KPMG Case Study

1. What are Professional Services Networks?

* Professional services networks are networks of independent firms who come together to cost-effectively provide services to clients through an organized framework. * They are principally found in law and accounting. They may also be found in investment banking, insurance, real estate and architectural services. * Any profession that operates locally, but has clients in multiple locations, are potential members of a network. * They include the well-known accounting networks like PwC, KPMG, Deloitte, and Ernst & Young (also known as the Big 4 Audit Firms) as well as more than 30 other accounting networks and associations. * These firms use a network disclaimer which states that the network members are independent firms that do not practice jointly and are not responsible for the negligence of each other. It further states that generally the network does not practice a profession or otherwise provide services to clients of the network’s members. * The firms joined this network for tangible reasons: to receive referrals from other members, to have reliable firms to which they can refer, to maintain independence, to meet clients’ needs, to retain existing clients by being able to provide services in other states or countries, and to obtain new clients in their market who know of the membership.

2. What were the challenges faced by Colin Sharman after being appointed as the Chairman? * Increasing competitive situation globally- this required to develop strategies to cope with changing conditions. * Rigid structure * Reluctances of existing partners in introducing the new partners to the clients. * Mismatching of skills required by clients. * Skills hidden from sight. * Time consuming and inefficient method of investigating and solving a problem. * Poor management system. * Little management control.

3. Detail out the inherent deficiencies of the old structure?

* Everyone thought of as a leader. * No specialisation based on work or department. * Lack of well defined chain of command and span of control * According to clients, the skill sets of traditional partners were outdated * Lack of cooperation and involvement of new partners due to fear of losing client as well as income. * Different skills required for each job in a matrix structure was almost hidden. * Problem solving is tedious, time-taking, unpopular and inefficient. * Mismanagement of control as well as information. * Unsatisfied employees from working culture.

4. Did the old structure impact culture of KPMG? How?

Of course, the old structure had an impact on culture of KPMG. KPMG being a largest professional service firm in the world needs a very well defined yet flexible and informal culture which could make every employee highly efficient and involved in the functioning of the company. KPMG’s culture was affected in following ways: * Improper control * Decentralisation of power * Effortless contribution by employees and their disinterest. * Continuous complains about long working hours to reinforce the air of crisis * Unhealthy culture of reluctance and hostility among partners. * Boring and tiring work culture.

5. How did KPMG benefit from the changed structure?

The changed structure was more accountable in nature and helped KPMG in several ways like: * The new structure made management an easy task as it followed a centralized system with the power lying in largely in the hands of management teams. * Income increased, profit increased and thus retention rate also increased. * Increased customer retention and customer loyalty. * Increased employee retention. * Employee satisfaction, their commitment and involvement. * High level of cooperation and trust among partners. (As they were shown how they can retain earning even after referring the employees to specialised partners.)

6. What did Sharman do to address the problem?

* He himself headed a management team which would make most of the decisions in corporate manner along with consent of partners but now partners will be having relatively less power. * By better flow of communication. * By employing better information management systems. * By capturing and retaining loyalty of highly intelligent staff. * Made the structure more flexible n informal. * Greater cooperation and less confrontation among partners. * Changed the old style of “up or Out” management. * Rewarded genuine efforts n achievements.