SarbOx Sustainability

Raleigh, NC

This installment of our series on SOX Sustainability concerns sustainability “Change Management.”  In Part 1 we introduced Change Management as a significant SOX sustainability challenges.  Sustainability planning will be addressed in final part of the series.

 Change Management

Sustainability requires effective Change Management.  All organizations change over time, in culture, process, technology, business focus, etc.  A compliance program that is deployed today without an integrated change management mechanism to review and update the compliance elements over time will be obsolete in 12-18 months.  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/as faced with the need to evolve.

 Change Management programs should be constructed with several basic elements:

1. 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 be more often, say monthly
2. 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 determine if something is capable of working.  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
3. A methodology to evaluate and review progress , and to determine what changes or revisions are appropriate or necessary for the enterprise.  Ad-hoc constructs and reviews typically net ad-hoc results
4. A methodology to implement or empower necessary changes and program re-alignments.  Proposing and discussing changes becomes useless if management never backs or implements changes as recommended by staff and lower level managers
5. 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%, or vice versa 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
6. A methodology or process for addressing identified deficiencies
7. An emergency-response process
8. 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 political alignments that may affect the progress of the initiative and empowered to work across departmental boundaries
9. 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 could/should include an HR 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 regulatory and/or inter-divisioual issues facing the enterprise, to mitigate the likelihood of a process or policy change that will fail because of regulatory issues. For some enterprises an outsider or board member may be a good team member.  
10. 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 reasonably planned and conceived so that the enterprise and all affected managers understand how the change management system will work: 1) How to tender change recommendations; 2) How they will be evaluated and decided; and 3) How they will be implemented and managed. With an established process there is less likelihood that ad-hoc changes will take place in internal processes and controls and/or that staff will resist approved changes. 

 Most established corporations already support one or more change management initiatives at any given time.  SOX warrants its own team and approach.  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.

 The next article will discuss intrinsic and extrinsic drivers to help prepare an entity-specific plan of attack.  To review earlier articles in the series please visit Visage’s website at the URL below.

VisageSolutions is a group of experienced operational executives focused on providing efficient, repeatable complinace (including Sarbanes-Oxley) solutions. By working carefully with their clients VisageSolutions provides customized solutions that focus on reducing the “operational cost” of sustained compliance through an optimum combination of existing and new technologies and tools, and business process integration.  See www.visagesolutions.com for more information and related links.