Partner's Report for CPA Firm Owners

Change has become a fact of life at CPA firms. Modifications range all the way from major restructuring through mergers and downsizing to alteration of work styles, such as converting to a less-paper environment.

Although partners will sometimes resist change, at other times they recognize it can be fruitful and creative to be on the front lines of new modes of operation.

Why? To gain a competitive edge for your firm, to retain staff, to give yourself a new challenge, just to name a few benefits.

Despite the possibilities that change presents, it is never easy. Fear of the unknown and a perceived loss of control can trigger a visceral response that makes innovation difficult to handle.

This is why data suggest that 70% of all change initiatives fail to meet their expected outcomes, according to Tracy LaLonde, associate development administrator for the law firm of Mayer Brown Rowe & Maw (Chicago).

The changes that relate to people—and there are few that don’t when it comes to professional services firms—are of special concern, say human resources professionals. Forty-eight percent of HR professionals who responded to a recent survey, Global HR Challenges; Yesterday, Today and Tomorrow, conducted by the World Federation of Personnel Management Associations (WFPMA; www.wfpma.com), cited change management as a top concern.

What challenges successful change? Speaking at an industry meeting, LaLonde identified the issues that can destroy even the best-intentioned change initiatives at professional services firms:

1. Lack of partnership commitment to and support for change initiatives. In this instance, you may think the change is a great idea, but a few of your fellow owners don’t agree, or just pay lip service to it. Or, support among busy owners can wane over time, because partners become distracted by other initiatives. The firm’s key decision makers must be kept engaged throughout the entire process by the person who is leading it.

2. Staff don’t completely embrace the change. If you don’t inculcate into the hearts and minds of staff that change is good, then your efforts won’t transform the culture and reverberate for the long haul. CPA firms have seen what happens when there is too much focus on the change itself and not enough time devoted to "convert" those who will be affected by the new approach. Paperless initiatives are an excellent example of this—fail to follow through on the procedural change, and your digital project could be doomed.

3. Individuals don’t receive enough feedback, coaching, or reinforcement. Even changes that seem rational and logical can instill fear. People are presented with a change and expected to "suck it up." This is yet another area where insufficient communication can wreak havoc with the firm’s strategic plans.

Preparing for change. When change is imminent, LaLonde recommends the model created by Kurt Lewin, a German psychologist and one of the pioneers of social psychology. Under Lewin’s model, she explains, you "unfreeze what was there before by giving folks a reason to alter their beliefs or buy into yours." You must:

1. Mitigate the reasons against change.

2. Move people into the new initiative.

3. "Refreeze" those involved in the change by providing the systems, supports, rationale, incentives, and rewards to keep them where they have been moved.

It’s a simple model that goes a long way toward helping you think about the change process, LaLonde adds.

Another model, presented by John Kotter, a Harvard leadership professor and author of Leading Change (Harvard Business School Press, 1996), asserts that when hoping to generate support for change, it’s necessary to think about it in two ways: individual support and management support.

A comprehensive approach requires that you:

• Secure partnership support. Focus on your firm’s managing partner and executive committee (if you have one), as well as the other owners who will be most directly affected by the reorganization you are spearheading. And since it is "middle management" that tends to really make conversions happen, you need to win managers and supervisors to your side as well. Here are three suggestions to consider:

• Create an advisory board to champion your efforts and position power. In the best-case scenario, La Londe says, you can get another powerful partner to be involved with developing a plan, along with staff who will be responsible for implementing the change.
• Aim to include your biggest naysayer owner on the board, she recommends, adding that the goal is to field his or her objections in order to win over everyone else.
• Include those who have the greatest level of expertise in your company, people with an understanding of the systems involved, someone admired for their strong credibility in the company, and other influential leaders who are willing to be involved for the duration.

• Develop a vision and strategy. A vision outlines why it’s necessary to strive and create your picture of the future. It’s the "what" part of the equation. Consider: What makes your future picture so good?

A vision also serves three important purposes:

1. It shows where you’re going and simplifies decision making.

2. It motivates people, even if the steps are painful.

3. It helps coordinate the actions of people in a fast and efficient manner.

In addition, the vision needs to convey a picture and seem reasonable, feasible, realistic, and attainable. A vision of, "We want to make more money," for instance, has no direction, whereas, "We want to be on the top 10 list of CPA firms providing business valuation services" is focused in that it gives people something to work toward.

Strategy, on the other hand, relates to the "how," and a number of strategies can support your vision.

Explains LaLonde, "Top-management leadership for your advisory board often creates the vision and strategies, and middle management picks up with the plans and does the activities."

• Communicate and keep your vision simple. This means you should be able to convey the perspective in five minutes or less by using metaphors, analogies, and other descriptive examples: "We want our company to be the hare, instead of the tortoise." Use multiple forums as well, like e-mail, meetings, flyers, small tokens of appreciation, and any other approach that can help you create buzz and easily reiterate your message.

• Seek and offer leadership by example (for more on this point, see the accompanying sidebar), and know that full partners’ acceptance is critical, LaLonde says. If your change imposes hard rules, be sure the owners are willing to make sacrifices as well.

The point: Remove all impressions that your changes apply to everyone except the partners.

• Provide ample opportunities for those who are managing the change to meet and talk with staff.

These pointers from LaLonde should help you think about how to communicate with individuals on a variety of levels:

• Provide forums for discussion. Some people will want information in writing so they can think through your proposed changes, while others prefer a step-by-step outline of what will happen now and in the future. Staff will also appreciate understanding the reasons "why."

Consider the individual’s motivation, too, by providing insight on personal recognition. And offer milestones so people know when they’re advancing.

The point: Think about your communication efforts and give enough chances for people to react to your change in a variety of ways.

• Empower people so they’re able, willing, and ready to go along with the change. Empowering actions deal with attitude and capability. In an ideal scenario, everyone is eager and open to new situations, but this happens only 5% of the time, says LaLonde. In another scenario, people are able to adapt—they have the skills, knowledge, and systems—yet they resist. This, she contends, is the most difficult to overcome since attitude is so personal.

In some instances, people are willing to change, but unable to do so. Here, training and systems go a long way. And in the final scenario, people are unwilling and unable to change—the toughest situation to diagnose.

The point: Take care and assess the readiness of your audience. In circumstances where people aren’t ready, your initiative will not be as successful as you’d like. Full empowerment requires your company to have structures in place to support change.

• Train regularly and with intensity. The more training you provide, the more people will feel supported by the firm. LaLonde offers the example of organizations that are downsizing, which inevitably leads to defections as people get nervous about their futures and leave for more predictable and stable work environments. In such instances, training can ease fears, stem attrition, and even provide assistance with the transition.

• Revisit your firm’s systems, including those relating to performance evaluations, bonus structures, and the like to ensure that existing systems support your new approach.

• Empower supervisors and managers. Middle managers often get "sandwiched." People who work for them wonder why things need to change and the partners just want to get it done. The goal is to empower managers and supervisors with information and resources.

• Show evidence of success and perseverance. Revel in your short-term wins or milestones; they provide evidence that the changes in functioning and sacrifices are worth it in the long run, advises LaLonde. They also provide you with a moment to relax and celebrate. "Milestones are also great because they are so visible, unambiguous, and clearly related to the change effort."

• Remember, nothing changes unless you transform your culture. LaLonde recommends thinking of culture like a city water system: "You know it’s there running under the streets; you appreciate its effects; but often its pumps and ducts are invisible. Until you get deep down within the organization and make changes—which takes a long time—changes won’t stick."