Value-add (Part Deux)

 

Honest, my original plan was to go further down this road — that value-add is table stakes and our focus on it may be self-defeating. Maybe even introduce Maslow’s Hierarchy of Auditing to illustrate the brilliant points I was prepared to make. (Yeah, and my best intentions are to have one or two posts a week, and look how that’s going.)
 
But the responses of Misters Hansen and Camplin (see original post) deserve to be expounded upon — in particular as the pressures put on all audit shops increase because of the current economic situation. They bring two excellent points to this whole discussion. Hansen accurately quotes many of the auditors I’ve heard in the last few weeks (paraphrasing here): 
“The company keeps making cuts. The controls are falling apart. They will be forced to keep us. In fact, they need us more than ever.” 
And Camplin gets to the heart of why almost every one of those auditors will be wrong: 
“The value I am speaking about is not what auditors perceive or know as value, but what the organization perceives as the value.”
Let’s start with Camplin’s comment about perceived value. What are you currently delivering? What do you think your customer wants? Does your delivery match that want, or are you trying to force them to accept delivery of the product you want to sell? During a recent presentation, I asked a group of audit managers what they thought their customers — in this case, executive management and the audit committee — wanted. One responded, “The schedule done on time.” A few others agreed. And, while I haven’t heard it specifically expressed yet, I’m willing to bet that the other answer I might hear now is “reduce our expenses.” Pay close attention to that last one — it wasn’t “reduce the company’s expenses;” it was “reduce the expenses incurred by auditing.” There is an important distinction in those two that cuts to the heart of this discussion. Are these our value — a schedule and a budget? If your customer believes that, you’ve got trouble. If I were that CEO, I would be ecstatic in having found an excellent source for expense reduction. As Hansen indicates, “… if a company has to cut costs, the first place they will cut are those departments viewed as ‘overhead.’” Worse, if that is what you — or your audit department — believe, then you had better hope for economic recovery; nobody wants to buy the value you’re selling.
 
(Quick digression: Ask yourself: Do you want your tombstone to read “He met the schedule,” or “She came in under budget”? That is a whole other discussion to be taken on at a later date.)
 
Those auditors who believe they will live forever because of weakened control structures have some small glimpse of the value that can be provided. But have they delivered? The problem right now is that the opportunity for marketing/selling ourselves and delivering is in the past. If we go in now — no preface, no background — and explain we are there to help, the uphill battle is now taking place on a cliff face. And to use the simplistic argument that loss of people means a loss of control does not bridge the gap that Camplin so perfectly identified: “the gap between auditor goals and organization goals.” There is no doubt that we should have a shared vision with our customers (tied to quality controls), but part of our job often is to help them understand how controls help them achieve their objectives. And, if they don’t, why bother with those controls? Just one quick example. If I do an audit of a sales operation, and I cannot show sales management how the controls I suggest help them increase sales (no matter how tenuous the connection), management will not change its procedures, I will have provided no value (just reporting is not providing value), and I will be easily replaced overhead.
 
So, you say that you have been selling yourself (or even if you haven’t, but you are starting to grasp the need and the proper message), but how does this buzzword value-add help you? Or, should you ignore it? Hansen and Camplin have addressed some of the answers. But there are underlying realizations in that word that can help.
 
Look for "Value-add (Part trey)" soon in a theater near you. And maybe that will include Maslow’s Hierarchy of Auditing — next time for sure.
 

 

Posted on Mar 20, 2009 by Mike Jacka

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