The news last week that Grant Thornton and HLB Kidsons had left each other at the altar came as little surprise to industry insiders.
It was clear the merger, which many saw as a straight takeover by the larger of the two firms, had been floundering for some time as the two organisations grappled to understand each other.
Chief executives and senior partners might think they know their organisations, but those below can have a completely different outlook on life. This was the problem that KPMG forced itself to address back in 1997.
The Big Five (or Big Six then) firm was facing a confidence crisis.
As Colin Sharman (now Lord Sharman), the international head at the time, says: ‘KPMG was generally perceived by the media and many clients as being somewhat behind its major competitors in its efforts to globalise.’
Changing business culture
The firm had lost some big new business pitches and Sharman knew it was time to change the direction of what he calls an oil tanker, chugging along too slowly, without much of a rudder.
The experiences have been documented by Jan Thornbury, formerly a KPMG consultant, now running her own strategic and cultural change consultancy.
In Living Culture, published this month, the reader is treated to a blow-by-blow account of how KPMG tried to change the way its people did business.
‘But it is still very much ongoing, there’s still a lot to be done,’ says Thornbury.
‘It probably has no end,’ adds Sharman. But at the time there was nothing in the marketplace to which they could refer to change the firm. Sharman looked at global businesses and liked what he saw at McDonald’s.
A shared set of global values
He developed the McDonald’s business culture and pitched it to his international board as ‘the virtual firm’. The key tenets were a shared set of values worldwide, consistent core services and common business processes, supported by a centrally managed global infrastructure. Of course, no such business plan would be complete without a mission statement.
KPMG came up with: ‘The global advisory firm whose aim is to turn knowledge into value for the benefit of its clients, its people and its communities.’
In organisations it is possible to see eyeballs roll heavenwards at the mere hint of such a statement.
As Sharman admits himself, he was dealing with a very intelligent and potentially cynical collection of partners who could smell something unsavoury at 100 paces.
But he was surprised how little cynicism he encountered.
‘What avoided it,’ he says in one of his many notes throughout the book, ‘was linking our culture change to an opening up of relationships and communication channels. Cynicism is the product of limited choice, and the effect of our process was to minimise it.’
Thornbury adds: ‘Culture change is seen as soft and woolly, touchy feely. We needed to turn it into something practical, something involving.’
The book goes into detail about the techniques used to ensure that all felt involved in the process so that it was real, and not something abstract lifted from a textbook.
In implementing the change process, KPMG was given a huge boost in early 1998.
Towards the end of the previous year, as Sharman and his team were putting the finishing touches to the programme, everything was put on hold. KPMG and Ernst & Young had announced their intention to merge in the wake of Price Waterhouse and Coopers & Lybrand coming together. When the talks fell apart in February 1998 Sharman had one weekend to come up with a new strategy. In fact, he went back to Plan A, but he had added impetus on his side.
Developing core values
The firm had acknowledged the need for change by entering the merger talks. That need still remained, and this was something Sharman could harness for the benefit of the worldwide firm.
Thornbury is the first to admit that the KPMG case study would not apply to all companies, though some are already implementing her methods – law firm Allen & Overy being a good example.
But what does come through is the need to be practical and build in flexibility.
This is as true within a single organisation as it is between organisations.
Sharman points to their experiences in the Far East. Part of the core values required treating clients as ‘peers’.
This was a totally alien concept for many working in the Far East – as a supplier, KPMG’s partners would never dream of treating their clients as their peers, there was always suitable deference in the relationship.
To change culture, a business needs to understand its culture first.
KPMG has reported on its values in its annual review. It is open about how it is changing, and Thornbury has opened the book on how it is done.
- Living Culture – a values driven approach to revitalising your company culture by Jan Thornbury is published by Random House, Pounds 16.99
The second largest improvement in ‘significant’ levels of financial distress since the EU Referendum was in professional services, found research from Begbies Traynor
Just one half of UK practices have implemented a pricing structure around auto enrolment implementation and advice - with many suffering increased costs
Deloitte's north-west Europe foray; BDO, Smith & Williamson investment paths; Shelley Stock Hutter; and Wilkins Kennedy discussed by editor Kevin Reed on our Friday Afternoon Live broadcast
Accountants should alter their perspective on auto-enrolment to maximise business opportunities, according to Eric Clapton.