Accelerate the Adoption Rate, the Adoption of Change

Apr 21, 2014

Gary Cokins is a longtime proponent of change in the field of management accounting. His most recent blog focuses on why organizations are just not making the leap to adopt the proven value added practices of using analytics to drive the actions of the organization in tandem with the Company’s overall strategy.

We here at William Vaughan have asked that same question repeatedly, especially when it comes to product costing and budgeting. I have met with so many companies and spoken with Controllers and Cost Accountants and CEO’s about major problems the team is facing. The list of problems cannot specifically be duplicated from company to company, but in very generic format, the problems are the same:

  • There is an overall lack of credibility and understanding of the financial reporting
  • The team spends a great deal of time working “outside” of the systems (software) to do analysis and financial reporting (NOT management reporting) and essentially provides data that is inconsistent at best and confuses management more than anything else
  • Too much time is spent looking at the wrong information
  • There is a lack of meaningful financial planning. The vast majority of the time if there is planning in the form of a budget, and yes, the kind that is based on last year’s information multiplied by 3% with a few changes and NOT linked to any type of Company wide strategic plan.

change_aheadGary indicated that he believes the solution to accelerating these changes involves behavioral change management. I always use to think that if you showed the team the unequivocal benefits of making these changes, then it was a no-brainer. I was wrong, and Gary is right. I can talk until I am blue in the face about how wrong your numbers are, how misleading your spreadsheets are, and even tell you that your Company is going to go under in less than a year if you keep doing it the way you always have been. You won’t change unless you are ready.

The book “Change or Die” by Alan Deutschman is a great read if you find yourself identifying as “one of those Companies that needs to change or wants to change” but just cannot. The statistics he cites are jaw-dropping- even when faced with possible death, 9 out of 10 people DO NOT CHANGE their lifestyles or behaviors! If an individual has such a hard time making a change, how can you get an organization of people to do it? The concepts Deutschman presents make sense: there has to be great commitment, a relationship that inspires support, short-term wins to see success.

Gary is right- while technology may be an impediment for some- change management is the real issue. Time to hire an in house psychologist?

Categories: Cost Accounting