The Virtual Firm Strategy
Values
CoreBusinessServicesProcesses
Infrastructure
To create the ‘virtual global firm’ we focused on:
q
Uniting the firm in what we stand for: we wouldachieve this by developing and bringing to life ashared set of values
q
Harmonising and aligning what we do, by makingsure we offered consistent core services throughoutthe world
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Making sure we do things in the same way, bydeveloping and implementing common internalbusiness processes
q
Creating a common infrastructure, managedrobustly from the centre.
Why Values?
There was an overriding need in KPMG to createglobal alignment. The market in which we operatewas becoming increasingly global, both in terms ofour clients and our competitors. While we needed topreserve our significant local strengths, we also hadto ensure that all the 100,000 people throughout thefirm started to act more in the interests of KPMGglobally – this meant a significant departure from oldhabits. We also found that, in some practices, we werelosing good people. We knew that in today’s worldthere is more to staff retention than offering highersalaries: organisations today need to treat people welland offer them inspiration, something to believe inand a sense of purpose.
We believed we could create alignment and bringabout behaviour change if everyone in KPMGunderstood and was committed to a clear and credibleset of values which were not just talked about butactually embedded in our culture. These would:
q
Add to our vision and help provide strategicdirection and leadership
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Provide guiding principles for our decisions,activities and behaviour
q
Create more pride in the firm and a sense ofbelonging to something bigger than the localpractice.
“This is all very well, but show me the money!”said one of our ambitious young partners. This is afair point: there needs to be a strong business case forculture change. Culture change in organisations isoften conducted solely on idealistic grounds, so it isnot surprising when programmes run out ofmomentum. At KPMG, there were plenty of solidreasons why we should change our culture and,throughout the process, we constantly made links withissues, strategic goals and bottom-line performancein the global firm.
We were also motivated by external research(Collins and Porras 1994) which indicates thatorganisations with a clearly-defined purpose and astrong set of shared values do better than their peersin all respects. They exhibit vastly superior financialperformance, better reputations, superior endurancerecords, and resilience to changes in leadership.
Surprisingly, when it comes to businessperformance, it appears not to matter much what thevalues say, but rather whether they are shared, trulybelieved and put into practice by the people in theorganisation. This should not be forgotten in anyculture change programme: it is much more importantto spend time engaging people’s hearts and mindsthan it is to craft what is imagined to be a perfect‘values statement’.
What Do We Mean by ‘Values’?
Ask a group of people to describe their organisation’sculture and the chances are you will be told all sortsof things – typical behaviours, anecdotes, randomadjectives and management jargon. Ask people whatneeds to change and you will be even more confused.To be clear about what we were talking about, weneeded a solid framework and clear definitions onwhich to base our work.
We used a model of organisational culture whichwe adapted only slightly from Schein’s well-knownframework (1993). We also found Collins and Porras’work (1994 and 1996) helpful in defining what wemean by core values. Our framework is set out inFigure 2. The theory is described in more detail in ourforthcoming book ‘Living Culture’. A summary isgiven below.
KPMG: Revitalising Culture through Values 3
Figure 2
Culture Framework
ArtefactsBehavioursEspousedvalues‘The way we dothings around here’CoreValuesImagePhilosophiesStatus symbolsPower structuresRoutinesOffice layoutLanguageStories
Heroes and villainsSystems and processesReward and recognition systemsIn the framework, culture is defined in terms of itsdifferent levels:
q
Artefacts of culture: This is culture at its mostsuperficial level. Artefacts are the things we canobserve and feel in the work environment, such asvisible organisational structures and processes, theoffice layout, dress codes, status symbols and soon. Artefacts also include what gets talked about– taboos, war stories, heroes and villains, what getscelebrated and what gets swept under the carpet.Cultural artefacts are easy to observe because theyare very visible. However, it is unwise to makesweeping judgements about a company’s cultureon the basis of artefacts alone: while organisationsmight look similar on the surface, they cannevertheless have distinctly different values.Behaviours: At the next deepest level of culture,we find ingrained behavioural patterns, sometimesreferred to as ‘behavioural norms’. Every newjoiner in an organisation quickly learns about ‘theway we do things around here’ – these are the (oftenunwritten) codes of practice which dictate dailybehaviour at work. These include what you needto do to ‘get on’ and ‘career-limiting moves’ to beavoided. Behaviours are not as visible as artefacts,but you do not have to be around an organisationfor very long before you can observe them.Espoused values: These are values which anorganisation claims to hold or temporarilypromotes to suit a business need. Espoused values
are not yet truly a part of the company culture.They may be used to influence behaviour only ifthey are being promoted seriously as part of aculture change programme. However, manyorganisations suffer from ‘poster syndrome’: thatis, they think up a set of values, distribute designerposters proclaiming these values and then wonderwhy nothing changes. It goes without saying thata set of values which is espoused but not enforcedwill not make a difference.
q
q
Core values: These are the unconscious, taken-for-granted beliefs and assumptions at the heart of theorganisation’s culture. Core values underpin allother elements of the culture. They are thecompany's timeless guiding principles. If in somestrange circumstances, continuing to do businessmeant compromising the core values, then peoplein the organisation would choose to change thenature of the business rather than changing thevalues. A few organisations have clearly articulatedtheir core values, but in most organisations theyare not written down. They remain in theunconscious, so they are difficult to identifydirectly.
q
Changing Culture
If we study the culture framework, we can see thatsome elements of culture are easy to change directlywhile others are not.
Artefacts, because of their superficiality, are easyto change. Artefacts are symbolic of the culture and
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changing them can send a strong signal that there iscommitment to change. However, changing artefactsalone is not enough to bring about a lasting shift inculture. Any benefits are short-lived. Unfortunately,you still need to do it, because, while changingartefacts may not always make a big difference, notchanging them causes a disproportionate amount ofdamage to your culture change programme. So, forexample, if you redesign your performancemanagement systems to reflect your new corporatevalues, people will not say: “Look how serious thisculture change is – they have changed the performancemanagement system!” But if you leave things as theyare, people will say: “Well, the new culture certainlycan’t be that important – they haven’t even botheredto change the performance management system.”Behaviour is more difficult but not impossible tochange. Implementing behaviour change will lead toa longer-lasting shift in the culture. Changingbehaviour requires absolute commitment. People inleadership roles are key because they are the rolemodels for everyone else in the organisation. They alsomake decisions about the types of people (andtherefore behaviour) they wish to promote. Behaviourchange requires focused initiatives and a high degreeof sensitivity, patience and persistence. However, ifpeople can change the way they think aboutsomething, if they can see a good reason to changetheir behaviour, and if they are provided with practicalsupport, behaviour change is possible.
Espoused values are easy to change – a new setcan be written any time! Needless to say, espousedvalues won’t make a difference unless they are madereal. In KPMG we were fanatical about not makingour values a poster phenomenon. We’re not sayingthat they shouldn’t appear on a poster, but unlesspeople see commitment and, more importantly,actions, a poster can simply generate cynicism.
Core values are slow or almost impossible tochange directly, particularly in a mature organisation,where they have been established and reinforced overtime. However, any organisation which wishes toradically re-engineer its core values needs to be asked:if the present culture is so deplorable, why not shutdown and start again? For most organisations, andcertainly in our own experience at KPMG, it isimportant not to throw away the baby with the bathwater. It is better to look long and hard at the presentculture, appreciate the good in the existing set ofvalues, but also look at where they may be limitingthe organisation. Then it can be decided what needs
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to be added and what taken away from the existingsystem to bring about the desired culture.
At KPMG, our philosophy was to focus onchanging what we could change. We knew that wecould change the artefacts of our culture and that wecould change behaviour. We knew that we could notchange values in a direct way. However, we neededto define the values of the culture we wanted to createand use them as a guide in our organisational andbehavioural change efforts. We knew and acceptedthat it would take a long time for a true shift invalues to follow our organisational and behaviouralchange programme. But in the meantime, therewould be benefits.
A Strategy for Change
In developing a strategy for our culture change process,we took account not only of what we were aiming todo (creating and embedding a shared set of values)but also the environment in which we were doing it(KPMG’s dynamics, how it works as an organisation,and how it deals with change).
Firstly, we were aiming to develop a set of valueswhich would align KPMG firms worldwide andbecome the timeless guiding principles for ourbehaviour, decisions and actions. The values neededto be relevant to everyone in the business, and sharedthroughout KPMG. They had to be meaningful enoughto extend well beyond our current generation of leaders.Therefore it clearly would not suffice if a few people atInternational Headquarters locked themselves away andawaited inspiration. Our process had to involve alarge number of KPMG people from all over theworld working on what was important to them.Secondly, like all organisations, KPMG has its ownset of idiosyncrasies. To name but a few:
q
The remnants of a federalist culture: local practicesstill operate with a great deal of autonomy, so weknew that issuing directives from the centre wouldnot work.
q
The ‘not invented here syndrome’: we think thiswas invented by KPMG! In running aninternational initiative at KPMG, to avoidresistance to things ‘not invented here’ you haveto make ‘here’ very big. The whole world-wide firmneeds to have a say.
q
Client focus: at KPMG, clients are more importantthan everything else, and the people who arelistened to are those who have been heroes in client
work. Any process we chose had to draw heavilyon the opinions and knowledge of such people.
q
A tradition of intellectualism: KPMG is awonderful environment for people who love ideas.However, while intellectuals love to think up ideas,they can easily get bored when it comes toimplementing them. In KPMG, long-term internalprojects often run out of momentum. We knew wewould have to be imaginative in our approach toensure that interest was maintained throughout thelong culture change process.
When we had fully considered the nature of thechange and the environment which KPMG provided,we developed an overall strategy for change. The keyprinciples were:
q
To involve KPMG people from all over the world– otherwise the values would not have been sharedand we would have had limited buy-in.
q
To use existing international events (such asmeetings, conferences and developmentprogrammes) to work on the process. Wedeliberately did not set up a separate project teamor run special events to work on the values. In thisway, our values were always integrated with ourorganisational programme.
q
To involve people from the mainstream of ourbusiness – we asked the people who are ‘out there’doing client work and running our businessesaround the world to work on the values. We didnot involve consultants, whether internal orexternal, in creating any of the content.
q
To include in the approach creative or un-conventional elements which would continue tocapture the imagination of people in the firm andhelp maintain momentum throughout the longprocess.
By conducting our process around previously-scheduled international events, we were able to involvethousands of KPMG people from all over the world.This approach also sent a clear message that ourdesired culture was to become part of normal work.The culture agenda always remained part of thebusiness agenda.
Approach
The process has so far consisted of three stages, which,at the highest level, can be described as:
KPMG: Revitalising Culture through Values 5
q
Identifying where we are now: diagnosing thepresent culture
q
Determining where we need to be: defining thedesired culture
q
Getting there: implementing organisational andbehavioural changes to bring the desired cultureinto being.
In my experience of client organisations, peopleoften neglect the first phase: diagnosing the presentculture. They argue that because it will soon beobsolete, there is no point in investing the effort. Thisis surprising, since the same people would be unlikelyto get into their cars and set off on a journey to aremote destination without first being sure of theirstarting point. At KPMG, we spent a great deal oftime in truly understanding the present culture. Weneeded to know where we were starting from –otherwise we would not be able to prioritise actionswhen it came to implementation. We also knew thatsince we were operating in the present culture, anychanges we made would be resisted or supported byit. In addition, we knew the present culture wouldhave benefits, strengths and strong values which werefundamental to KPMG’s identity. A thorough analysisof current values and behaviours would bring to lightwhat could and should be preserved as well as whatneeded to change.
When it came to defining our desired culture, weknew that we needed to paint a very clear picture. Peopleoften define their desired culture in terms which are tooabstract, and consequently struggle to see how they couldimplement it. The definition of the desired cultureneeds to include more than just a set of values: it alsoneeds to describe in detail what the behaviours of thenew culture will be. We involved thousands of KPMGpeople in developing what we called our ‘aspiredvalues’ – the set of values we aspired to have at thecore of our global firm’s culture. We then asked themto define exactly what these values meant in practice.People were asked to articulate what sort of behaviourthey would need to start and stop doing if the valueswere to become a reality. They were also asked “Howwill we know when we have got there?” In this way,they developed a strong sense of what it will look andfeel like when the desired culture has been attained.At the end of this stage, we had a statement of aspiredvalues which was clear, concise and inspirational. Butwe also had practical definitions of behaviours and avivid picture of the desired culture to back it up.
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When it came to implementation, we took thevalues of our desired culture as our guide andconcentrated on:
q
Aligning artefacts with our aspired values bymaking organisational changes, eg to processes,systems, rewards and recognition, powerstructures, communication etc.
q
Ensuring that the behaviours which support thevalues become the norm, by running behaviourchange initiatives and personal developmentactivities. This was led by example from the top(see picture).
Colin Sharman plays the values gameImplementation was more difficult in practice thanin theory. Some of our national practices had alreadycarried out sophisticated culture change initiatives whileothers had done nothing. Some had a need to address aparticular value while others differed. Some had suitablyskilled people to run the local implementation effortwhile others had not. The global approach toimplementation had to be flexible enough to deal withthis and with the inevitable diversities in nationalculture in 157 countries throughout the world. We alsohad to keep responsibility and ownership of the culturechange at a local level. Therefore, a prescriptiveapproach, directed from the centre, was out of thequestion. Instead, the role of the centre had to befacilitative. We provided people not with ready-madesolutions, but with a range of tools and techniquesfrom which they could put together their own culturechange programmes. We assembled these in a toolkitfor culture change (described in more detail later).The toolkit was aimed for use at a local level. Inparallel, we continued to work at an international level
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to integrate the values into the activities of ourinfrastructure and support functions. In this way weensured that the values were built into new processesand systems as KPMG continued on the path ofglobalisation.
Diary of the Process
The work on values at KPMG has been an evolvingprocess. It is described in diary form in the followingsections. As the process used existing events in KPMG’sinternational schedule, we use these as the key datesin the diary.
Phase 1: Diagnosing the Present Culture
Before May 1997: Background Research
Before the official launch of the values process in May1997, a great deal of research into culture had beengoing on in various KPMG practices around the world.Most of this was in the form of attitude and culturesurveys, and already some common themes wereappearing.
In KPMG’s UK practice, we had conducted extensiveresearch into behavioral norms and values. Theapproach we developed for diagnosing culture in theUK formed the basis for the process we followed withKPMG International, so we describe it briefly here.
Behaviour is key
The approach is derived from the culture frameworkexplained above. The culture framework is very similarto the models of personality we use when describingindividuals. If we think about how a person might beanalysed, we can draw parallels with how we couldanalyse an organisation’s culture. While firstimpressions are important, very few of us (except thoseunusually blessed people who claim to be ‘good judgesof character’) would presume to have an insight intoa person’s deeper personality and values based on outerappearances alone. Likewise, in diagnosing culture, ifyou look only at artefacts, you will not discover verymuch about the values which underpin them. On theother hand, even the most naive amateur psychologistwouldn’t expect a valid answer to the question “Whatare your deep personality traits and values?” as thesethings, being unconscious, are difficult to articulatefor all but the most self-aware of individuals.
With an individual, the key to better self-understanding lies in identifying and analysingbehaviour patterns and determining their source. Weapplied the same principle to diagnosing our
organisation's culture. We analysed KPMG’s presentculture at the level of behaviour. We then investigatedwhat was causing people to behave in this way. Weasked why these behavioural patterns exist and keptasking until we arrived at what seemed like anunderlying value. When we had a list of values weapplied some of the tests suggested by Collins andPorras (1994) to identify which values were core. Forexample, we asked which of the values peoplethought KPMG would or should never give up –even if it meant changing our business to preservethem. Throughout this process we validated ourhypotheses about the values by constantly linkingthem back to observed behaviour patterns andartefacts of our culture.
Identifying Behavioural Patterns
We had already made extensive use of proprietary,questionnaire-style culture surveys aimed at measuringbehavioural norms. While this gave us plenty of foodfor thought, we found that the results were too generalto enable us to understand our culture fully. Standardquestionnaires are by their very nature too broad-brush when it comes to describing something ascomplex and unique as an organisation’s culture. Avery accurate picture of behavioural patterns isnecessary if the values system of the culture is to beunderstood, and this requires qualitative techniques.We developed a simple process to use with focusgroups and in interviews which was good fun to carryout and surprisingly effective in getting straight to theheart of KPMG’s behavioural patterns. Behaviouralnorms are described in laymen’s terms as ‘the way wedo things around here’, and this gave us the idea forthe process. We asked people to imagine they weregiving their dearest friend some very frank advice abouthow to ‘get on’ in KPMG. Specifically, they were asked:
qWhat must you do?
qWhat can you get away with not doing?q
What must you absolutely never do?
One focus group participant christened theapproach ‘The Hustler’s Guide to Getting on inKPMG’, and we certainly got some very handy piecesof advice about how best to survive in KPMG's cultureas it was then. The proprietary culture surveys, attitudesurveys and the ‘Hustler's Guide’ research included across section of all employees. (See box overleaf for asummary of the results drawn from hundreds ofpartners and staff throughout the world.)
KPMG: Revitalising Culture through Values 7
May 1997: International Council Workshop – thelaunch of the values process for the global firmKPMG’s International Council comprises the top 35-40 of the global firm’s leaders. Their function is similarto a supervisory board and they meet twice yearly.Their meeting in May 1997 was the first of the eventsto be used to work on the culture change process. Thepurpose of the meeting was twofold:
q
We needed to confirm that the results we hadgathered from research into the present culturewere valid in the wider, global firm.
q
More importantly, we needed to engage theleadership group of KPMG International in thevalues process.
The sessions were in workshop format. Councilmembers were split into small groups and allocated afacilitator who took them through the process ofidentifying current behaviours and core values of thepresent culture. (We used an approach similar to thatjust described.) There was astonishing similarity inthe outputs from each group, even though people camefrom all over the world. The results also agreed withresearch conducted previously in other KPMGpractices. From these behaviours, our analysis of theunderlying values resulted in the identification of thefollowing as core:
Core values (current 1997)qServing the client comes first
qIndividualism
qTechnical excellence and high professional standardsq
Integrity
All these values have positive qualities whichneeded to be preserved. However, a few of themalso give rise to negative behaviours which wewanted to minimise – or were not deemed adequateto make our culture a source of competitive advantage.More specifically:
q
Serving the client comes first is a very worthysentiment and we wish to remain client-focused.However, people at KPMG could sometimes be tooaccommodating, doing what the client says withoutquestion and often at the expense of staff.q
Individualism has the enormous positive advantagethat KPMG people are definitely not a bunch of‘clones’. There is room for autonomy and freedom;
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8 Jan ThornburyTable 1
The Hustler’s Guide to Getting on in ‘old’ KPMG
What you MUST doq
What you CAN GETAWAY WITH NOT doingqqq
What you absolutelyMUST NOT doqq
q
Be committed to clients aboveall else
Be linked to prestigious clientsAlign yourself with a
successful partner as yoursponsor
Understand the politics
Be sociable, build relationshipsand get on with people, bothinternally and externallyCollect excellent peoplearound you
Take and make opportunitiesHave personal ambition whichbenefits the firm
Be visible – Blow your owntrumpet
Have integrity and honestyGet the numbers behind yourname: big fees and clientrelationships
Put KPMG first – ‘Your firstwife is KPMG’
Be seen to work long hours(Hint: buy two jackets – one towear and one to drape over theback of your chair when you gohome)
Exhibit professional excellenceand technical competenceAppear to know what you aredoing
Have common sense
Deliver on time and to budgetBe able to bullshit
Rock the boat a little, but nottoo much
It’s often luck – be in the rightplace at the right time.
q
q
q
q
q
q
q
q
q
qqq
q
q
q
q
qqqq
All internal commitmentsMost administrative tasksAbiding by internal rules (e.g.‘clean desk’ policies)Being on time for internal
meetings (Hint: client work is agreat excuse for this)Delegating properly
Assisting or briefing otherpeople
Sharing knowledge andinformation
Sharing resources
Saying what you’re reallyfeeling
Entering into discussions onprofitability
Conducting counselling
sessions or annual appraisalson time
Your own training anddevelopment
Making decisions (Hint: form acommittee instead!)Long-term thinkingTaking special risksHelping to sell servicesoutside your own area ofexpertise
Taking responsibility for yourown mistakes and disastersJustifying actions withbusiness casesThinking globally
Everything not related to thebottom line
qqqqq
qqq
qqq
qqqq
qqq
Put anything before clientsBreak ethical guidelines, bedishonest or unprofessionalDivulge client confidentialityLose important clientsUpset clientsShow disloyalty
Get into litigation or generatebad publicity
Be rude or disrespectfulAsk about payDress scruffily orunconventionally
Have a 9-to-5 attitude
Have a track record of failuresBe so aggressive that you’rehated
Wait for solutions
Put in less than 100% of effortUpset key decision makersNeglect to manage riskproperly
Admit your limitationsPublicise your mistakesAny internal projects
q
Source: KPMG, Spring 1997
people can be creative and entrepreneurial.However, individualism has an unpleasant side too:people often act in their own interests and this canundermine effective teamwork.
q
client (acknowledging that the client may regard afew creative ideas as more valuable than a lengthy,technically immaculate report...).
q
Technical excellence and high professionalstandards are obviously a matter of pride.However, the Council felt that we needed to paymore attention to the concept of true value to the
Integrity: we asked the question “What if thebusiness environment changed and integrity didn’tmatter any more – would we give it up?” TheCouncil members could not answer because theycould not imagine a world where integrity did not
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matter. This was test enough to prove that integrityis truly a core value for KPMG.
Having secured broad agreement on what wascurrently valued by KPMG, we went on to reflect onwhat could be improved about our culture. TheCouncil felt that the values also needed to addresshow we treat our people and how we develop andshare our knowledge.
Talking about values at this meeting also raisedfurther issues of strategic importance: we needed toclarify our core purpose. An organisation’s coreideology is defined by Collins and Porras (1994) asfollows:
Core Ideology = Core Values + Core Purpose
WhereCore values are the organisation’s essential andenduring tenets – a small set of general guidingprinciples, not to be confused with specificcultural or operating practices; not to becompromised for financial gain or short-termexpediency
Core purpose is the organisation’s fundamentalreason for existing beyond just making money –a perpetual guiding star on the horizon, not tobe confused with specific goals or businessstrategies
Source: Collins and Purras, 1994
Although the discussions did not originally set outto discuss core purpose, this emerged naturally as atheme. It was clear that our raison d’être was aboutmore than just making money – but what was it? Todo audits? To run business process improvementprojects? Hardly. The Council members knewintuitively what it was all about, but were shocked tofind that they had difficulty in articulating the firm’score purpose. They reckoned that if they could notstate it clearly, people in the rest of the firm wouldstruggle even more. They agreed to undertake furtherwork on this, and charged the firm’s internationalexecutive board with finalising a new statement ofpurpose at its next meeting.
July 1997: The International Board Revises theMission Statement
A simple statement of core purpose was agreed at theInternational Board meeting a few months later,namely, that KPMG’s purpose is
KPMG: Revitalising Culture through Values 9
‘To turn knowledge into value for the benefit of itsclients, its people and its communities’
This meant changing the old mission statementfrom:
“KPMG shall be the world’s leading accountingand consulting firm. We shall achieve this by deliveringthe highest quality services that provide significantadded benefits to our clients and that meet or exceedtheir expectations. We shall thereby build enduringrelationships and be always worthy of our clients’,our people’s and society’s trust”
to the more inspiring, not to mention memorable:“KPMG is the global advisory firm whose aim isto turn knowledge into value for the benefit of itsclients, its people and its communities”.
In addition to this, they did some thinking aboutwhat assets KPMG could mobilise to achieve thismission. This was a simple step to take, but it is oftenthe simplest concepts which prove most valuable infocusing strategic developments. KPMG has threeassets at its disposal to achieve its mission:
qClientsqPeopleq
Knowledge
All are equally important and interdependent. Forexample, there is no point in investing only in buildingclient relationships if we do not develop our people towork with those clients. There is little point in developingour people if their learning remains locked up in theirheads and is not added to the knowledge of the firm aswhole. And we can have the best knowledge-sharingsystem in the world: but what use would it be if wecould not populate it with the learning we gain fromworking with our clients and developing our people?As we moved forward to define our desired culture,we needed to focus our discussions on the things thatwere most important to us. From this point onwards,our newly-articulated statement of purpose and ourthree assets became central themes in the developmentof our aspirational values.
Phase 2: Defining the Desired Culture
The international events we targeted for this nextphase were a series of development programmes heldin Bürgenstock, Switzerland, and the 1997 annualKPMG International Partners’ Conference in SanFrancisco.
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August/September 1997: The BürgenstockProgrammes
Every year in late summer, senior managers andpartners of KPMG from all over the world meet ina rolling programme of seminars which promoteglobal awareness. The seminars are geared towardshigh flyers – senior managers and partners whomake key contributions to KPMG’s global business.The programmes have always been a means todisseminate KPMG’s international strategy and weretherefore an obvious choice of event for the valuesprocess. The difference was that this time, insteadof commenting on existing strategies, participantswould be actively involved in strategy formulationby working on the ‘live’ development of KPMG’sdesired culture.
Throughout each programme, a large proportionof time was allocated to working in small groups onhow the firm’s culture needed to change. The groupshad received a brief with thought-provoking questionson one of the themes of clients, people or knowledge.They generated ideas too numerous to mention here,but usually came back to several central issues aroundeach of these three themes. They also voiced strongideas about the culture change process, commentingfor example on the importance of personalcommitment, communication, role-modelling andproactivity in challenging non-compliance.
September 1997: International Partners’Conference
Over 350 KPMG partners from all parts of the worldmet for this regular annual event. This was the keyevent used to define KPMG’s desired culture.
It was a working conference in which participantswere seated at tables of ten with a spokesperson whohad been briefed to facilitate the discussions.Participants worked on two exercises:
qThe validation of the current culture diagnosisq
The development of our aspired values, and theidentification of behaviours which would supportor undermine these values
For the first exercise, we were very conscious thatwe needed to find a way to present the current culture,‘warts and all’, in a way which was clear, quick toassimilate and accurate. We wanted the audience toacknowledge KPMG’s faults as well as its merits, butwe did not want to turn them off or lead them into astate of self-flagellation. We achieved this by using
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humour and drama. The audience was presented witha series of ‘soap opera’ sketches about ‘a typical dayin KPMG’ and was asked to vote on whether thesetruly represented what happened in real life. Thiscaused much amusement, but the serious outcome wasthat people were able to (and did) acknowledge KPMGand all its foibles. (Indeed, a few people thought theactor who played the “bumptious partner” characterreally was a KPMG partner.) The results of this firstexercise validated our research into KPMG’s currentculture, and the audience was nicely warmed up towork on the next, more serious task.
The second exercise involved intense tablediscussions in which the desired culture was defined.The outputs were periodically gathered, collated andagreed with the table spokespersons. Towards the endof the day, participants became actively involved inpresenting back the thinking of the entire group andleading discussions on what needed to change. Thefollowing day, after the output had been analysedfurther, there was a live review with questions, answersand ideas from the floor.
A number of key themes emerged clearly as a basisfor KPMG’s aspired values. This was accompaniedby a long list of very specific behaviours whichparticipants felt that people (including themselves)needed to stop, start and continue doing to bring thevalues into being. Together, the themes for the valuesand the lists of behaviour formed a rich picture of theculture we wished to build.
October 1997: Refining the Aspired Values atthe Asia Pacific Conference
In developing a statement of values, manyorganisations make the mistake of including too manyitems. This indicates inability to truly focus andprioritise. Furthermore, any list of more than five itemsis impossible for most normal human beings to recall.Values won’t become second nature if people have tokeep referring to a crib sheet.
After the San Francisco meeting, we found thatwe still had too many themes for our values statement,so at our Asia Pacific conference, partners from theregion prioritised what we had developed so far. Wethen had a few, central themes to present to theKPMG’s International Board for final formulation ofthe values statement.
November 1997 – March 1998: On Hold!
Just when we were on the point of agreeing the valueswith the International Board and proceeding with
implementation, KPMG started merger discussionwith a rival firm, Ernst & Young. Merging with Ernst& Young would have meant creating an entirely neworganisation – a fantastic opportunity to unite the twofirms under a new culture. However, the outcome ofthe merger discussions remained unclear for months.During this time, there was little point in KPMGpressing on to finalise its own values, but neither couldwe strive to create a common culture with a firm whichcould potentially remain a competitor. As it turnedout, the merger discussions fell through and fourmonths later KPMG took up the values process again.
March 1998: Finalising the Values Statement
At its meeting in March 1998, the International Boardagreed a statement of three core values for KPMGInternational. Each statement encapsulates threecentral themes, which, for clarity, are reproduced here:KPMG’s Global Values:
We are passionatewhich means:about working withour clients to deliver-being passionate about
exceptional value
client service -robust, lasting
relationships
-being committed to
adding valueOur people flourishwhich means:and realise their fullpotential
-respect, support and
trust
-adding value to our
people by providingvaried, challenging andrewarding work andplanned careerdevelopment
-teamwork: self-fulfilment
through working andgrowing togetherWe continuouslywhich means:extend the frontiersof our shared -openness of mind and
knowledge
continuous learning-treating knowledge as a
highly valued asset
-everyone in the firm has
a right and an obligationto access our
knowledge base, andthe responsibility tocontribute to it.
KPMG: Revitalising Culture through Values 11
The positive aspects of the existing culture arereflected and built upon in the new values statement.For example, the notion of ‘the client comes first’ hasbeen modified and broadened to describe arelationship which is much more robust and concernedwith adding value. We acknowledge that KPMG willalways be individualistic, and the new culture will offerthe individual ample opportunities to realise their fullpotential, which is much more possible in a supportiveenvironment than a competitive one. Our technicalexcellence and professionalism will be part of ourexceptional value offering to our clients, and also partof the learning which we offer to our people. And ourintegrity, still key in our client relationships, has beenreflected also in the respect, support and trust whichwe will foster within the firm.
Phase 3: Implementation
Our approach to implementation needed to befacilitative rather than directive. Our solution was toenable people in our practices around the world todevelop their own culture change programmes. Weprovided them with a toolkit to do just this. Thetoolkit contains extensive guidelines, materials,questionnaires, workshop designs and exercises whichcan be used in the culture change process. It is fullyflexible: people can select the tools they need and adaptthe content where necessary.
The toolkit is designed for use by local ‘changeagents’, that is, for the people who will be responsiblefor designing and running the culture changeprogrammes in their own practices. It contains twoelements:
q
A boxed set containing an implementation guideand tools and techniques for implementing culturechange
q
A board game which helps people understand thevalues and put them into practice (see overleaf)
The boxed set
This is the mainstay of the toolkit (see photo overleaf)The first item in the box is an ImplementationGuide. This gives in-depth background to the values,provides principles and a basic framework for culture-change, and gives guidance on when and where to usethe various tools in the kit.
The rest of the toolkit consists of five boxes of, intotal, 36 tools and techniques. We categorised the toolsby the activities they support, having identified fivekey areas of activity in the culture change process:
Winter 1999
12 Jan Thornbury
1.Leadership Alignment, is supported by items inthe first box of tools. This is fundamental to thesuccess of the process. It involves buildingcommitment among the leaders of theorganisation, making sure that they activelysponsor the culture change process and that theybecome effective role models. Leadershipalignment is a critical component of any kind ofmajor change in any organisation. Unless asufficient number of the company’s leadership teamchampion the change, all the research shows thatthe programme will fail.
The boxed set2.The second box of tools is entitled Personal andTeam Development, and provides materials andexercises to help individuals and teams receivefeedback and work on changing their behaviour.3.The importance of communication is oftenunderestimated in change programmes. The thirdbox of tools, Communications, provides the changeagent with planning guidelines, materials andcreative approaches to getting the messages across.4.In putting together the toolkit, we were aware thatmany of the people who would be using it mightnot be seasoned culture change managers. Not onlythat, even experienced change agents would needto conduct their activities in a way which wasbroadly consistent with KPMG's overall culturechange effort. Either way, there was a need to
Business Strategy Review
provide guidance on how to carry out variousactivities. The fourth box, Managing the Process,addresses this need, for example by providingmethods for conducting research, designing andrunning events, measuring progress and so on.5.Local change agents need to have to have a firmgrasp of the concepts involved in the process andbe able to explain these clearly to others. The finalbox, Content, provides a set of materials whichassist in explaining in depth the values, thetheoretical background and details of variouselements of the programme.Where We Are Now
Any process of culture change will be lengthy, andKPMG is still in the early days of implementation.However, in the two and a half years to date, we havemanaged to maintain an interest and enthusiasm forthe values and to gain strong commitment toimplementation. There is a deeper understanding ofthe importance of the firm’s culture, and a highawareness of the values and the behaviours whichsupport them. There is a strong sense that the valuesare shared by all – our efforts to involve people fromall over the world have paid off.
We have had a good take-up of the valuesimplementation toolkit, with many practices eitherusing it in developing their own culture changeprogrammes or integrating the tools into their existingactivities. People like the toolkit because it providesrigorous techniques while being practical and easy touse. Behaviour change, unheard of a few years ago, isnow a focus of attention. Actions are being undertakenthroughout the firm to ensure that it happens.
Of course we have had problems along the way –not least due to the sheer size of an organisation whichuntil recently has been quite fragmented. There is stillmuch work to be done before everyone in KPMG,irrespective of location, truly understands and actsaccording to the values. Although we have a strongbusiness case for culture change, it is not felt withequal acuteness in all our national practicesthroughout the world. A few practices can still flourishin their local markets without having to pay muchattention to the values. We are convinced that this isnot sustainable in the medium to long term, so wherethe sense of urgency is lacking we are reaching out tofind more far-sighted advocates of culture change.We also need to ‘get tough’ when we see non-compliance with our new culture. In the past, this has
KPMG: Revitalising Culture through Values 13
been difficult because of our structure and uncleardistribution of authority. Fortunately, our governanceand our attitudes are changing to overcome this. Wehave a very public commitment from KPMG’sinternational leadership to uphold the values and tobe strict about consequences when they areundermined. For example, values are now a keyconsideration when it comes to reward and promotion.We still have some inconsistencies in the wordingof the values statement around the world because afew practices are still retaining the values statementsthey created prior to the development of the globalvalues. This can be frustrating, but the internationalleadership does appreciate that national practiceleaders can hardly turn around to their people andsay: “These values you have all been working towardsare now out! And, as of tomorrow, these new ones arein!” For such practices, the transition to the adoption ofthe global values needs to be a managed process.Fortunately, there is a willingness to do just this andwe at the centre are giving it time and support.
It was always our intention to embed the valuesfully in our organisational programme, and we arebeginning to see them manifested in our strategicdecisions, investments and projects. For example,because our values focus on clients, people and
The Values Game
Corporate communications can frequently be regarded as a somewhat dull. It is also much harder toconvey the concept of values through conventional media than it is to present, say, the year’s financialstatistics. We wanted to help people experience and ‘feel’ the values, and we didn’t want to lecturethem or bore them to death in the process. Hence, the board game.
The game models KPMG as a global firm. It is like Monopoly, but is played with clients, peopleand knowledge. There is a simple trick to winning the game (not given away here – someone mightread this and cheat). Players achieve high scores only if they behave according to KPMG’s values!The game has been played at numerous conferences with people at all levels in KPMG. With ourInternational Council, it was first played in April this year – almost two years after the values processwas launched with the same group.
The game has been useful not only in teaching people about the values, but also in generatingenthusiasm for the continued process of implementation. Culture change is a lengthy process, andsomething as unconventional as the game has helped keep it alive.
Winter 1999
14 Jan Thornbury
knowledge, we are investing heavily in a sophisticatedglobal client account programme, global HR processesand a leading edge knowledge management system.We believe that the connection between values andreality has been made.
In summary, while we recognise that there is stillmuch to be done, we are happy with the progress wehave made so far. We have been able to take themystery out of culture change and make it tangibleand real. We feel we are well on the way to achievingour goals. In an organisation where the largest singlegroup is male accountants, culture, values andbehaviours are now talked about freely. Surely that isa measure of success.
What We Have Learned, and Implications forOther Organisations
We have learned a great deal in the past few years. Afew general points are:
q
q
What may have been planned as a neat, sequentialprogramme of activities will soon be subjected toall sorts of constraints and opportunities in reality.The real process will look messy. Opportunities needto be taken as they arise and at times it will benecessary to go with the flow. The change agent needsto know when to force issues and when to let go.Clarity is key. Culture change is often regarded asnebulous, ‘touchy feely’ and mysterious. In fact itis like any other change. Culture can be defined inclear terms and a host of practical steps can betaken to change it.
People from outside the organisation may be ableto give helpful advice on the process, but asoutsiders, their contribution to content should belimited. At the end of the day, the people insidethe organisation are the ones whose job it is todefine the desired culture and make change happen.
q
q
There is no cook book for culture change, nodetailed generic approach which will guaranteesuccess. Every organisation has different dynamics,issues and values. The key is to remain sensitive tothe peculiarities, moods and readiness of theorganisation and to tailor the approachaccordingly.
The need for culture change will not go away.The increasing number of mergers, the need forflexibility, ‘virtual’ working and globalisation allmean that leaders of successful organisations willbe those who can create alignment and a sense ofbelonging in this changing environment. A shared setof values, deeply embedded in the organisation and
Members of KPMG's International Council contemplate their next strategic moveBusiness Strategy Review
believed in and practised by all is fundamental toachieving this. More than ever, culture change needsto shed its shrouds of mystery and become moreaccessible and practical.
Some more specific lessons we learned which applyto any organisation contemplating culture change are:
q
Involve people from the day-to-day business asmuch as possible. Remember that it is their beliefsand aspirations which you are trying to capture.This will not be achieved if you set up a small,elite group to work on it.
q
There needs to be a clear vision of the culture youare moving towards and the means of achieving it.Make sure your picture of the desired culture isrich enough to make people visualise how it willbe. In other words, include specific descriptions ofbehaviour and outline the outcomes and benefitsyou will expect from the desired culture in additionto formulating a values statement.
q
Remember that the culture you are trying to createis unique to your organisation. Don’t be temptedto ‘borrow’ values from other successful companiesor ask an external person to formulate a statementfor you. This won’t work – your values need toreflect what is truly believed by the people insideyour organisation.
q
There needs to be a strong business case for culturechange and a sense of urgency. Otherwise, whybother?
q
Sponsorship needs to be strong, particularly fromthe top. It is vital that the leadership teamchampions the values in their words and actions.
References
Collins, James C and Porras, Jerry I (1994) Built toLast: Successful Habits of Visionary Companies,Century Ltd.
Collins, James C and Porras, Jerry I. (1996) BuildingYour Company’s Vision, Harvard Business Review,September-October, Reprint 96501
KPMG: Revitalising Culture through Values 15
q
Communication is key. Plan your communicationeffort and then multiply it by a factor of ten. Makesure you include creative or unconventionalmethods in your approach to maintain interestthroughout.
q
Obstacles to the values (whether these are structures,rules or people) need to be removed – and supportersneed to be upheld, recognised and rewarded.q
Integrate your activities with the corporatedevelopment programme and support functions:in the initial stages you may need to run a separate‘culture change’ programme. However, as timeprogresses, the more you can do within existingstructures and initiatives, and the less you need toset up separate ‘values’ projects, the better. Thegoal of any values implementor should be to workthemselves out of a job.
q
Manage expectations: culture change does nothappen overnight. Be realistic about what you cando. But be optimistic too.
The path to culture change is long, but the goodthing about being on it is that there are benefitsalong the way.
Jan Thornbury is a Director at KPMG. She leadsthe international culture change process. ColinSharman, now Lord Sharman of Redlynch,retired at end-September 1999 but remains atKPMG in an advisory capacity. Under the newChairman, Steve Butler, implementation ofKPMG's global values project is continuing.
Schein, Edgar H. (1993) Organisational Culture andLeadership (2nd Edition), San Francisco CA: Jossey-Bass
Thornbury, Jan (2000 forthcoming) Living Culture:A Values-driven Approach to Revitalising YourCompany Culture with Colin Sharman
Winter 1999
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