Creating a Teamwork Based Creating a Teamwork Based Culture Within an Audit Culture Within an Audit

EnvironmentEnvironment

Presenter:Presenter:

William P. Cullen Jr.William P. Cullen Jr.

Audit Manager IFTA/IRPAudit Manager IFTA/IRP

Arizona Department of TransportationArizona Department of Transportation

My Goal Today is to:My Goal Today is to:

Share with you the steps that I took to Share with you the steps that I took to implement a new management philosophy implement a new management philosophy with our team.with our team.

Challenge you to examine your current Challenge you to examine your current employee management practices. Do a employee management practices. Do a self assessment.self assessment.

Select at least one item you plan to Select at least one item you plan to implement when you return to your office.implement when you return to your office.

Management Style ConsiderationsManagement Style Considerations

Results of recent employee surveyResults of recent employee survey Employees are changingEmployees are changing Management tools have changed, but Management tools have changed, but

management theory is basically the same.management theory is basically the same.

Harris PollHarris PollRecently polled 23,000 U.S. residencies, employed Recently polled 23,000 U.S. residencies, employed full-time, in key industries- banking, finance, full-time, in key industries- banking, finance, education, public administration etc.education, public administration etc.

Only 37% said they have a clear understanding of what their Only 37% said they have a clear understanding of what their organization is trying to achieve.organization is trying to achieve.

Only 1 in 5 was enthusiastic about their teams and Only 1 in 5 was enthusiastic about their teams and organization’s goals.organization’s goals.

Only half were satisfied with the work they have Only half were satisfied with the work they have accomplished at the end of the week.accomplished at the end of the week.

Only 15% felt they worked in a high trust environment.Only 15% felt they worked in a high trust environment.Only 10% felt their organization holds people accountable for Only 10% felt their organization holds people accountable for

results.results.

Audit Manager History (May 2005)Audit Manager History (May 2005)

Results of March 2003 IFTA Peer ReviewResults of March 2003 IFTA Peer Review Encourage cooperation with other Encourage cooperation with other

departments in our agencydepartments in our agency Promote professionalism for our teamPromote professionalism for our team Develop teamworkDevelop teamwork

A Few Disclaimers About the Book A Few Disclaimers About the Book Before I BeginBefore I Begin

I can’t cover everything in the book during this I can’t cover everything in the book during this presentation; therefore, I suggest that you buy presentation; therefore, I suggest that you buy the book.the book.

Microchip technology is production oriented and Microchip technology is production oriented and operates in the private sector. We (Audit) are operates in the private sector. We (Audit) are service oriented and operate in the government service oriented and operate in the government sector.sector.

Steve manages 3,900 employees and I manage Steve manages 3,900 employees and I manage 10.10.

What I’m saying is that liberties were taken to fit What I’m saying is that liberties were taken to fit our situation.our situation.

Some brief background about the Some brief background about the company would be helpful:company would be helpful:

When Steve Sanghi took over at Microchip Technology, When Steve Sanghi took over at Microchip Technology, the company was in dire straits.the company was in dire straits.

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

Steve decided to hire consultants to evaluate the Steve decided to hire consultants to evaluate the business process and come up with recommendations:business process and come up with recommendations:

Need to focus on cycle time reductionNeed to focus on cycle time reduction Quality improvementQuality improvement Implement statistical controlImplement statistical control OutsourcingOutsourcing

Aggregate SystemAggregate System

The purpose of the Aggregate System is to The purpose of the Aggregate System is to systematically align and integrate every aspect of the systematically align and integrate every aspect of the business around a set of core values. Producing a self-business around a set of core values. Producing a self-perpetuating, continuous-improvement culture designed perpetuating, continuous-improvement culture designed for world class excellence.for world class excellence.

The Aggregate System attempts to unite employees The Aggregate System attempts to unite employees through shared workplace values and guide employee through shared workplace values and guide employee strategies, decisions, actions, and job performance.strategies, decisions, actions, and job performance.

The company policies and management practices that The company policies and management practices that influence employees were aligned and integrated to influence employees were aligned and integrated to company values.company values.

Aggregate SystemAggregate System

Managers serve as role models of this Managers serve as role models of this philosophy through decisions and actions.philosophy through decisions and actions.

Improving all aspects of the enterprise is Improving all aspects of the enterprise is accomplished by designing the system to accomplished by designing the system to promote continuous improvement. It involves promote continuous improvement. It involves training, equipping, empowering, and requiring training, equipping, empowering, and requiring all employees to improve their areas of all employees to improve their areas of responsibility.responsibility.

The ultimate goal is establishing a self-The ultimate goal is establishing a self-perpetuating system that will yield extraordinary perpetuating system that will yield extraordinary results from average employees.results from average employees.

Conditions Suggested to Conditions Suggested to Implementing the Aggregate SystemImplementing the Aggregate System

1.1. Inspire leadershipInspire leadership2.2. Create a culture of continuous improvementCreate a culture of continuous improvement3.3. Promote empowermentPromote empowerment4.4. Encourage teamworkEncourage teamwork5.5. Utilize a Systems ApproachUtilize a Systems Approach6.6. Provide continuous trainingProvide continuous training7.7. Promote professional development and succession Promote professional development and succession

planningplanning8.8. Insure effective communicationInsure effective communication9.9. Establish a fair appraisal systemEstablish a fair appraisal system10.10. Model a balance with work and familyModel a balance with work and family

1. INSPIRE LEADERSHIP1. INSPIRE LEADERSHIP

Received some help from Louzes and Posner Received some help from Louzes and Posner in their book in their book The Leadership Challenge.The Leadership Challenge. The The book discusses 5 practices of exemplary book discusses 5 practices of exemplary leadership:leadership:

A.A. Model the WayModel the Way

B.B. Inspire a Shared VisionInspire a Shared Vision

C.C. Challenge the ProcessChallenge the Process

D.D. Enable Others to ActEnable Others to Act

E.E. Encourage the HeartEncourage the Heart

John Maxwell’s John Maxwell’s “21 Qualities of a Leader”“21 Qualities of a Leader”

1.1. CharacterCharacter2.2. CharismaCharisma3.3. CommitmentCommitment4.4. CommunicationCommunication5.5. CompetenceCompetence6.6. CourageCourage7.7. DiscernmentDiscernment8.8. FocusFocus9.9. GenerosityGenerosity10.10. InitiativeInitiative

11.11. ListeningListening12.12. PassionPassion13.13. Positive AttitudePositive Attitude14.14. Problem SolvingProblem Solving15.15. RelationshipsRelationships16.16. ResponsibilitiesResponsibilities17.17. SecuritySecurity18.18. Self-DisciplineSelf-Discipline19.19. ServanthoodServanthood20.20. TeachabilityTeachability21.21. VisionVision

Inspiring LeadershipInspiring Leadership

The success of this program depends on the The success of this program depends on the leadership ability of the managers.leadership ability of the managers.

Outstanding leadership is the most critical Outstanding leadership is the most critical element in this mix. If leadership is element in this mix. If leadership is

ineffective or the actions and management ineffective or the actions and management style don’t reflect the firm’s core values, style don’t reflect the firm’s core values,

the results will be mediocre.the results will be mediocre.

2. CREATE A CULTURE 2. CREATE A CULTURE OF CONTINUOUS OF CONTINUOUS IMPROVEMENTIMPROVEMENT

CultureCulture

Governing valuesGoverning values Policies and normsPolicies and norms AttitudesAttitudes Degree of employee empowermentDegree of employee empowerment Prevalent management stylePrevalent management style

IT’S HOW THE WORK GETS ACCOMPLISHEDIT’S HOW THE WORK GETS ACCOMPLISHED

The Aggregate System promotes a culture The Aggregate System promotes a culture that has a relentless striving for continuous that has a relentless striving for continuous improvement, which engenders:improvement, which engenders:

Employee empowering and involvementEmployee empowering and involvement Honest, Free flowing communicationHonest, Free flowing communication Problem solvingProblem solving InnovationInnovation MeritMerit FrugalityFrugality Systems thinkingSystems thinking Continuous learning and improvingContinuous learning and improving Results orientationResults orientation

Most discussions on management never reference the Most discussions on management never reference the corporate culture or assume it can’t be changed so you work corporate culture or assume it can’t be changed so you work around it.around it.

The Aggregate System views culture as a system, and as The Aggregate System views culture as a system, and as such can be designed, influenced, and controlled.such can be designed, influenced, and controlled.

The culture must reflect an attitude that employees are given The culture must reflect an attitude that employees are given the responsibility and authority to improve their jobs.the responsibility and authority to improve their jobs.

Historically, employees had little input in defining systems and Historically, employees had little input in defining systems and procedures that govern their work. procedures that govern their work.

Power must be appropriately distributed throughout the Power must be appropriately distributed throughout the organization, rather than accumulating at the top of the organization, rather than accumulating at the top of the management rank.management rank.

Culture Culture continued…continued…

3. PROMOTE EMPOWERMENT3. PROMOTE EMPOWERMENT

To authorize and enableTo authorize and enable

The empowered employee must have:The empowered employee must have:

Information (Data, Technical knowledge)Information (Data, Technical knowledge) Resources- Funds, material, space, timeResources- Funds, material, space, time Support- Backing, approval, legitimacySupport- Backing, approval, legitimacy Must believe there are opportunities to Must believe there are opportunities to

perform in an empowered way. perform in an empowered way. Must accept ownershipMust accept ownership

Managers need to act as coaches, developers, facilitators, and team Managers need to act as coaches, developers, facilitators, and team builders. builders.

Instead of micromanaging, they need to remove barriers that Instead of micromanaging, they need to remove barriers that obstruct employee performance. obstruct employee performance.

Employees must be more involved in problem solving and strategy Employees must be more involved in problem solving and strategy discussion.discussion.

4. ENCOURAGE TEAMWORK4. ENCOURAGE TEAMWORK

What makes a team?What makes a team?

Individuals who are not equal in talent, experience, or Individuals who are not equal in talent, experience, or education, but equal in commitment.education, but equal in commitment.

It is not realistic to think that we can live or work with It is not realistic to think that we can live or work with others without conflict. However, by communicating others without conflict. However, by communicating about the differences, focusing on the common good, we about the differences, focusing on the common good, we will make great strides.will make great strides.

A team is not just people who work at the same time and A team is not just people who work at the same time and same place.same place.

A manager’s job is to remove the teamwork killing A manager’s job is to remove the teamwork killing barriers.barriers.

Lucy to Linus (Who is watching a TV show): “Lucy to Linus (Who is watching a TV show): “Change the channel.”Change the channel.”

Linus: Linus: “Do What?”“Do What?”

Lucy:Lucy: “Change the channel.” “Change the channel.”

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

Lucy (Showing her hand): “Lucy (Showing her hand): “You see this? These are 5 little fingers, but You see this? These are 5 little fingers, but when they are rolled together into something called a fist, they when they are rolled together into something called a fist, they become a weapon that is formidable to behold.”become a weapon that is formidable to behold.”

Linus (After contemplating Lucy’s fist, changing the channel, and Linus (After contemplating Lucy’s fist, changing the channel, and looking at his own little fingers): looking at his own little fingers): “Why can’t you guys get organized “Why can’t you guys get organized like that?”like that?”

When people come together for whatever the reason, the question that When people come together for whatever the reason, the question that often surfaces as people try to work together is “Why can’t we get often surfaces as people try to work together is “Why can’t we get

organized today? Why can’t we become something which although organized today? Why can’t we become something which although weak independently, becomes formidably strong when we put it weak independently, becomes formidably strong when we put it

together?together?

5. UTILIZE A SYSTEMS 5. UTILIZE A SYSTEMS APPROACHAPPROACH

1.1. Defined desired improvement (work papers, Defined desired improvement (work papers, supporting documents)supporting documents)

2.2. Get a buy in from all concerned (ownership)Get a buy in from all concerned (ownership)

3.3. Established improvement teamsEstablished improvement teams

4.4. Outline project details, goals, planOutline project details, goals, plan

5.5. Present solutions to the groupPresent solutions to the group

6.6. After approval- implementAfter approval- implement

7.7. Evaluate, follow-up, modifyEvaluate, follow-up, modify

8.8. Maintain, monitor (continuous improvement)Maintain, monitor (continuous improvement)

Systems Approach to Audit Quality Systems Approach to Audit Quality IssueIssue

6. PROVIDE CONTINUOUS 6. PROVIDE CONTINUOUS TRAININGTRAINING

In Arizona, we have two basic In Arizona, we have two basic components of training:components of training:

1.1. Training for new auditorsTraining for new auditors

2.2. Advanced training for all auditorsAdvanced training for all auditors

Advanced Training Consists of:Advanced Training Consists of:– Monthly team meetingsMonthly team meetings– Semi-annual internal trainingSemi-annual internal training– Formal outside speaker trainingFormal outside speaker training– ConferencesConferences

Internal Training Has Included:Internal Training Has Included:1.1. Streamlining the work processStreamlining the work process

2.2. Auditing of new tax typesAuditing of new tax types

3.3. Refund trainingRefund training

4.4. IRP rewriteIRP rewrite

7. PROMOTE PROFESSIONAL 7. PROMOTE PROFESSIONAL DEVELOPMENT AND DEVELOPMENT AND

SUCCESSION PLANNINGSUCCESSION PLANNING

I suggest that the courses taken are I suggest that the courses taken are comprehensive and relevant to the employees comprehensive and relevant to the employees job and career aspirations. Areas could include:job and career aspirations. Areas could include:

Computer trainingComputer training Statistics and samplingStatistics and sampling SupervisionSupervision Time managementTime management Problem solvingProblem solving Interviewing techniquesInterviewing techniques Management philosophyManagement philosophy Developing job skillsDeveloping job skills Problem resolutionProblem resolution

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

Innovation at the workplaceInnovation at the workplace

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

Time managementTime management

Auditing ethicsAuditing ethics

Creative problem solving, thinking outside of the boxCreative problem solving, thinking outside of the box

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

8. ENSURE EFFECTIVE 8. ENSURE EFFECTIVE COMMUNICATIONCOMMUNICATION

Communication must be honest and free-flowing. All Communication must be honest and free-flowing. All employees want to know what is expected of them and employees want to know what is expected of them and how they are doing.how they are doing.

I try to communicate with our staff in a few different I try to communicate with our staff in a few different ways:ways:

Make sure that job expectations are clearly defined when Make sure that job expectations are clearly defined when they are first hired and are constantly reinforced.they are first hired and are constantly reinforced.

Give feedback, both positive and negative on each audit.Give feedback, both positive and negative on each audit. Have planned quarterly and annual evaluations for at least Have planned quarterly and annual evaluations for at least

30 – 60 minutes.30 – 60 minutes. One minute manager visit every dayOne minute manager visit every day Open door policy- walk the talkOpen door policy- walk the talk Lunch with the bossLunch with the boss Monthly team meetingsMonthly team meetings Quarterly staff meetingQuarterly staff meeting Share information with the staff, both good news and bad Share information with the staff, both good news and bad

news.news.

9. ESTABLISH A FAIR 9. ESTABLISH A FAIR APPRIASAL SYSTEMAPPRIASAL SYSTEM

The annual employee performance review should reflect The annual employee performance review should reflect prior discussion and should just be a recap of the prior discussion and should just be a recap of the previous four quarterly reviews.previous four quarterly reviews.

Hopefully the process will be positive and promote Hopefully the process will be positive and promote continuous improvement. With that being said, you are continuous improvement. With that being said, you are doing the employee a disservice by not pointing out doing the employee a disservice by not pointing out areas that need improvement.areas that need improvement.

I try to recognize accomplishments as well as intangibles I try to recognize accomplishments as well as intangibles as supporting team goals, teamwork, passion, as supporting team goals, teamwork, passion, generosity, etc.generosity, etc.

Since turnabout is fair play, once per year I give my Since turnabout is fair play, once per year I give my employees an opportunity to evaluate me.employees an opportunity to evaluate me.

The evaluation is completed by the staff and given to our The evaluation is completed by the staff and given to our senior auditor who summarizes and recaps the findings. senior auditor who summarizes and recaps the findings. I never see the evaluation. I handout the results at the I never see the evaluation. I handout the results at the following team meeting.following team meeting.

10. MODEL A BALANCE WITH 10. MODEL A BALANCE WITH WORK AND FAMILY/FRIENDSWORK AND FAMILY/FRIENDS

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

I especially appreciate the emphasis on I especially appreciate the emphasis on promoting the balance of values relating promoting the balance of values relating to:to:

PhysicalPhysical MentalMental Social/EmotionalSocial/Emotional SpiritualSpiritual

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

study of business management.study of business management.

It shifts the focus from examining the various pieces of the business It shifts the focus from examining the various pieces of the business to viewing the enterprise as a total system.to viewing the enterprise as a total system.

Its approach views company culture and employee performance as Its approach views company culture and employee performance as systems that must be optimized in order for the firm to realize its systems that must be optimized in order for the firm to realize its potential improvement.potential improvement.

The key to the success of the aggregate system is its The key to the success of the aggregate system is its comprehensiveness. It promotes a congruity and harmony between comprehensiveness. It promotes a congruity and harmony between employee performance and the desired culture.employee performance and the desired culture.

Improving all aspects of the enterprise is accomplished by designing Improving all aspects of the enterprise is accomplished by designing it to perpetuate continuous improvement. This involves training, it to perpetuate continuous improvement. This involves training, equipping, empowering, and requiring all employees to improve equipping, empowering, and requiring all employees to improve their areas of responsibility.their areas of responsibility.

In Summary In Summary continued…continued…

By designing and managing the totality of factors that By designing and managing the totality of factors that influence employee behavior and performance, you can influence employee behavior and performance, you can expect exceptional performance from average expect exceptional performance from average employees.employees.

As you can see, audits increased 220%; audit hours As you can see, audits increased 220%; audit hours were reduced by 35%, and assessment dollars were were reduced by 35%, and assessment dollars were increased by 266%.increased by 266%.

In Summary In Summary continued…continued…

It’s difficult to assess quality. I can say that the recent It’s difficult to assess quality. I can say that the recent IFTA Peer Review was very complimentary. They were IFTA Peer Review was very complimentary. They were nice enough to include in the report that “The new nice enough to include in the report that “The new audit manager reviewed the results of the last peer audit manager reviewed the results of the last peer review and immediately implemented changes to affect review and immediately implemented changes to affect the problem areas of:the problem areas of:

A.A. SamplingSamplingB.B. Examination standardsExamination standardsC.C. Evaluation of internal controlsEvaluation of internal controlsD.D. Verification of Licensee’s recordsVerification of Licensee’s recordsE.E. Audit file contentAudit file contentF.F. Communication of audit findings Communication of audit findings G.G. Audit reportsAudit reports

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

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

1.1. ““Ten Behaviors of Managers who Excel” Ten Behaviors of Managers who Excel” 2.2. ““Common Management Mistakes.” Common Management Mistakes.”

Both are from a seminar I attended Both are from a seminar I attended called “Ten Behaviors of Managers Who called “Ten Behaviors of Managers Who Excel.” Excel.”

The name, address and phone number The name, address and phone number of the presenter is at the end of the of the presenter is at the end of the presentation.presentation.

THE ENDTHE END

References & AcknowledgmentsReferences & Acknowledgments1.1. ““Driving Excellence: How the Aggregate System turned Microchip Technology Driving Excellence: How the Aggregate System turned Microchip Technology

from a Failing Company to a Market Leader.” Steve Sanghi and Michael Jones.from a Failing Company to a Market Leader.” Steve Sanghi and Michael Jones.

2.2. ““Liberating Passion: How the World’s best Global leaders produce winning Liberating Passion: How the World’s best Global leaders produce winning results.” Omar Khanresults.” Omar Khan

3.3. ““The Fourth Turning: What Cycles of History tells us about American’s next The Fourth Turning: What Cycles of History tells us about American’s next rendezvous with destiny.” William Straus and Neil Howe.rendezvous with destiny.” William Straus and Neil Howe.

4.4. ““Fired up or Burned out: How to reignite your team’s passion, Creativity and Fired up or Burned out: How to reignite your team’s passion, Creativity and productivity.” Michael Lee Stallard.productivity.” Michael Lee Stallard.

5.5. ““The Effective Executive.” Peter DruckerThe Effective Executive.” Peter Drucker

6.6. ““The 7 Habits of Highly Effective People: Powerful Lesson in Personal Change.” The 7 Habits of Highly Effective People: Powerful Lesson in Personal Change.” Stephen R. CoveyStephen R. Covey

7.7. ““The 8th Habit: from Effectiveness to Greatness.” Stephen R. CoveyThe 8th Habit: from Effectiveness to Greatness.” Stephen R. Covey

8.8. ““21 Indispensable qualities of a Leader. John C. Maxwell21 Indispensable qualities of a Leader. John C. Maxwell

9.9. ““The Leadership Challenge. Kouzes and Posner.The Leadership Challenge. Kouzes and Posner.

10.10. Ten Behaviors of Managers who Excel.- Seminar, Penny Altman (HSC Ten Behaviors of Managers who Excel.- Seminar, Penny Altman (HSC workshops (602) 674-0911, hscseminar@juno.com)workshops (602) 674-0911, hscseminar@juno.com)