Cultural transformation drives competitive edge for Grant Thornton Australia
A Frazer Jones Chronicle article: The Talent & Culture Series: Published October 2015
The business thinks, acts and feels like a very different firm than it did 5 to 6 years ago. It has moved from a federated firm, with a localised (state-based) approach to the external market, to ‘one firm’ nationally, now collaborating across geographies and practice areas, to deliver integrated, client centric solutions that is creating a demonstrable competitive advantage in the Australian marketplace.
This has been in no small part due to a cultural transformation, underpinned by turning a previously inwardly focused partnership, into a highly engaged, highly focussed team that is now (literally) singing from the same hymn book.
The agenda for change
Ian Herman, National Managing Partner, Strategic Performance and Engagement, has been a Partner with Grant Thornton (GT) for the best part of 8 years. When he joined the firm, Ian said the professional services sector in Australia was strong. Clients’ needs were localised and as such, professional services firms took a similar approach to client delivery. Internal operations were also managed at a local level and the pathway to Partnership was about the amount of work sold individually. Ian says the market has changed and clients now demand a more integrated approach nationally, or globally.
Kim Schmidt joined GT Australia as Director of People and Culture in August, 2012. She accepted the role, sold on the firm’s clear growth agenda. Yet upon joining, Kim quickly discovered that at a time when the market was demanding a unified, integrated approach, the firm was considerably inwardly focused. There were a number of contributing factors:
The firm was grappling with the transition from a state-based to a national firm (and in particular the indifferent commitment levels of Partners to fall in line);
The ongoing integration of 2 smaller firms whose employees were used to a more agile environment and were up for change;
A recent merger with (parts of) BDO, another mid-tier consultancy firm. Whilst this doubled revenue and headcount of the expanded firm, it threw two previously fierce competitors together overnight.
Kim recounted that the sum of these factors led to a culture whose personality would be best described as ‘introverted’, with a lack of confidence among Partners in the firm’s ability to change/be different, let alone aspire to be something great. There was also a sense below Partner level that there was little opportunity for progression and hence no real aspiration toward a future in the business, as if the ‘local book’ (i.e. clients and revenue within respective states) did not justify the appointment of additional Partners, there were no development opportunities.
Kim gave a wry smile when she recounted her early discussions with Partners about talent management. With GT and BDO’s Sydney and Melbourne offices coming together, there was no clarity on what potential Partner talent the organisation had. Kim added it was even more challenging “further down the line”. Each office had their own processes regarding promotions and frequently when the firm had a vacancy, they would go to the external market. No real surprise then, that an engagement survey completed just prior to the BDO merger delivered a pretty ordinary score.
Added to Kim’s challenge was the fact that the People and Culture function within the firm was not taken seriously. It was seen more as a support area that would “run some programs” and reactively facilitate promotions, mobility and recruitment, rather than as a strategic, enabling function.
Ian added that there were further challenges in the business. Whilst the merger with BDO’s Melbourne and Sydney offices was definitely in line with GT’s growth strategy, it happened very quickly, which had a significant impact on day-to-day business. Ian, an ex-AFL footballer, likened it to throwing together two arch enemies and asking them to become teammates overnight. Both firms had different ways of doing things (with varying views on which were better) and the former BDO Partners were not necessarily bought into the firm’s future strategy, as they had not been involved in its creation. Kim added that there were further tensions coming from GT’s Board related to under-performance in top line revenue, as well as timelines around when synergies and associated efficiencies from the merger would be achieved. This had a knock-on impact on Partner remuneration. Even after structural and systems changes had been addressed as part of the integration of the previous two entities, there was still a feeling that the firm was not meeting its financial potential and there were significant concerns around retention of their people and
their clients, in particular clients of the merged BDO practice.
Plan of attack
With a burning platform for change, Kim set about designing a plan to engage the Partnership group, as “to achieve sustainable transformational change you have to build belief”. Kim indicated that for GT to achieve its business strategy, Partners needed to collectively believe in the firm’s direction and understand their contribution in making it happen.
Kim’s past experience taught her that “leadership drives culture and performance”, though not to focus only on performance, but rather to understand what’s happening in the culture that supports or hinders performance and also the critical role leadership plays in creating the culture. Therefore the collective engagement and alignment of GT’s whole Partnership group around the culture change journey was an essential component in its success.
Kim said “we acknowledged that the level of change required was significant and that organisations don’t change, people do, organisations don’t determine culture, people do and professional services only grow if the people do”.
So it is with this mindset that Kim set about a very individual approach, working office by office and Partner by Partner, with GT’s CEO in attendance, to unpack each Partner’s motivations, including:
- why they joined the firm;
- what their journey had been;
- what they believed the culture currently was;
- their vision for the future;
- what they perceived the gaps to be; and
- how they would go about closing these gaps.
Kim indicated that this process helped Partners realise that they had a lot in common, which built a strong connection for them. In addition, they engaged with the firm’s future leadership group seeking their
insights and perspectives to capture what was important to them in their thinking.
Subsequent workshops and conferences were conducted with all Partners to create an agreement on the culture which would support the firm’s strategic ambition. From this work they developed a set of core behaviours that would underpin this culture. The introduction of GT’s ‘Signature Behaviours’ followed, which resonated with people in terms of what could be done. These core behaviours, such as empowering, collaborative and courageous, were applied in leadership and management processes including the annual business planning and performance reviews. Ian indicated that this mind-set shift amongst Partners is building a belief that “together they can be stronger and deliver a distinct service”. This more transcentric approach has led to GT engaging with clients differently, offering a more integrated approach to how they can support clients to grow.
To underpin a more collaborative environment, GT’s CEO and the senior leadership team also agreed to revisit the Partners’ remuneration model. This was previously individually based and hence, did not encourage the critically important need for collaboration. The revised model saw Partners’ incentives move to team-based performance.
Kim indicated that GT’s culture change is key to fulfilling its commitment to its people, its clients and the community. She added that “we are leading differently and to do that we are doing things differently”. To reinforce this commitment and different approach, in July this year, 130 Partners will be working together in Cambodia to build houses for a significantly disadvantaged community. This initiative is demonstrating GT’s desire to do something extraordinary together. Kim added “this environment will challenge us as individuals, and bring to life our seven signature behaviours. Working together on this project, side-by-side, sharing this experience, we’ll develop a deeper understanding of each other and we believe our work will build a better future, not only for the families we will support, but also a better future for GT Australia, enabling our people and our clients to unlock their potential for growth”.
Re-positioning HR as a value-adding
Ian credits Kim with playing a key role in the quantum shift in culture and performance at GT. He indicated that having someone from outside the firm and indeed, outside the professional services sector, has brought new thinking and a different approach, unencumbered by previous/traditional approaches and processes. “Kim was able to create the necessary tension to break down inherent views. By unpacking issues at a personal level with all the Partners, she was able to ensure they would be change-ready and able to appreciate that for the company to grow, individual people needed to grow”. Ian added that Kim was able to demonstrate her understanding of business drivers and “didn’t talk HR speak”. In what was previously a very conservative culture, Ian said that Kim adopted some “out of normal” experiences to breakdown cultural norms, beliefs and attitudes and encourage Partners to be brave and start imagining a different future. Talk of Partners singing, dancing, juggling, climbing mountains and sharing stories was all part of this journey!
GT has also instigated a more structured, strategic approach to Talent. This has included the creation of an Annual Talent Day, where all Senior Leaders come together to plan talent requirements, identify their current talent gaps, discuss how to develop existing talent and what talent they need to acquire externally. Other initiatives include the creation of diversity targets, and increasing involvement, empowerment and appointment to leadership roles of younger Partners, ensuring diverse views are at the decision making table. In addition to increasing innovation this is creating strong leadership succession for the future.
Ian and the rest of the Partnership Group now see its People and Culture function as a strategic advantage and differentiator in the national marketplace.
So how would the business describe the transformation?
As a key business stakeholder intimately involved in the transition, Ian stated that the past 2 years has been transformational beyond expectations. He said that the business has shifted from being a pretty challenging environment where so many people previously did not see a future in the business, to one now littered with passionate, engaged, high potential people. Ian adds that there is supporting evidence just in what he is seeing and hearing in the business on a regular basis. He referenced a member of GT’s IT Division recently winning a national award, following nominations from a number of Partners. Ian indicated that such recognition of a central corporate function would never have occurred previously. Further, that Senior Partners are now sharing their business and personal stories, with many handing over key client relationships, in the interest of assisting in the development of Junior Partners. Kim added that there is a real degree of belief now amongst both the Partnership Group and the business more broadly, that GT can and is doing things differently. All Partners are currently engaged in developing the firm’s 2020 Strategy, which is expected to deliver an ambitious and exciting 5 year roadmap to which Partners are committed and engaged to deliver.
In addition to these internal indicators, Kim and Ian indicated that they have had positive recognition from clients that GT is operating differently, adding that the firm’s financial performance suggests that it is delivering to expectations.
What lessons would you share with other organisations looking to embark on a similar journey?
Kim indicated that working with GT has been exciting and exceeded her expectations in terms of the significant shift that has occurred in people’s thinking and behaviour. She encourages others to not limit expectations about what can be achieved when you have senior leaders on board. “It changes everything. Leadership and especially the CEO is the key”. She suggests the first step is to get as many of your leaders open to going on the journey even when the destination is not always clear.
From a People and Culture perspective, Kim counsels against making assumptions and thinking you have to have all the answers. “Be open to learning from colleagues outside of People and Culture. Keep an open mind, challenge your own thinking and be less formulae. Don’t think you have to set the pace of change. Find the right rhythm, learn when to push and when to pull back and take your cue from the environment”. Ian adds from a business stakeholder’s perspective, to be prepared to put yourself out there and go on the journey yourself, rather than directing others to do it. The old adage, “the more you give, you more you get”, rings true for Ian, as does adopting a relationship approach to leadership.