Introduction:

The case is about StratAfin Inc., an accounting firm in South Africa that is trying to transform and align itself with globalization and the changing operating environment of South Africa mainly due to the advent of democracy and the abolition of apartheid in the country. The imperatives for transformation were twofold. First, the company wanted to become global and position itself as a best-practice international accounting firm in the African continent. Second, it wanted to achieve race and gender diversity at all levels within the organisation. Ben Adams was appointed to manage the change.

Analysis: Key changes that Ben Adams drove: Adams took several key steps like creating a new identity, creating a vision/strategy and communicating it effectively thus getting the buy-in of employees, insuring short-term wins and managing resistance to change in order to support the transformation process. However this paper will focus on two key steps that he took and address if Adams was effective in his leadership of these two areas.

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Developing a vision/strategy & Effective communication to obtain employee buy-in

Adams pursued active management by taking into account employees’ views of the firm. He took a participative approach towards formulating an effective transformation strategy for the firm. Organisation of a conference with a cross-section of employees balanced between race and gender helped solicit recommendations on a transforming strategy and encouraged buy-in from StratAFin staff. There was free-flow of information and the effects of transformation on employees and the firm were discussed. He consolidated all information into one common vision, value system and strategy to ensure unity. A transformation covenant with seven objectives to focus was adopted and served as reference point for all employees. The vision was to align the firm with the national imperative for change. This is very vital and effective as it helps clarify the direction of the change by giving compelling reasons for change and motivates people to take action in the right direction.

Further the strategy was effectively communicated by repetition. Often the most powerful way to communicate a new direction is to lead by example. Adams often spoke enthusiastically about the transformation strategy to garner support from employees and ensure alignment of people and practices to the new operating environment. He also encouraged managers to disseminate the message through informal “corridor talk” and ensured consistency. He created excitement about growth and change. Senior partners spent 10 days in a month listening to outside people to better understand the context of transformation for StratAFin. The road show to clients enabled the company to get the buy-in of customers and shareholders. Open dialogue was encouraged and every employee had the opportunity to give feedback thus making the process more inclusive and transparent. This two-way communication endeavour makes the employees feel important and creates responsibility and ownership for change. All of the above enabled the company to
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successfully address the fears of the employees and enabled them to take a positive approach to the transformation process.

Managing resistance to change:

When organisations undertake transformation efforts there is often resistance from employees due to lack of direction, insecurity and complacency. Adams also faced resistance from employees at StratAFin but he was smart to acknowledge that resistance to change is a part and parcel in any organization. There was gender resistance and the HR department recognized the stress for women and the company tried to accommodate these challenges. Nevertheless some of the senior partners’ mindset did not change. Adams took the following steps to effectively manage resistance to change. He made sure all employees were in the same direction and that they understood the collective vision of what the firm wanted to achieve. This helps give clear direction and show employees where to go, how to act and what destination to pursue. He made sure that managers created comfort among employees and a consistent vision was filtered throughout the system. He realized that managers trained in accounting did not have the necessary business management acumen and often resisted difficult conversations to avoid conflict thus negatively impacting effective performance management. He acknowledged the need for having competent HR professionals who could support StratAFin. He could spot the people who were so off the mark. He tried to confront them and bring them along by articulating the vision but few still resisted the change and he was quick to recognize that it did not make sense to expend energy on them. He created great impact on the employees of the entire organisation by firing a senior partner for sexual harassment.

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Short-term wins:

Adams remodelled the entire IT platform and implemented transparent online processes. This enabled many divisions to exceed budgets regularly and started delivering immediate results. On noticing that the business was not working at capacity, Adams reworked the bonus-scheme for employees making it more performance-oriented. This resulted in motivating the junior staff to work more and actively participate in discussions with senior partners. The new systems empowered people to take ownership. This was very effective step as it created a win-win situation for both the employees and the firm.

Within 18 months, the revenues and profits were improving and Adams was effective and built the credibility needed to sustain his transformation efforts in the long haul.

Radical vs Incremental Change

I believe that if we want sustainable change, incremental change is preferable. The gradual implementation of radical change would be effective for StratAFin. Adams is already in the right direction. The new corporate premises symbolize the changed organisational culture reflecting the diversity of the country and its artists. He has given the employees a new identity and a physical sense of what StratAFin is aspiring to become. Cultivating a new identity helps to grow the employees, inspires them and makes it easier for employees to accept the change and act accordingly. It takes time to change the culture of the company and it is important to avoid quick and dirty decisions. There is also an example in the case where competitors were achieving transformation by making Black accountants partner just one year after training without sufficient experience. However Adams took the right decision that this is not sustainable in the long run and would damage the individual’s reputation forever.
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The company is already going through monumental change and radical actions at this point would create chaos. Moreover the company has made some improvements. The number of Black accountants has increased by 111% and 21% of the firm is owned by Blacks as of 2010. It is important for the company to keep building on these wins and to not lose focus on the transformation strategy.

Managing the “Human Capital” Investments:

Adams was in the opinion that the transformation that the company was going through was monumental and recognized the importance of investing in human capital for the successful growth of the company. This would help bring in change agents that challenge the status quo within the firm. The investments in these people thus gave a fresh perspective to the firm. He made sure the HR strategy was in line with the vision to promote diversity by recruiting the best young Black talent in a firm dominated by white people and offering bursaries to deserving Black students. When it was recognized that diversity issues still needed improvement, recommendations were made to address these problems. Adams created transformation through personal accountability for the senior partners. He encouraged them to take actions like being transparent when not able to allocate work to specific juniors and having lunch with employees different from oneself. He made them accountable for these actions by ensuring that they report on what they have done every three months. HR managers were appointed to facilitate team meetings and build open and honest communication. They were also responsible to address challenges that Young Black accountants faced such as access to quality chargeable work. I think that this is the right step to take as investment in people’s knowledge and skills (particularly Black people) is the most important thing for the sustained long-term economic development of StratAFin particularly in the age of globalisation, advent of democracy and abolition of apartheid in the country.
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