Part 7 – SOX Sustainability – Change Management
In our previous installments on implementing and managing a
sustainable SOX compliance framework, we discussed
several significant success factors including the
importance of a supportive corporate culture, well
designed business processes, and technology. In
this, our final installment, we discuss the impact
of change management on sustainability.
All organizations experience change over time, in culture,
process, technology, business focus, competitive
landscape and the external environment. A
compliance program that is deployed today without an
integrated change management mechanism to review and
update the compliance elements over time will become
obsolete fairly quickly. Unless the compliance
initiative is conceived and implemented with a
meaningful and well-conceived change management
process as an integral part of the construct, the
organization will struggle to adapt the compliance
systems when the need to evolve arrives.
Change management programs should be constructed
with several basic elements:
- A defined timeframe to
re-assess the sustainability initiative. This
may be a set period such as quarterly reviews.
In the early stages of the initiative, review
frequency should occur more often, say monthly.
- A defined timeframe to
allow changes and policies to be fully evaluated
for effectiveness and integration. Changing a
process too frequently (say, every two or three
weeks) does not allow sufficient time to
stabilize the process. The enterprise never
comes to grips with any given approach before
the game changes. Appropriate timelines to
allow a policy or practice to be implemented,
tested and evaluated should be clarified in
advance. Setting timelines in advance clarifies
for staffers what is considered an appropriate
time in which to evaluate a process or policy
change, so that complaints and unauthorized
changes don’t occur.
- A methodology to evaluate
and review progress, and to determine what
changes or revisions are appropriate or
necessary for the enterprise.
- A methodology to implement
or empower necessary changes and program
re-alignments. Proposing and discussing changes
becomes meaningless if management never backs or
implements changes as recommended by staff and
lower level managers.
- A process for periodically
reviewing goals and objectives of the
sustainability initiative - to see if enterprise
goals require adjustment. For example,
adjusting a cost savings goal from 20% savings
in “X” expense to 18% depending on measured
progress at 3 months or 6 months into the
program. If goals are revised, then the change
management program should consider the process,
technology and/or corporate changes necessary to
meet the revised goals.
- A methodology or process
for addressing identified deficiencies.
- An emergency-response
process.
- A program manager or
program facilitator other than the CEO, CFO, CIO
or Internal Audit Director. Since
sustainability initiatives affect the
enterprise, the program manager should be
independent of functional alignments that may
affect the progress of the initiative and should
be empowered to work across departmental
boundaries
- A change-management team
comprised of five to ten executives or managers
from various departments who will empower and
support the prioritized changes. Team members
might include a Human Resources officer or
manager to assure that personnel concerns and
issues are addressed, an MIS executive or
manager to consult on technology capabilities
and limitations, and a handful of functional or
divisional leaders. This includes someone
familiar with the regulatory issues facing the
enterprise, to mitigate the likelihood of a
process or policy change that will fail because
of other regulatory issues. For some enterprises
an outsider or board member may be a good team
member.
-
A communication mechanism to articulate agreed
policy and process changes to internal staff and
to the independent auditor so that the auditor
may consider any necessary testing and
validation necessary to document control changes
for the auditor
§404 attest.
In short, the change management process should be well planned
and conceived so that the enterprise and all
affected managers understand how the change
management system will work, including things like:
- How to tender change
recommendations;
- How they will be evaluated
and decided; and
-
How they will be implemented and managed.
Most established corporations already support one or more
change management initiatives at any given time. It
is important to maintain focus and attention to the
goals and objectives of the sustainability
initiative, so that it does not get lost in another
change program. While SOX compliance is mandatory, a
sustainability initiative to create efficiencies
within the enterprise is voluntary. Accordingly
there are necessary outcomes from the initiative
(compliance) and desired outcomes (cost savings or
improved efficiencies). Unless a dedicated change
management framework exists for SOX sustainability
it will be too easy to focus on either the necessary
or desired outcomes but not both. Only by focusing
on both will the program have a chance of achieving
both. The SOX change management program should also
consider that auditing practices will evolve
significantly over the next 2-5 years. On this
basis, audit practice evolution should be reviewed
as a driver for internal change, the goal of which
is to reduce year over year audit expense.
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