Creating a Teamwork Based Culture Within an Audit Environment

Presenter: William P. Cullen Jr. Audit Manager IFTA/IRP Arizona Department of Transportation

My Goal Today is to:

Share with you the steps that I took to

implement a new management philosophy with our team.

Challenge you to examine your current

employee management practices. Do a self assessment.

Select at least one item you plan to

implement when you return to your office.

Management Style Considerations

Results of recent employee survey

Employees are changing

Management tools have changed, but

management theory is basically the same.

Harris Poll
Recently polled 23,000 U.S. residencies, employed full-time, in key industries- banking, finance, education, public administration etc.
Only 37% said they have a clear understanding of what their organization is trying to achieve. Only 1 in 5 was enthusiastic about their teams and organizations goals. Only half were satisfied with the work they have accomplished at the end of the week. Only 15% felt they worked in a high trust environment. Only 10% felt their organization holds people accountable for results.

Audit Manager History (May 2005)

Results of March 2003 IFTA Peer Review

Encourage cooperation with other

departments in our agency Promote professionalism for our team Develop teamwork

A Few Disclaimers About the Book Before I Begin

I cant cover everything in the book during this

presentation; therefore, I suggest that you buy the book. Microchip technology is production oriented and operates in the private sector. We (Audit) are service oriented and operate in the government sector. Steve manages 3,900 employees and I manage 10. What Im saying is that liberties were taken to fit our situation.

Some brief background about the company would be helpful:

When Steve Sanghi took over at Microchip Technology,

the company was in dire straits.

The company was losing money Its technology was outdated Surveys to employees showed they distrusted management Employees had low job satisfaction

Steve decided to hire consultants to evaluate the

business process and come up with recommendations:

Need to focus on cycle time reduction Quality improvement Implement statistical control Outsourcing

Aggregate System
The purpose of the Aggregate System is to

systematically align and integrate every aspect of the business around a set of core values. Producing a selfperpetuating, continuous-improvement culture designed for world class excellence.
The Aggregate System attempts to unite employees

through shared workplace values and guide employee strategies, decisions, actions, and job performance.
The company policies and management practices that

influence employees were aligned and integrated to company values.

Aggregate System
Managers serve as role models of this

philosophy through decisions and actions. Improving all aspects of the enterprise is accomplished by designing the system to promote continuous improvement. It involves training, equipping, empowering, and requiring all employees to improve their areas of responsibility. The ultimate goal is establishing a selfperpetuating system that will yield extraordinary results from average employees.

Conditions Suggested to Implementing the Aggregate System

Inspire leadership Create a culture of continuous improvement Promote empowerment Encourage teamwork Utilize a Systems Approach Provide continuous training Promote professional development and succession planning 8. Insure effective communication 9. Establish a fair appraisal system 10. Model a balance with work and family
1. 2. 3. 4. 5. 6. 7.

1. INSPIRE LEADERSHIP

Received some help from Louzes and Posner in their book The Leadership Challenge. The book discusses 5 practices of exemplary leadership:
A. Model the Way B. Inspire a Shared Vision C. Challenge the Process D. Enable Others to Act E. Encourage the Heart

John Maxwells 21 Qualities of a Leader

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Character Charisma Commitment Communication Competence Courage Discernment Focus Generosity Initiative

11. Listening 12. Passion 13. Positive Attitude 14. Problem Solving 15. Relationships 16. Responsibilities 17. Security 18. Self-Discipline 19. Servanthood 20. Teachability 21. Vision

Inspiring Leadership
The success of this program depends on the leadership ability of the managers. Outstanding leadership is the most critical element in this mix. If leadership is ineffective or the actions and management style dont reflect the firms core values, the results will be mediocre.

2. CREATE A CULTURE OF CONTINUOUS IMPROVEMENT

Culture
Governing values Policies and norms Attitudes Degree of employee empowerment Prevalent management style

ITS HOW THE WORK GETS ACCOMPLISHED

The Aggregate System promotes a culture that has a relentless striving for continuous improvement, which engenders:
Employee empowering and involvement Honest, Free flowing communication Problem solving Innovation Merit Frugality Systems thinking Continuous learning and improving Results orientation

Culture continued
Most discussions on management never reference the

corporate culture or assume it cant be changed so you work around it. such can be designed, influenced, and controlled.

The Aggregate System views culture as a system, and as

The culture must reflect an attitude that employees are given

the responsibility and authority to improve their jobs.

Historically, employees had little input in defining systems and

procedures that govern their work.

Power must be appropriately distributed throughout the

organization, rather than accumulating at the top of the management rank.

3. PROMOTE EMPOWERMENT

To authorize and enable

The empowered employee must have:

Information (Data, Technical knowledge) Resources- Funds, material, space, time Support- Backing, approval, legitimacy Must believe there are opportunities to perform in an empowered way. Must accept ownership Managers need to act as coaches, developers, facilitators, and team

builders.
Instead of micromanaging, they need to remove barriers that

obstruct employee performance.

Employees must be more involved in problem solving and strategy

discussion.

4. ENCOURAGE TEAMWORK

What makes a team?

Individuals who are not equal in talent, experience, or

education, but equal in commitment.

It is not realistic to think that we can live or work with

others without conflict. However, by communicating about the differences, focusing on the common good, we will make great strides.
A team is not just people who work at the same time and

same place.
A managers job is to remove the teamwork killing

barriers.

Lucy to Linus (Who is watching a TV show): Change the channel. Linus: Do What? Lucy: Change the channel.

Linus: What makes you think I should respond like that?

Lucy (Showing her hand): You see this? These are 5 little fingers, but when they are rolled together into something called a fist, they become a weapon that is formidable to behold. Linus (After contemplating Lucys fist, changing the channel, and looking at his own little fingers): Why cant you guys get organized like that? When people come together for whatever the reason, the question that often surfaces as people try to work together is Why cant we get organized today? Why cant we become something which although weak independently, becomes formidably strong when we put it together?

5. UTILIZE A SYSTEMS APPROACH

Systems Approach to Audit Quality Issue

1. 2. 3.

4.
5. 6. 7. 8.

Defined desired improvement (work papers, supporting documents) Get a buy in from all concerned (ownership) Established improvement teams Outline project details, goals, plan Present solutions to the group After approval- implement Evaluate, follow-up, modify Maintain, monitor (continuous improvement)

6. PROVIDE CONTINUOUS TRAINING

In Arizona, we have two basic components of training:

1. Training for new auditors

2. Advanced training for all auditors

Advanced Training Consists of:

Monthly team meetings Semi-annual internal training Formal outside speaker training Conferences

Internal Training Has Included:

1. 2. 3. 4. Streamlining the work process Auditing of new tax types Refund training IRP rewrite

7. PROMOTE PROFESSIONAL DEVELOPMENT AND SUCCESSION PLANNING

I suggest that the courses taken are comprehensive and relevant to the employees job and career aspirations. Areas could include:
Computer training Statistics and sampling Supervision Time management Problem solving Interviewing techniques Management philosophy Developing job skills Problem resolution

During our monthly team meetings, I try to integrate outside disciplines into our discussions. The past year we have discussed:
Innovation at the workplace

Managing employees from different generations (Baby Boomers; X; Y)

Time management Auditing ethics Creative problem solving, thinking outside of the box

Succession planning could have some problems, but it should be done.

8. ENSURE EFFECTIVE COMMUNICATION

Communication must be honest and free-flowing. All employees want to know what is expected of them and how they are doing. I try to communicate with our staff in a few different ways:
Make sure that job expectations are clearly defined when

they are first hired and are constantly reinforced. Give feedback, both positive and negative on each audit. Have planned quarterly and annual evaluations for at least 30 60 minutes. One minute manager visit every day Open door policy- walk the talk Lunch with the boss Monthly team meetings Quarterly staff meeting Share information with the staff, both good news and bad news.

9. ESTABLISH A FAIR APPRIASAL SYSTEM

 The annual employee performance review should reflect

prior discussion and should just be a recap of the previous four quarterly reviews.
Hopefully the process will be positive and promote

continuous improvement. With that being said, you are doing the employee a disservice by not pointing out areas that need improvement.
I try to recognize accomplishments as well as intangibles

as supporting team goals, teamwork, passion, generosity, etc.

Since turnabout is fair play, once per year I give my

employees an opportunity to evaluate me.

The evaluation is completed by the staff and given to our

senior auditor who summarizes and recaps the findings. I never see the evaluation. I handout the results at the following team meeting.

10. MODEL A BALANCE WITH WORK AND FAMILY/FRIENDS

I try to follow Steven Covey The 7 Habits of Highly Effective People which does a wonderful job of presenting a holistic, integrated approach for solving personal and professional problems.

I especially appreciate the emphasis on promoting the balance of values relating to:
Physical
Mental Social/Emotional Spiritual

In Summary
The aggregate system represents the next evolutionary step in the

study of business management.

It shifts the focus from examining the various pieces of the business

to viewing the enterprise as a total system.

Its approach views company culture and employee performance as

systems that must be optimized in order for the firm to realize its potential improvement.
The key to the success of the aggregate system is its

comprehensiveness. It promotes a congruity and harmony between employee performance and the desired culture.
Improving all aspects of the enterprise is accomplished by designing

it to perpetuate continuous improvement. This involves training, equipping, empowering, and requiring all employees to improve their areas of responsibility.

In Summary continued
By designing and managing the totality of factors that

influence employee behavior and performance, you can expect exceptional performance from average employees.

As you can see, audits increased 220%; audit hours

were reduced by 35%, and assessment dollars were increased by 266%.

In Summary continued
Its difficult to assess quality. I can say that the recent IFTA Peer Review was very complimentary. They were nice enough to include in the report that The new audit manager reviewed the results of the last peer review and immediately implemented changes to affect the problem areas of:
A. B. C. D. E. F. G. Sampling Examination standards Evaluation of internal controls Verification of Licensees records Audit file content Communication of audit findings Audit reports

The only non-compliant area was a signature line on the auditor report, which was added that same day.

Finally, I have two handouts for you to review at your leisure.

1. Ten Behaviors of Managers who Excel 2. Common Management Mistakes.

Both are from a seminar I attended called Ten Behaviors of Managers Who Excel. The name, address and phone number of the presenter is at the end of the presentation. THE END

References & Acknowledgments

1.

Driving Excellence: How the Aggregate System turned Microchip Technology from a Failing Company to a Market Leader. Steve Sanghi and Michael Jones. Liberating Passion: How the Worlds best Global leaders produce winning results. Omar Khan The Fourth Turning: What Cycles of History tells us about Americans next rendezvous with destiny. William Straus and Neil Howe. Fired up or Burned out: How to reignite your teams passion, Creativity and productivity. Michael Lee Stallard.

2.

3.

4.

5.
6.

The Effective Executive. Peter Drucker

The 7 Habits of Highly Effective People: Powerful Lesson in Personal Change. Stephen R. Covey The 8th Habit: from Effectiveness to Greatness. Stephen R. Covey 21 Indispensable qualities of a Leader. John C. Maxwell The Leadership Challenge. Kouzes and Posner. Ten Behaviors of Managers who Excel.- Seminar, Penny Altman (HSC workshops (602) 674-0911, hscseminar@juno.com)

7. 8. 9. 10.