Global Case Study: Leading Financial Services Firm-Internal Accounting Group

Background

Company A is a leading Financial Services firm. Sales have changed with the fluctuating economic conditions and an effort to diversify has lead to the cautious entry into new businesses overseas. Business in the European market has been difficult given the economy and the established competition; Company A has scaled back its efforts in the region.

The Accounting group, based in the southeast, works hand-in-hand with the Sales team, headquartered in New York. The Accounting group is a key component to the overall success of Company A. However, the Accounting group struggles with the stigma of being “back office overhead.” Also, communication between the two groups is less than optimal given the Accounting group’s geographical separation from the Sales team.

Each January, Executive Management broadly outlines Company A’s strategy in a company-wide meeting, but changes to the strategy are inconsistently communicated throughout the balance of the year. The Accounting group’s management team is often the last to know of shifts in business strategy and expectations.

To further complicate matters, the Head of Accounting is highly technical, but lacks leadership and management skills to link Company A’s overall strategy to what the Accounting group needs to accomplish. Objectives for the Accounting group are usually communicated later than they should be each year. In addition, communication is confusing and obtuse when delivered. This results in a reactive environment, which causes a lack of focus and prioritization for the team.

CURRENT SITUATION

January

It’s mid January and Craig, a manager in the Accounting group, and his colleagues just wrapped up another annual strategy phone call, where Executive Management in New York outlined this year’s initial strategy and direction. As usual, the call was another one-way affair – all presentation, with no chance to be physically present and no opportunity to ask questions. Short on specifics, the outlined strategy doesn’t look much different from that of the previous year.

Afterward, Craig and his colleagues spend a few minutes talking about how they are going to balance a recent ramp-up in workload coupled with a subtle underlying message to increase efficiency and reduce expenses. Craig, a long-time team member at Company A, expresses concern on how his request for a modest increase of three staff is going to be received. Even with the modest increase, it is going to be difficult to meet the current objectives, let alone the new overseas initiatives detailed by Executive Management.

With the lack of clarity from the Head of Accounting, Craig attempts to get further clarification on this year’s expectations from Executive Management, with little success. Craig and his direct reports spend considerable time discussing how to best motivate the team of young and hungry professionals. Optimistically, this year will bring career development and promotion opportunities for the staff; at least the recently paid year- end bonuses were generous. That should help with staff morale and retention, at least in the short-term.

February

With still no objectives set from the Head of Accounting, and his hiring request still “under consideration”, Craig begins to consider ways to prioritize the increasing number of initiatives directed to his team, while looking for ways to gain efficiencies in processes and costs. With continued obscure and sometimes conflicting direction from Executive Management and the Head of Accounting, Craig decides to develop an operational strategy for his team. Time is wasting and his direct reports are clamoring for direction on project plans and performance objectives.

Craig embarks on a threefold strategy:

  1. Continue to ensure high-quality support to the Sales team,

  2. Reduce expenses through more effective project resourcing and prioritization, and

  3. Continue to develop the current staff with the goal of promoting several staff at year-end.

May

Craig’s frustration increases as he gets off the phone with Executive Management. This was the first that he has heard of the start-up of two new businesses overseas. Was Executive Management serious when they said that Accounting is expected to be immediately up-to-speed on the nuances of the new businesses...and without hiring additional, experienced full time resources? And why was this the first time he was hearing of quality issues in his department from Executive Management? Sure, he and his direct reports discussed some routine quality issues in the past few weeks, but hadn’t those already been resolved with the Sales team? Why the sudden escalation to Executive Management and why was he taking a pointed beating for “the ongoing issues of the overall Accounting group’s interaction with the Sales team”? Craig is questioning the support that he believes should exist from the Head of Accounting to manage these new requests and derogatory comments from Executive Management.

Craig’s previously conceived strategy for his team is suddenly and unexpectedly being turned on its head; he now has to scramble to shift direction and address the fire drills for the new businesses. However, one message is perfectly clear to Craig...he and his department must support the Sales team at all costs. Craig is concerned that this additional work will significantly impact the morale of his already overworked team. Craig has still not heard anything about his request for three new hires.

December

As expected, performance and morale in the Accounting group has plummeted since May. High profile and costly mistakes have been made. Despite their long work hours, the staff can’t keep up with the escalating workload and the steep learning curve for the new businesses. With no additional staffing, junior-level contract workers were brought in to supplement the current staff by doing routine work. The Head of Accounting’s rationale is that these contractors will free up the permanent staff to focus on the details of the new business and high-priority initiatives. Unfortunately, the routine work proved to be too challenging for the inexperienced contractors.

These resource issues have continued to impact the quality and efficiency of Craig’s team. Finger pointing between the Sales team and Craig’s team has increased and a “blame culture” has developed leaving Craig’s staff believing they are victims of mismanagement.

Craig continues to see the erosion of his team’s morale and the stagnation of the staff’s career development as his team struggles to keep pace with continually shifting priorities. The external perception of the team has resulted in no promotions for the year. A number of staff members have already resigned and there are rumors of more resignations after bonuses are paid.

Leadership at all levels remains disjointed and continues to communicate only limited and obscure information. As the situation deteriorates, Craig begins to consider his own career options.

Case Analysis: The Prism Partners International Approach

The problem starts at the top – with Executive Management. A lack of a clearly defined and communicated strategy creates a Vision Gap in the organization – people don’t know what they are working towards. Organizational culture, already tenuous, begins to deteriorate with the lack of direction. The net result is a negative impact on performance jeopardizing strategic objectives, including financial goals, regulatory compliance and organizational development.

Given this perfect storm of events, Executive Management must immediately assess how to re-align the organization’s human capital performance to its strategy and culture. Roles and tasks, competencies, individual assessments and development plans are all key elements of a complete evaluation. This multi-faceted assessment is the basis of our Organizational Impact Spectrum.

Strategy Assessment

Like many organizations, Company A’s Executive Management communicates its annual direction, objectives and goals. So why is Craig and his department in the dark about their direction? Strategy has to be clearly articulated and appropriately communicated to all employees in the organization. Everyone needs to understand in what direction they are collectively rowing, what obstacles they may expect and how they need to translate the overarching strategy into specific team and individual roles and performance.

Prism Partners International’s approach is to help the entire management team – starting with the Executive Management team – develop a communication plan that cascades the strategy and expectations of the firm. A second, more tailored, communication plan would be developed with the Head of Accounting. This plan would clearly articulate the specific actions and expectations of the Accounting group resulting from the organizational strategy mandate. Craig would then have a basis on which to develop objectives and direction for his team. Each level of the cascading strategy plan would embed a project plan with milestones to measure progress and accountability for results.

Culture Assessment

Culture is the compilation of common values, competencies, human capital performances, strategy and expected behaviors that coalesce into that distinctive brand of glue holding a business together. Culture is the force that aligns and wraps employee engagement and performance around the goals, objectives and purpose of the company.

Company A faces several challenges within their culture:

  • The fragmented and undefined culture is reflective of the Sales team and the Accounting group not working in the same location.

  • The stigma of the Accounting group being “back office overhead” is indicative of the negative, underling current of “class distinction” or “us and them” mentality underpinning Company A’s culture. This distinction also diminishes the value of the Accounting group allowing Sales to underestimate the time and resources required to do a high-quality job.

  • The existing culture of blame is exacerbated by the current difficult circumstances. The escalating finger pointing is evidence of an ill-defined and inconsistently led culture where lack of accountability is tolerated.

Such negative cultures are demoralizing, disengaging and lead to organizational disarray.
At Prism Partners International, we understand the value of culture. We would assist Company A’s Executive Management and subordinate management teams in developing and communicating a strategy-aligned cultural framework to:

  • Articulate, communicate and reinforce the organization’s strategy and its expectation of employees, consistently and timely, to all levels of the employee population.

  • Unify and align values and expected behaviors both upward and downward. Upward to the strategy of the company. Downward to the roles, competencies and employee performance that produces the desired client experience and achieves strategic objectives.

  • Live the culture – always and consistently. Communicate the culture – always and consistently.

  • Develop and manage talent to be culturally aligned.

  • Pace the culture with the organizational strategy, assessing and evolving the culture to align with fundamental shifts in strategy.

Accountability, high performance, trust, teamwork and collaboration are examples of the elements of a cohesive culture that can emanate from an organization having a clearly articulated strategy. Poorly understood objectives and the resulting mismatched expectations degenerated Company A into a culture of blame, excuses, disenfranchisement and disengagement. The result – accomplishment of strategic objectives is placed at risk.

Roles, Competencies and Performance

A common role misalignment that plagues most organizations is a significant contributing factor to the disintegrating performance of Craig’s team and the regretted exit of talent. Prism Partners International would describe this as the “Strategic Leader vs. Knowledge Leader” dilemma. The Head of Accounting is an accomplished technical senior expert but has been placed in a senior strategic leadership role. Without coming up the “Strategic Ladder” of leadership development, the Head of Accounting is improperly equipped to lead, manage and direct the performance of the Accounting group at a strategic level, towards the overall accomplishment of the organizational objectives. The downstream effect is seen as Craig, a true “Knowledge Leader”, is now forced ” to focus on strategic matters because of the inability of his manager to do so. Craig’s focus from the work of his team is now diverted perpetuating and compounding the disarray resulting from the Head of Accounting’s inability to deliver strategic direction. The result is inept leadership performance that is misaligned with the direction and needs of Company A.

A further organizational challenge that plays out in Craig’s group is how to best align the roles and competencies within the shifting strategy of new overseas businesses. Does Craig’s team have the required new competencies for the modified roles mandated by the new businesses? Can his team effectively “re-tool” in a short amount of time while continuing to meet the demands of both the routine work and the non-routine or new accounting requirements? How will Craig manage, hire and develop his staff to meet expectations? Is Craig’s staff working hard or are they working smart? How should he position the roles, competencies, focus and performance of his team to realize the organizational direction? Is the team engaged, are they confident and do they have the aptitude needed to drive the new business direction?

Using Prism Partners International’s role and competency based assessment model, FACCETTE, Craig and his managers can accurately forecast and align both individual and team performance to the new business mandates. Periodic assessments and the use of our Spectrum Development Roadmaps will also allow Craig and his managers to recognize the performance risks associated with a strategy shift and take actions to mitigate those risks.

The three measurable outcomes of the assessment are:

  1. Manager and employee accountability
  2. Productive, aligned efforts in concert with Company A’s broader strategic objectives
  3. Increased organizational results

Summary

Continually shifting strategies without proper and continual assessment of the human capital requirements to deliver those strategies sets the organization up for failure. Rigorous and periodic resource assessments to execute the strategy is imperative to an organization’s long-term success. In the short-term, organizations become reactive resorting to a “plug and play” resourcing model, instead of putting the right people in the right roles aligned to execute on the strategy. Thus, organizations mistakenly believe they have the ability to achieve their goals, when, in reality, they actually have created teams – and an organization – that does not have the aptitude, engagement and confidence to accomplish its goals. Work gets done but at what cost? The human capital component is the direct impact on strategic results. When the organization is out of alignment strategically and culturally, employee disengagement and compromised organizational initiatives are the result. If your people really are your most important asset, what are you doing to develop and align them to your organizational success? Prism Partners International’s Organizational Impact Spectrum evaluates and aligns organizations to ensure human capital keeps pace with strategic initiatives.