For change to happen, people and organizations must adopt new behaviors. Most in the accounting profession admit that change is necessary, but honesty about the situation doesn’t make change easy or fast. For many, the gravity of the past is generally more compelling and less risky than the potential reward of the future. With this said, internal and external forces are driving change at an increasing pace. Lack of understanding of change management is one of the most significant dangers that firms identify in strategic planning sessions (along with growth and succession). Change management is a skill, and those in our profession know they need it. Nevertheless, few firms offer or seek out related training. How can firms better manage change?
Before we answer that, let’s explore some prevalent myths associated with change that hold firms back and make change management more difficult than it needs to be. Though widespread, these assumptions don’t have to be and should not be the norm.
Myth No. 1: Education is the key. People don’t change with education alone, and learning takes time. While the mind is both emotional and rational, the emotional side typically dominates when it comes to change. Education is usually good, but it can be time-consuming and expensive without significant results. Leadership, communication and coaching provide a greater array of positive results. Providing a compelling vision and pathways to achievement is imperative.
Myth No. 2: Incremental change is better than exponential change. People become tired and stressed if change takes too long. Short-term pain is generally better than long-term suffering. The industry has witnessed a significant push toward paperless and document management initiatives over the past couple of decades, and this offers a good example. Firms that have done it are reaping the rewards, while those that haven’t are still holding meetings and arguing about procedures.
Myth No. 3: Don’t move too quickly. This is often associated with incremental change. Sometimes incremental change is appropriate, but in today’s environment, exponential change is occurring in technology (moving from client-server applications to cloud computing systems), succession (baby boomers retiring faster than new people entering the profession) and the economic model (hours x dollars no longer represents value in a results-based economy).
Myth No. 4: I’m not part of that change. Improved technology typically benefits those lowest on the organizational chart first, while those making decisions are often least impacted. However, they must not allow their skills to become obsolete, or put themselves outside of processes and workflow, or they become candidates for early retirement and buyout. Employability for a lifetime is different from employment for a lifetime.
Change can be positive or negative. The best way to predict short-term results is to look at the initiatives that the firm is currently executing. If your firm is ignoring changes in technology, succession, the market and regulation, there’s a good chance that you’ll be worse off in one year than you are today. On the other hand, if your focus is on the “big rocks” and making progress, the situation should improve.
Now to answer the question, “How can firms better manage change?” It takes multiple skills and a team approach to succeed. The following approaches may seem reasonable and within the reach of most firms, yet execution is the most significant challenge. The process is more like managing a simultaneous, three-act play than working from a sequential checklist. It requires planning, people and processes, with technology as the accelerator.
* Shared vision and a plan. Most firms have a vision of some sort. Some have as many visions as they have partners (this is a significant risk to a firm’s long-term viability). The challenge is to develop and communicate a single vision that is shared and supported by the firm’s values. Your firm’s plan should be formally documented and no longer than one page, because it’s impossible to effectively communicate or accomplish more objectives than can fit on a single page. The plan should contain strategic objectives, measurements of success, initiatives for each goal, due dates and assignments.
Once the firm’s strategic plan is approved, each partner and manager should develop a personal 90-day game plan that supports the firm’s strategic plan. After a successful year at the partner and manager levels, individual 90-day game plans should be required for everyone in the firm. Discipline and right behavior must start at the top, and permit no “sacred cows.” If anyone, including a partner, refuses to participate, that person should be required to get off the bus.
* Leadership and management. Leadership is absolutely necessary to ensure commitment. High-level, significant changes require significant involvement from leaders. Changes associated with efficiency and effectiveness can be implemented by management, but the process takes less time when leadership is involved. Change is much easier for firms with great leadership and management. In fact, difficult and impossible change in other firms may be routine in firms with excellent leadership and management. Remember that management must have authority as well as responsibility.
* Discipline and commitment. Behavioral changes require discipline. This is true for people as well as organizations. Weight-loss plans can be effective, but they require a commitment to execute. Commitment is typically gained through the planning process and influenced by the culture. A culture with a high level of trust can implement change faster and less expensively. In a low-trust culture, the firm pays a tax through increased time and expense.
* Accountability and coaching. Change typically does not occur in organizations where people are not held accountable. This is the No. 1 obstacle in most firms, and I believe it’s a reflection of the partnership form of governance and a tendency to undervalue management. Organizations with a CEO form of governance implement change with greater ease and efficiency. Accountability starts at the top, and coaching is a key to successful change. Great coaches build the team while helping individuals play to their potential (or even better).
* Reality and communications. Every change-management initiative has peaks and valleys. Great managers prepare their teams for success and adversity during the process. Knowing what to do during periods of struggle builds confidence and commitment to get through difficult times.
The planning process provides the path and clarity in an increasingly complex business environment. Simplification reduces resistance and builds confidence, enabling individuals and organizations to grow and reach the next level. Your strategic plan is the foundation for managing change. Make sure it is relevant and up to date.