Most leadership teams are not short on confidence. They review the numbers, make the call, and move forward. What they are often short on is a reliable read of whether the numbers they are looking at actually reflect what is happening in the business.

I am Josh, and welcome back to the City Shift Finance podcast.

Our guest today is Jeff Glick, a CPA with over 30 years of experience across hedge funds, private equity, SPACs, family offices, and growth businesses. Jeff leads U.S. operations at OCFO, where he works with leadership teams to build the kind of financial infrastructure that lets them see clearly enough to make good decisions.

What we are getting into today is something Jeff has seen play out repeatedly across different businesses and sectors. Leadership teams making confident decisions based on financial signals that turned out to be measuring the wrong thing entirely. The cost of that tends to surface quietly and compound over time.

When institutions face pressure to reduce labor cost, and that pressure is intensifying, the response tends to follow a recognizable pattern. Cost reduction concentrates in administrative functions. Academic labor, despite representing the largest share of total salary expenditure, is largely protected. The data structure is part of the reason.

When financial reporting organizes cost by department rather than by activity, the reduction options that surface are department-level. Hiring freezes get applied broadly. Position eliminations happen where headcount is most visible and most accessible. Precision requires data the standard report does not provide.

The decisions are not wrong in intent. They are shaped by what the financial picture makes possible.

The institutions that have navigated this period with more deliberate cost decisions tend to share a common characteristic. Rather than leading with headcount targets, they built the capacity to see labor cost at the activity level, to understand not just what each position costs, but what work that position funds and how that work connects to the outputs the institution is accountable for producing.

Jeff, welcome to the show. I want to get straight into it. In growing companies, you see this pattern where leaders trust a specific financial signal that ends up misleading them. Walk me through what that looks like and what it costs when they act on it.

Jeff: Growing companies tend to look at sales and sales alone, but what they don't look at is annual recurring revenue and the lifetime value of those annual recurring revenues. That's what an investor really looks at.

Because they're buying an asset and the asset is that recurring revenue, not a onetime deal because they want to be able to rely on consistent revenue and then build on that with other products or as that line grows, you could add on to that more sales. So, what you really have to do is break up sales by recurring revenue and new sales and get those new sales into recurring revenues.

Josh: Sales show activity. Recurring revenue shows what actually holds.

That distinction matters more than most financial reports are designed to show. When investors or acquirers look at a business, they are not focused on what sold last quarter. They want to know how much of what was built will still be there next year without spending to replace it. A business winning new sales while its recurring base quietly shrinks is working harder to stay in the same place.

The number on the report looks like momentum. The number that actually matters is telling a different story.

Jeff, I want to push into the next layer. You described a signal problem at the top line. Tell me about a decision you have seen leadership feel completely confident making that later turned out to be structurally wrong, and why it looked right at the time.

Jeff: The phrase “garbage in, garbage out” really applies here. When management has not invested in proper strategic reporting, many decisions end up being made using incomplete or inaccurate information.