I mailed monthly financial statements to him and he seldom questioned anything.
They know whatever they want to about the bills. But I think only in a pretty small corporation would they typically sign them. I bet in half of corporations with a dozen employees, the CEO signs them, and in corporations with a thousand employees, maybe only a percent or two of the CEOs sign them.
Bills that are relatively important to the business, the CEO is probably pretty aware of. This would be for the purpose of figuring out how the business should change, if at all. For example if the business is in transportation and operates on a slender profit margin, the changing cost of fuel is probably something the CEO stays aware of. Though, he’s probably not checking last month to see if somebody borrowed the car.
But for example a rapidly rising software company that operates in rented offices in big buildings can probably do little to make their electricity consumption go up or down, and probably doesn’t care much either. That CEO may never know what the bill is, though they probably have a pretty correct understanding that they don’t need to.
If you think that these bills are higher than they need to be, you should put together a plan for reducing them. Typically, if capital expenditure is required, they will expect payback in three to five years. Get it typed up and checked out by someone, then send it off.
If it is just a matter of switching suppliers then you just need to tread a little carefully as the boss may well be getting some personal benefit from staying with the current one. Of course there might also be a hard to break contract.
In my experience, the CEO is frequently not aware of waste in a company, especially if it has been going on a long time. "We always did it that way/used that supplier is a powerful argument.
The higher up in the chain of command you go, the more generalized your knowledge is. The CEO sees things at a corporate level. As far as the bills you mention, the CEO probably just sees a single line item that says “General and Administrative Expenses.” If that number is out of the ordinary (compared to what he sees every period), he might dive into the details to find out what is driving it up or down. Or, more likely, he would ask his CFO to prepare a report detailing the change, and the CFO would then advise one of his accountants on what to look for and have him prepare the report under supervision.
Everyone is a specialist in a large corporation. The CEO’s speciality is running the entire company, so he doesn’t have time for anything but a big picture view.
In more than 3/4 of all US corporations, the CEO actually IS the entire company.
If you look at the statistics of CEOs, the gigantic overwhelming majority of them will have few or no employees under them. Only about 10% of US corporations have more than 10 employees. Only about 1% have more than 100 employees.
Just to add some information: In the entertainment business, it is very common for people to be incorporated as “loanout companies,” meaning the corporation gets paid for the “loan” of the individual. Some people who have loanouts are more middle-class types, but you’ll find a lot of actors/directors/producers who have business managers who deal with all the bills. So those one-employee companies won’t have a CEO who pays the bills. You’ll also have production companies with one or two employees but who employ an accountant and payroll service to handle check cutting. And even quite small films will have a corporation that owns the movie, and employ an accountant and payroll service, and the CEO wouldn’t ever write a check herself.
I doubt this affects the overall point that much though, which is that US businesses are overwhelmingly small businesses where the owner/CEO writes at least some checks.
That’s all true, but to me “CEO” suggests a large corporation. I used to do the books for small businesses, many of which were incorporated for tax and liability purposes, and I don’t think that any of the owners referred to themselves as the CEO. They were only ever even referred to as “president” on a few official documents. For the most part, they were just owners/managers.
When a corporation has a single shareholder and few employees, there is no corporate structure, thus no CEO.
pending on the size of the company. A company that owns only one building it is possible that he goes over the bills. Larger than that He probably only knows how large each department budget is, but not what is in the budget.
Have you ever experienced the demand that each budget has to be reduced by 10%, no excuses? With an existing energy management program in existence I have. We were told to cut all budget items including electricity, in a time when power prices were increasing. Every month the Chief Engineer had to write up a report explaining why we went over budget. He included each month an explanation that if we were to replace the recip direct expansion compressors with Evap towers with a modern centrifugal with new towers we could cut back on electricity.
After several months it was requested that he do an evaluation of cost and buy back period. The cost was around $1M buy back 20 years. He got a order not to include any more comments on a new AC system in his reports. But he still had to make a report each month about the over budget.
If he really wanted to know, he could find out. But it’s only if the bill constitutes a significant portion of the business that he would ever care. It doesn’t really matter if someone is spending 1% more on an item that makes up 1% of all expenses. Change those to 10% each, and then maybe, given that revenue and expense are usually much greater than profit for a large enough corporation. But even then, strategic concerns would probably be of greater importance; figuring out a way to realign everything to spend 2% less overall would be twice as useful as figuring out the 10% of 10% waste.
It really depends on the companies size and how much time a CEO has to look at such things.
With Home Depot as a receiving manager I knew how much people were spending on purchase orders and how much machine maintenance was costing us and I had responsibility to manage those budgets. If Janet the cleaning lady decided to order 200 bucks in paper towels(Janet we sell paper towels, why the fuck did you buy them from staples at twice the cost!) I’d have to take appropriate action. If Kyle decided to take a reach truck 4 wheeling on the asphalt and we then had to have maintenance replace all the wheels I’d know about it and would be pulling Kyle’s license.
As an operations manager I had access to every aspect of the stores expenses but I’d only be investigating the purchase orders or maintenance costs if they weren’t inline with the budgets, it was the receiving managers job to micro-manage those things and write people up accordingly. I might not have known anything about what Janet or Kyle was doing until the receiving manager was showing me write ups and asking I fire them. I didn’t really have time to to pick apart the how and why’s of each budget. If the purchase orders or machine maintenance was over budget only then would I have to figure out why. If I found the receiving manager was letting abuses happen then she’d be the one with her job on the line.
The store manager had access to everything I did as an operation manager. He’d only be looking at operations expenses if they weren’t meeting budget.
A district manager would have a half dozen stores so she’d only investigate at the store level and so on.
By the time you got to the CEO he’d have no clue what the individual budgets for store 2035 were. He’s looking at the aggregate results of 3500 stores. No way he has time to even look at Janet’s stupid purchase. If someone from upper management like the CEO or Regional manager came to ‘walk’ a store they’d have a cheat sheet with sales figures and expense budgets so they have an idea of that stores individual performances but they wouldn’t have a 60 page daily expense report unless they were really pissed off.
The daily receipts for the Home Depots I were at were about 300 pages a day per store on just the retail purchases. You’d have about 400 pages a day for all expenses. That might only equate to 70 bills per day to be paid. Each payroll day there would be an additional 300-400 paychecks to add on top of that.
The CEO certainly wasn’t reviewing the sum 40million line items per day the company was cutting checks for.
Running my own business, I sign every check so I know exactly what’s going on. It’s a lot easier to keep track when there are only a dozen expenses in a given week.
Large companies have signature authority at various levels for various amounts. If I go on a trip for $1,000 say my boss signs off, no one else. When you are buying something for $10 million the CEO and maybe the board approves it.
I know someone who was selling electronic equipment that could replace much more expensive equipment. He and his company had a problem doing so because the managers liked going before the board asking for budget - it was the only time top management knew they existed.
Every department has a budget. Go over it and then there might be a closer look. But top execs are not going to waste time with the electric bill. And I agree that in small companies the story is very different.
Which is why the CEO might notice if say… the price of lumber went up by a noticeable amount- 3500 stores worth of increased lumber cost would be something that would impact the bottom line.
But he wouldn’t be aware if say… some store or other was paying 5% more for electricity than another. There’s probably some purchasing person negotiating the rates by market/region, and probably some other accountant monitoring the bills for monitorable groups of stores, and would probably notice if one store stood out drastically.
I have little faith that the accountant’s notice of the variance in electrical bills would actually make it back to the store and convince the GM of the store to raise/lower the thermostat, or tweak the timing of the auto-open doors to save energy though.
The CEO wouldn’t be aware of any of that, unless it became a company-wide issue that he’d need to get involved in, or make a decision about.
Atlanta had a department responsible for maintenance and the central office did monitor things like lighting and heating. They were surprisingly good at picking up inconsistencies.
For example the central computers would shut down 50 percent of the stores lighting during off hours where there was overnight work and 90 percent on nights no one was expected in the building. At the store level we could bypass that and turn lights back on if needed. If our actions at the store level were causing us to exceed energy they’d be calling. At one point the two off hour overhead lights in the main plumbing isle where out. The policy required we have a dozen total lights out before we could get the electricians in to service. We needed light in that aisle so we could work but the red tape wouldn’t let us get it fixed. My suggestion of go break some lights was shot down Instead we would had to bypass to the daytime lighting. Eventually they called asking why we kept running the daytime lighting at night. ‘Because we need to be able to see and you won’t fix it’ They decided to make an exception.
If we ran overnight crews during the 90% off periods we’d call central turn adjust lighting accordingly.
On the heat the stores had fixed thermostats, so they couldn’t be adjusted. We’d have to call Atlanta if the temperatures were off or they’d send the HVAC guys in if the energy usage was off.
As a side point I’ll let you know a little about heating and air conditioning (HVAC).
Lets say a company occupies 2 floors of a 50 story building. They rent that area and part of that rent includes a set amount of HVAC. Maybe for example that would be between 6 am and 8 pm M-F. The system shuts down or goes into low during the off times.
Now if say someone needs to work late their are 2 choices. One, they call my boss and they agree to pay for extra air conditioning and I turn it back on. Or 2. they come and talk to me and I just MIGHT be having to do some maintenance and work on the units which would require me to keep them on or that darn thermostat could be stuck again. None of this shows up on the log.
Thing is HVAC controls are controlled by computer which can be offsite. Managers miles away can go in and mess with the temperatures in an entire building or down to an individual office. However the local techs can do alot also.
Typically in a large corp things like electricity and heating bills are the responsibility of the COO, the Chief Operations Officer. He/She would provide monthly expense reports to the CEO where electricity might be lumped together with a bunch of other expenses.
If something changes unexpectedly then the CEO might ask for a detailed breakdown of why and want to see individual bills.
When I was a kid, purchasing was notoriously a corrupt part of business. Because nobody else ever looked at the bills. It’s interesting seeing the comments here now: it appears that computerisation has provided much better supervision opportunities for middle managers.
They do! I spent my 30 year professional career in Purchasing, and that is one of the tasks.
I spent a lot of time looking at and approving invoices from spending. Interestingly, the companies I worked for didn’t care much about utility bills; I usually had to insist on looking at those also. Occasionally, I would find an error even in those.
Instead we would had to bypass to the daytime lighting. Eventually they called asking why we kept running the daytime lighting at night. ‘Because we need to be able to see and you won’t fix it’ They decided to make an exception.