Making it to the Big 4

Chapter 3 The Partnering ProcessES 39 experienced in the industry and the incumbent The following is taken from a DTT publication partner of DTT at the time, CLMC came out printed in 1999, of the process of negotiations as the lead firm. CLMC found itself taking in those partners and “On 12 April 1999 the representatives of professional staff of DMD who opted to migrate to [DTT’s] member firms gathered in London for CLMC. It challenged CLMC to excel and to be at a historic event… which marks the beginning of par with its international partner, DTT, as well as to Alignment, the first step of a two-phase process develop one culture out of the two worlds of CLMC that will take [DTT] well along the road to and DMD. globalization. [It was agreed] that all DTT firms will align [and] many will go further and DTT’s Regional Managing Partner and CEO said integrate. Integration, the second step, will begin about the appointment, in mid-2000.”…alignment is DTT’s response to a changing business environment where clients “We have assessed what is best for our clients. are thinking and acting globally and demand The creation of a new member firm in the that the people who serve them professionally Philippines will provide us with the opportunity do the same. That’s why there is a need for DTT to deliver consistent seamless service to our to be more flexible, nimble, responsive - and clients which is their expectation of us.” global. Alignment means aligning all strategies, plans and systems, and infrastructure so that all With DTT as the international affiliation, CLMC practices can move in the same global, strategic was assured of global exposure, for at that time, direction.” DTT was operating in over 130 countries, with a team of over 82,000 internationally experienced CLMC’s appointment as a DTT member firm was professionals serving nearly one-fifth of the consistent with DTT’s Alignment strategy. Quickly, world’s largest companies, as well as large national CLMC took steps to learn the ways of the DTT enterprises, public institutions, and successful fast- approach, and consequently, just a few months after growing companies. It was considered a distinct its appointment, CLMC was recognized officially as honor for CLMC to be a member in the circle of an Aligned Member Firm of DTT. the Big Five, DTT being at that time, one of the Big Five in the world. DTT Support Consequently, the partnership with DTT brought During the first few years of DTT’s appointment, CLMC face to face with globalization and global CLMC was able to receive support from DTT. As standards of excellence in professional practice CLMC grew in its practice, it needed to spend and services. It provided, moreover, Information more on staff training and capital expenditures Communications Telecommunications (ICT) particularly in information technology and office advanced technologies and processes and advanced facilities. and updated systems. CLMC joined DTT’s roster of member firms all Outside the “Bermuda Triangle” over the world at a very opportune time when DTT was embarking on a large-scale journey toward While the firm invested heavily on technology globalization. This was perhaps one of the reasons and staff training to keep up with the demands of why DTT needed a stronger firm in the Philippines. client service, CLMC was prudent in minimizing

40 Part ONE expenditures on office space. Conchita would and periodic submission of rolling forecasts and always be quoted as saying, “We would rather financial status to DTT. spend on staff than on office space.” CLMC had chosen to remain in a modest location for its The firm continued to receive support from DTT headquarters in the belief that the firm will be whenever needed in its early years. Conchita and defined not by the look of its offices but by the the partners exerted relentless efforts in negotiating quality of its professional services. for such support, until the second year of appointment when the firm had become financially When asked about the location of the CLMC stable. Robert Campbell, in a memo dated office, the partners would, jokingly, reply that it is February 28, 2001 addressed to Conchita, said: in a modest and old 9-storey building outside of the “Bermuda Triangle.” The “Bermuda Triangle” “..I must congratulate you and your partners is a term coined by the partners referring to the for the client service successes and the progress heart of the Makati Central Business District towards financial independence you have made where Ayala Avenue is intersected by Paseo de since becoming the Deloitte Touche Tohmatsu Roxas, the site of political rallies and disruptive Member Firm in the Philippines. parades. The three points of the triangle refer to SGV (EY) on the upper point in Ayala Avenue, …I am confident of your continuing success and then Isla Lipana (PwC) and Laya Mananghaya am proud of the manner in which you carry the (KPMG) on the left point in Paseo de Roxas, and DTT banner in the Philippines.” finally, Punongbayan & Araullo (GTI) on the opposite third point at the corner of Ayala and DTT continued to provide CLMC with the Paseo de Roxas. All of these companies are housed infrastructure (Deloitte Resources, communication in well-appointed high rise offices. infrastructure, web sites, practice management system, etc.), and the other support systems (Global At the start, the economics of the practice of CLMC Excellence Model, Partners in Learning, Risk was largely driven by the conversion of DTT Management) it needed. DTT’s commitment of accounts from the previous DTT firm and other support was acknowledged by the CLMC partners large accounting firms, regardless of whether such in a March 2000 memo pledging to “make the conversion was profitable or not. The working Philippine practice successful”. capital requirements and the needed investment in capital expenditures and staff training provided The Impact of the Global-reaching “Enron & AA the rationale for DTT’s financial support. This Cases” on CLMC had been a significant factor in allowing CLMC to hurdle the challenges of building the practice When the Enron corporate scandal in the United in its early years. The partners consulted DTT on States hit the headlines in 2001, its impact and key decisions such as the appointment of a new repercussions created major ripples all over the managing partner, admission of new partners, world. Stringent reforms in the accounting/ retirement of partners, increase in unit allocation auditing profession followed and new legislations (for profit sharing), merger plans, approval of were enacted that would put more teeth into capital expenditures beyond planned amounts, the regulatory bodies. This was to ensure that the incident would not be repeated and that the confidence of the investing public would be restored.

Chapter 3 The Partnering ProcessES 41 In the Philippines, while reforms were likewise office to house the CLMC firm and its clients. being instituted, the immediate aftershock of All partners and staff will be integrated into the Arthur Andersen’s downfall disrupted the alliances SGV personnel ranking and compensation, with and alignments of relationships among key players guarantees for employment for a period of 3 years in the profession. SyCip Gorres Velayo & Co. except when a staff is dismissed for a cause. The (SGV), the major player and the partner in the second scenario was where CLMC does not join Philippines of the fallen giant AA, took steps to SGV as a firm and where the orderly transition of search for a new international partner. It had a DTT clients to SGV will be effected over a period of choice between two: Deloitte Touche Tohmatsu or time. The Partners and staff would have the option Ernst & Young. This action by SGV immediately to transfer to SGV with the same terms as the first placed CLMC in a situation of uncertainty and option. In both scenarios, very attractive incentive ambiguity. packages and capital buy-outs were offered to the The next events that unfolded took two phases of partners of CLMC. negotiations from the CLMC perspective. As talks were ongoing with DTT, an SGV high- ranking partner approached Conchita to negotiate 1st Phase: SGV’s Bid and Attempt to Merge/ on CLMC being absorbed into SGV as a separate Acquire CLMC “market circle” (a profit center), including Upon the demise of AA, the remaining global arrangements with regard to management and Big Four accounting firms raced to claim the staff structures. In all of these talks, the only No. 1 spot. They campaigned to gather as many request of the partners of CLMC in agreeing to an as they could the orphaned partners and senior arrangement with Deloitte and SGV was that none professionals from the worldwide AA firms, and of its people will be marginalized in the transition naturally, to bid for the most attractive of the AA and that the staff would be adequately compensated clients. SGV, AA’s partner in the Philippines, was for their years of service. widely known to be the largest local accounting As the partners contemplated on this major firm, and was thus sought after by several big decision for the firm, they decided to consult international accounting firms. It was, in a sense, first the managers. The partners met with the the “most beautiful damsel in distress” at the time, managers several times to give updates on the as remarked by a partner. Among those Big Four developments and to get the managers’ views on firms which sought SGV was DTT. DTT was the likely scenarios. Foremost among the concerns one of two firms short-listed by SGV as a possible of the managers were whether there would be replacement to AA, the other firm being Ernst & equal opportunities and career growth for them Young (EY). considering that SGV was far bigger than CLMC, Negotiations between DTT and SGV had and whether there would be an assurance of progressed to such a point that CLMC found itself partnership culture, compensation, and position “under siege.” It seemed that DTT had decided alignments. Subsequently, the partners also met that they must get SGV at all cost. DTT offered with the rest of the staff to update them on what the partners of CLMC with two options and met had been happening. one afternoon in May 2002 with the six senior DTT sent two sets of negotiators to the CLMC CLMC partners. The first option was for CLMC to partners. During the initial stages of the join SGV as a firm and be established as a separate

42 Part ONE negotiations, the Regional Managing Partner of This time, DTT was careful not to show its hand Deloitte in Asia Pacific, Robert Campbell, and his but encouraged P&A and CLMC into talks of a Deputy at the time, Todd Smith, were the DTT possible merger. DTT acknowledged CLMC as its representatives talking to the CLMC partners and member firm in the Philippines and emphasized SGV. During the final stages and as a final decision that it will respect whatever CLMC’s position may was about to be made by SGV, a retired DTT-US be on the matter. partner and former Chairman and CEO of the worldwide DTT organization, Edward Kangas, was “…not a first” sent to convince the partners to accept the offer. He, along with Smith, came and told the partners The encounter with P&A was not a first time that DTT will be fair in this undertaking and for Conchita. In her previous partnership at that he, himself, will determine what is fair. The LMSC, there was an opportunity for her former partners however stood their ground and made a firm to merge with P&A. At that time, LMSC collective decision not to join and be absorbed into represented Ernst & Whinney (EW) which the “new” DTT firm. merged globally with Arthur Young (AY, the These talks were a very painful and stressful representation of P&A), to form the global experience for the CLMC partners and the firm accounting organization, Ernst & Young (EY). as a whole. The partners recognized that DTT The negotiations between LMSC and P&A was determined to get SGV under its umbrella, fizzled out due to certain conditions that were and CLMC had no way of stopping this from unacceptable to the LMSC partners resulting in happening. However, they likewise felt that P&A getting the EY representation. LMSC went SGV’s part in the decision would be significantly on without representation for a while until it got greater than whatever decision would be made by the Grant Thornton International affiliation in the CLMC partners or DTT. True enough, SGV 1992. eventually decided not to accept DTT’s offer but to join instead the Ernst & Young organization. This Based on a prior experience, Conchita was decision was a big disappointment to DTT but they expecting that P&A would “come in strong.” And came back to the CLMC partners with offers of a so it was. Terms were quickly set by P&A on the new beginning. Subsequently, DTT reiterated its first meeting. They submitted data about their firm, intention for CLMC to remain as a full member including information on partner compensation firm of DTT and with the commitment to make the and sharing scheme, and on their forecast for the practice successful. immediate future. Although the submission of 2nd Phase: P&A’s Attempt P&A’s company data was an early sign of sincerity, As SGV accepted the EY offer, the former EY Conchita, the most junior among the negotiating representation, Punongbayan & Araullo (P&A), partners of the two firms, thought that the terms of was left without any international representation. the merger were not favorable to CLMC and that Thru some linkages, P&A connected with CLMC getting together with P&A will not add any value to for a possible getting together in the light of CLMC. Besides, CLMC had declined SGV’s earlier CLMC’s Deloitte representation. This undertaking offer, so the partners were asking why should the was an alternative option to merging with a bigger firm now merge with P&A? SGV firm, the newly appointed EY representative. The regional CEO of DTT, after learning of the terms of P&A, said the following in a June 2002 communication:

Chapter 3 The Partnering ProcessES 43 “You [CLMC] should take the lead in any looming SGV take-over. Should this happen, they discussions with P&A. DTT can provide were all ready to seek employment at CLMC or negotiating support during discussions. …DTT some other Big Four firm. (By hindsight, the SGV/ knows little or nothing about P&A … have P&A merger talks eventually did not prosper.) no way of judging the value of their practice from CLMC’s or DTT’s perspective. Certainly Conchita and her partners had kept an open-mind the conditions are very, very different than the regarding these developments in the industry. Andersen/SGV circumstances. Your approach While recognizing the threats, they also saw the to P&A seems to be a good first step. I would opportunities unfolding. There were possibilities of suggest that many of their first set of conditions getting new accounts and with the movements in should be deal breakers from your perspective.” the landscape; there were opportunities of attracting talented people from the other firms. Likewise, While CLMC’s partners were assured of DTT’s if the merger with P&A should happen, CLMC continued support they, however, were fully aware realized that the firm’s size could easily be doubled of the threat that P&A presented. It was speculated or tripled overnight, thereby becoming at par with that P&A would do all it could to get to the DTT the country’s No. 2, at least in size of manpower. In core. Soon enough, the inevitable happened as several communications, Conchita commenting on fear had spread to the CLMC partners that the these developments in June 2002, said, pursuer may have already done so through various channels. Due to the P&A partners’ previous “We welcome [these opportunities] but these association with SGV, P&A had access to the DTT should not be at the sacrifice of our staff, network and to the various acquaintances within partners and the firm as a whole.” the DTT organization. SGV at one time in the past had represented Deloitte Haskins & Sells, which “… when we became DTT and we started to was DTT’s predecessor before the merger with win accounts …. and the other crown jewels of Touche Ross. DTT, manpower complement was our biggest challenge. We managed to learn quickly and In the meantime, talks about the imminent merger beef up our staff.” of P&A and SGV had circulated. News in the industry was also being heard that it seemed that “… We take into serious consideration where we P&A might also be talking to two other big firms, are, where we are headed to, our resources, and namely, PwC and KPMG. Either one of these were the opportunities at DTT.” possible replacement for the imminent loss of the EY representation should P&A not pursue the In a 2002 year-end situationer communication merger with SGV. And while exploratory talks with to the Asia Pacific regional office, Conchita the P&A partners were still in progress, several summarized the experience as follows: other approaches were being made to CLMC, this time by a group of some 15 managers from P&A’s “The year that is about to end has been very head office, and independently from that group, extraordinary to the global economy, to our by a manager from its Cebu office. These young calling, and…in particular, to us. This time last managers were concerned about the uncertainty year, your Philippine firm was contemplating of their careers in the light of the unfolding events on the many challenges it would have following at P&A and were even more apprehensive of a the 9/11 tragedy and what was emerging as a serious blow to the dominant firm in our country

44 Part ONE due to its affiliation’s involvement in the Enron optimum staffing requirements, and other changes financial embarrassment. As a DTT firm still in needed to move the practice in the direction of its infancy, we knew how vulnerable we were.” improving profitability. In Manuel’s December 2003 letter to Manoj Singh, the successor of Robert “2002 has been doubly exciting. Our Campbell as the Regional Managing Partner and international affiliation had been challenged CEO for Asia Pacific, he said that the creation twice. We experienced two major waves of of the task force “re-affirm(s) our (the firm’s) tsunami: first was when SGV was up for grabs willingness and commitment to embrace the best and the second was when P&A walked away practices that could be learned from Deloitte.” from the previously agreed upon merger with the dominant firm. The SGV transaction of course The task force included three DTT and two was much desired by the major international CLMC partners. Although the participation of accounting firms. Consequently, our very own DTT partners was merely in an advisory capacity, existence had become at risk. The second wave and the undertaking was deemed worthy of was just as life threatening as the first, as a implementation, some of the CLMC partners were practice that walked away from a merger, needed wary of the initiative because the firm had just an affiliation. …Looking back, the extraordinary gone through a rigorous DTT practice review a few encounters have made us better professionals months earlier and to go through another wave of and businesspersons, but more importantly, we review would only test the patience of all concerned emerged from the experience as well-Determined, particularly since the transition to the new regional Tenacious and Tough, [these were the three words leadership, as far as the partners were concerned, that the DTT Regional Managing Partner used in had not completely set in their minds yet because describing Conchita, alluding to the DTT initials.] of the still unfinished commitments of the previous with a much tested commitment to shared beliefs regional leadership. And also a few months and care for each other.” earlier, the partners had just been through several lengthy and sensitive merger discussions. Another “… In all the many unusual travails we have review initiative would therefore be difficult had during the year, what keeps us going is and exhausting to undertake. Besides, the busy our commitment to our profession, our people audit and tax season had already started and this and our clients. Of course, we could not have increased the pressure even more in the discussion achieved so much without the support and room. encouragement from DTT.” However, the mandate on this matter from Sustaining Relationships the regional office was firm and strong. Notwithstanding the discomfort surrounding In November 2003, DTT embarked on a review the initiative, the operations review took its of operations of the Philippine practice, resulting course, and the task force concluded its mission in the creation of a re-engineering task force to resulting in several areas for improvement and undertake change initiatives on ways of running implementation, the most significant of which was the practice. Its tasks included determining ways the re-engineering of the audit division to make to make the practice more efficient, with priorities it more efficient, effective and in sync with the of improving revenue cash flows and receivable audit reforms and requirements of the DTT audit collections, partner goal setting, determining approach and procedures.

Chapter 3 The Partnering ProcessES 45 Deloitte Asean + Guam Cluster Country Leaders Left to right - Chaly Mah of Singapore, Paul Capelle of Indonesia, Conchita L. Manabat of the Philippines, Deloitte Asia Pacific CEO Manoj Singh, Bert Braden of Guam, A. Mustapha of Malaysia, Subhasakdi Krishnamra of Thailand, Ng Meng Kwai of Malaysia Clustering, the Next Step next wave. Success, the senior partners thought, At around the same time, certain developments could only be sustained by great leadership if a were also ongoing within Deloitte as a global succession plan were in place. firm. In the first quarter of 2004, the initiative of Reflections and Insights clustering smaller practices in the Southeast Asia Partnering and merging are natural life processes Region was formally put into motion. Southeast in dynamic, evolving, and adaptive environments. Asia was to follow the same route that was started As in the biological ecosystems, the ecosystems of and launched earlier in Deloitte offices in other organizations, based on the experiences of CLMC, regions of the world, such as South America and reveal how speed of changes and complex dynamics Eastern Europe. Initially labeled internally as define and redefine the initial relationships and “regionalization,” the clustering initiative aimed to eventually the resolutions arrived at informal pull together the practices in Singapore, Malaysia, relationships or partnerships. From the foregoing Thailand, Indonesia, and the Philippines and experiences, it was clear to the leaders why they establish one “virtual firm” across the region, with came together to be partners, with whom they the Singapore firm leading the cluster. Guam was could best be partners, when and under what later added to the group and the outcome was conditions would relationships be value-added. named the ASEAN Cluster + Guam, and then later, It also seemed clear that the underpinning just the ASEAN Cluster. Being the second smallest motivations of the leaders/founders of CLMC did practice in the region, the Philippine partners were not only rest in opportunities for business and not in a position to object to such an initiative. profitability but, more importantly, on the core By this stage, the senior partners had begun values that are invaluable to relationships and conceptualizing about succession plans and partnership. possible alternatives to the future leadership of For anyone who would engage in and enter into the CLMC. The senior partners were convinced that “den” of negotiations and undertakings, it would the operating platform they had established had be well for one representing his or her organization long been successful and that the resources who to be sensitive to both the internal and external would most likely be the next generation of leaders dynamics of value alignment, value compatibility, had, through the years, been identified, developed and value synchronicity. and trained to be equipped to take the firm to the



Part TWO “Breaking In Boundaries” Norming and Converging Stages of CLMC



Chapter 1 49 Chapter 4 THE NORMING PROCESS “Nothing is more difficult to take in hand, More perilous to conduct, Establishing Patterns of Ways of Doing Or more uncertain of success, Than to take the lead in the Introduction of a new order of things.” - Machiavelli Chaos/Order or change is on the “setting up of rules and norms The winds of change are life generating that govern how the system connects internally opportunities but the waves of development and with its external environment.” How was this invariably require order and stability. Every change addressed in the growth and development stages of entails a paradox. As a law of life, out of order CLMC? What were the underlying belief systems comes the need for change, but out of change that were adhered to and demonstrated as patterns comes the need for order. The speedy change that of behavior? How was this process of “norming” occurred in the formation and growth of CLMC done at CLMC? How was the continuing could not be left to chance. There was always a formation of the firm sustained while “norming” consciousness on the leadership to establish and was being pursued? What were stabilized, keep “order” and “norms” in place, if the firm were normalized, standardized, and systematized? to live by its commitment to quality and integrity. What principles and practices were established as While change takes the breath away in the benchmarks? What standards of quality were set? excitement of the breakthrough and the novelty and What products/services were rendered successfully the vitality of a dynamic organization, the order and excellently? What were the success factors at and norms of things require the system to take this stage? Who were the key players leading this stock of breath, to settle down, to establish stability. process? What were accomplished and established? At CLMC, the partners and the professionals knew These are so many questions that have to be right from the start that it was important to keep answered. things in order and to be bounded by the norms. “Be the Best – Do Your Best” – An Individual For Land and Jarman1, the second breakpoint Challenge and a Shared Experience change in organizational growth is called When the “best” is the norm right at the “thought” “Norming.” The focus of the “norming” movement level, the process of becoming the “best” is like making the “being best” as the point to begin 1 Land and Jarman, Breakpoint Change and Beyond: Mastering the within the process of becoming “best.” From Future (New York: John Wiley & Sons, 1992). the experience of CLMC, two key points had

50 Part TWO surfaced as a matter of principle in this process of Sow a habit, and you reap a character; “norming.” First was the principle of the primacy Sow a character, and you reap a destiny.” of the thought “of being best” as a point to begin the process of becoming. Second was the principle Those who joined the firm recalled that the leaders of time as a continuum of the thought process of the firm extracted from them what the leaders rather than as a point in time independent from the themselves modeled or lived. When an engagement thought. was initiated, the team approach was put in full One significant policy that emerged in the stories steam. No one did a task independent of the other of those who were in the early formation of the and neither did anyone’s output go unchecked. organization was: “Be the Best/Do your Best Issues were deliberated well and analyzed critically Now.” There was no question about the firm being for learning purposes and then decided collectively. new, young, and just getting underway. But by When the team approach process was not fully leadership example, everyone was to start the followed due to staff limitation, there was no day with the motto: “BE THE BEST/DO YOUR excuse to do the tasks without the benefit of team BEST NOW.” It was like a mindset where “being/ feedback. When skills were observed inadequate, behaving/becoming” are rolled into one integral one-on-one coaching was done. To complement process. So, everyone began with the thought this coaching process, training was given, both of “being best/doing best” and behaving at one’s in-house and outsourced. Others were also sent best from day one. NOW was the moment of to overseas training for updating or encouraged to “being best.” The process of becoming came as a take on professional career advancement in formal consequence of or from an effort to be the best. education. When individual and group outputs This was reflected even in the way one was dressed were generated, quality controls were installed properly for the office or for a visit to a client: and implemented. There was always a constant “DRESS RIGHT/DRESS BEST!” challenge to standardize, update, and at the same The staff recalled the experiences of hard work time think/develop options and innovations. on their “norming” and on their establishing the “norm of the best.” But they realized that they were At the corporate functioning, there was a conscious always encouraged first to “think best” as the norm and deliberate move, to establish the Quality and then motivated to do or function best as a way Control Unit when CLMC became a DTT partner of doing things. It was like taking two realities at in June 1999. One of the auditors, Melissa Sanchez- every moment, “being best/doing best.” There was Delgado, who was with CLMC at the start, was no waiting for a later time to doing best but to “Do designated to take care of this function. When it right the first time.” Reinforcing this principle asked how she started the “norming process,” she was DTT’s vision when CLMC had become a said that CLMC utilized and reviewed the DTT DTT firm, namely, “to be the best professional systems and procedures and adopted them to local services firm in the world.” Many of the computer situations. These were used and tested at every screen savers and posters on the walls carried this auditing season. Soon after the auditing cycle message: was over, feedback and insights were drawn from “Sow a thought, and you reap an act; their experiences with different clients for further Sow an act, and you reap a habit; revisions and refinement of the system, policies, and procedures. In retrospect, Melissa claims that the practice was always accompanied by a system

Chapter 4 THE NORMING PROCESS 51 that checks, monitors, and validates the process for But there was more to “dress right, dress best” for quality control. the leaders, managers, juniors, and staff at CLMC. Norming as a process was not merely putting up Organizational Life: A Policy Matter policies, rules and regulations. The “norming As mentioned earlier, a significant example of the process” was done through the sharing of vision norming process in the organizational life at CLMC and values during informal gatherings, at meetings was that of the “dress code.” It was the metaphor and focused sessions, celebrations, and at every for the firm’s organizational life. The byword was opportunity for dialogue and interaction between “Dress Right! Dress Best!” To CLMC, the “dress partners and staff. The communication processes code” was the first norming process that created were open and interactive. Everyone could provide the impression of “norm/order” or decorum. So, feedback and discuss issues and concerns, through everyday at CLMC, one needs to remind him/ a suggestion box, email, or in one-on-one coaching herself to always “Dress Right! Dress Best!” whether or dialogue. Newly hired people were encouraged at work, in the office or with Clients. The mark of to participate in the process when they saw how being a professional at first sight is in the matter of leadership/management responded to the valid proper clothes. suggestions promptly and adequately. When there CLMC, in the beginning, had a very formal were moments of anger and frustration expressed dress code policy: “strictly no pants” for ladies over errors and mistakes, these were soon forgotten and “strictly long sleeves” for gentlemen. Some after the issues were addressed. The atmosphere professionals who joined CLMC had difficulty returned to normal and the experience was taken as adapting to the existing CLMC practice, so much part of the learning process. so that a number of the staff signed a petition Skills and Standards Building addressed to the partners, questioning the rationale Another feature that provided the dynamic of the existing dress code policy. mechanism for norming was the priority given by After the initial resistance which was addressed leadership/management to invest in continuous by the partners, the same dress code remained training and learning among the staff. in effect for another year or so. Management Political Will remained open to feedback in consideration of In the early years of CLMC, the challenge was existing corporate trends and client practices, and to establish common ways of conduct for the the code was then relaxed. Global trends were professionals who may have come from other gearing towards a more relaxed, casual dress policy. accounting firms. The appointment as DTT firm The firm tried out several formulas to ensure that a and the consequent expansion with the “partial professional corporate image is projected through merger” of two practices presented more challenges its dress code. Initially, it provided uniforms, and emphasized the need to have standards. The polo barong, and blazers to the staff. However, key in addressing these challenges, primarily, was the staff wanted individuality, so the uniforms in the will of the firm’s leaders. For example, upon were discarded. This resulted in the present more the appointment as DTT member firm, everyone relaxed guidelines for dressing. Ladies were in Audit was required to use AuditSystem/2 or the allowed to wear slacks and the gentlemen, short- AS/2, the DTT proprietary audit methodology and sleeved polo shirts. software, regardless of the size of client and whether

52 Part TWO it was a multinational client or not, whether a practice. Faced with this challenge, the firm DTT client or not. This forced all auditors, from naturally turned to its partner, DTT, to provide the Partners to Staff, to study and learn AS/2. With needed support in its first two years as a member this directive from the top, all had to undergo firm. DTT responded by providing the needed the training and render themselves equipped in human resources as consultants either on a short- using the audit methodology. The partners lost term basis at the height of the busy audit period or no time in providing the necessary skills to its on a more long-term basis in response to specific staff, regardless of the costs and the challenges client requirements, some of them coming from as in resources. The partners wanted not only to far as DTT offices in South Africa, France, United upgrade the staff ’s skills in the DTT methodology, States, Canada, Australia, and other countries. but also for the staff ’s skills to be aligned with other Such resources provided the hand-holding for the DTT practices, and perhaps even surpass those staff to be more comfortable in the use of the DTT of the competitors. Thus, the partners requested audit approach and the assistance in establishing that a trainer from the Canadian office of DTT, client relationships. They also shared new skills Venkat Kannan, come to Manila to deliver the inherent to procedures in certain industries where first round of AS/2 training for the staff. The same the firm lacked solid skills. The firm strived to get resource came back a couple of times more during the most out of the presence of these resources the course of the audit season of CLMC’s first by utilizing them in the training programs for the year as a DTT firm, to give guidance to the staff staff, either on the job or in classroom setting. as they encountered issues in using the DTT audit When DTT experts in specialized industries came approach. This enabled the staff to quickly upgrade for a visit such as those in insurance, banking, their skills as well as to develop output quality or securities brokerage industries, or whenever standards that were at par with the rest of the the head of DTT’s global Japanese service group world. The following is an excerpt from the report scheduled a visit to Manila, the partners would of a DTT Practice Review conducted in 2003: request them for a briefing of the staff on their areas of expertise. They provided insights on how to “Overall, the Philippines does not have critical approach certain major clients. In many instances, infrastructure issues in the AS/2 implementation. the partners took the opportunity to bring the DTT Level of computer availability, support, and experts for visits with clients, both existing and foundation training are considered adequate potential, to show the clients the breadth and depth with reference to the size of the practice.” of expertise and knowledge available at CLMC. These interfaces with professionals from more This report was prepared by Cissy Chiu of the DTT advanced DTT practices and multinational clients regional office in Hong Kong on DTT’s assessment with more sophisticated operations improved the of the AS/2 implementation in the firm during the technical skills and confidence of CLMC’s people 2003 Practice Review headed by Suzie Gough, a on the one hand, and enhanced client relationships partner from the DTT Hong Kong practice. on the other. Moreover, these provided the CLMC staff much wider, cross-cultural, and international Seizing Opportunities and Maximizing Resources perspectives. In no time, the service professionals were becoming more and more confident in The firm’s partners recognized from the start that communicating in English as well as in the building up skills and capacity was a key ingredient “technical” language. to winning global clients and putting the firm’s name in the map as a credible, professional services

Chapter 4 THE NORMING PROCESS 53 Cross-Border Sharing of Resources Some of the DTT resources that had shared their 14. Priya Martin, John’s predecessor to the region- expertise and contributed to developing the CLMC al HR role, rendering advice and assistance talent were: on HR related issues particularly the Global Development Program 1. John Jake Killeen, US expat posted in Manila as consultant on practice development from 1998- 15. Neil Stiles, New Zealand retired partner han- 2003 dling professional development training 2. Loretta Ayers, US expat posted in Manila as 16. Simon Walpole, British actuary/partner han- consultant from 2003-2005 dling insurance actuarial reviews, assigned to assist Manila in providing training for audits of 3. Troy Short, US partner based in Japan who insurance companies. served as consultant for an audit client 17. Jack Ribeiro, US partner based in Japan and 4. Lucia Pham, Canadian/Vietnamese senior later in New York, served DTT as regional manager assigned in Manila to assist in adviso- head for the Global Financial Services Industry ry capacity for an audit client 18. Steve Butters, US partner and deputy of Jack 5. Patrice Brusciano, French Senior Manager Ribeiro assigned in Manila to assist in an advisory capacity for a French audit client 19. Graham Segger, Canadian partner who was the Lead Client Service Partner for a group of 6. Frederic Mortamais, French Senior Manager insurance companies assigned in Manila to assist in an advisory capacity for a French audit client 20. Dennis Wu, US partner who supported the CLMC secondees assigned in the US for 18 7. Gina Faure, South African senior who rendered months under the Global Development Pro- training support to an audit team gram 8. Karin Zharnack, South African Senior Man- The above names are just some of the long list of ager who rendered training support for audit DTT professionals who visited or were assigned at teams; likewise, conducted basic audit and CLMC, and shared generously their time and talent AS/2 training, along with Gina Faure, during for the firm’s development. their one-month stint at CLMC The firm also has had its share of sending its part- 9. Patrick Henry, US partner based in Hong Kong ners and professionals to other DTT offices abroad, (and later in New York) as regional head for the especially in the ASEAN Region, either as reviewer audit of major multinational stock brokerages in country practice reviews or as resource in “Just- in-Time” arrangements to help in servicing clients 10. Sam Uchimura, Japanese regional partner for (for example in the U.S. and in the U.K.), and/or the Japan Desk (Japanese clients in the region) in exchange programs such as the Global Develop- ment Program discussed elsewhere in this chapter. 11. Venkatt Kannan, Canadian resource for the training on AS/2 12. Cissy Chiu, Hong Kong regional director/ coor- dinator for training and development 13. John Driscoll, regional human resource director and coordinator based in Hong Kong to assist and render advice in handling HR matters

54 Part TWO Group Consultations Left to right: Joey Pasatiempo, Rizalina VD Arco, Ofelia A. Gamad, Mamerto D. Jayco, Angelito D. Cu, Diane S. Yap, Luz A. Bernardo Practice, Practice, Practice Global Development Program (GDP). The GDP The firm was never content with the status quo. is a Human Resource curriculum where promising The firm’s leadership itself was always the first to mid-career employees (usually semi-seniors challenge existing practices. It strived to continue to senior auditors to newly appointed assistant challenging the staff. Long before the use of managers) throughout the Deloitte organizations Microsoft PowerPoint presentations became in the world are assigned to work in other Deloitte widely popular, Conchita required PowerPoint offices in other countries. Participants are able presentations in meetings with audit clients, to further develop their foreign language skills regardless of whether such a meeting was an and study the business practices and cultures of introductory meeting, or in the proposal stage, or other countries. They can network not only with on the final deliverable presentation stage. This the people from the host country but also with exposed partners and managers to public speaking the other participants from other countries. This and enhanced their presentation skills while would broaden their business perspective and they the support staff learned to prepare impressive can learn first-hand, global best practices in more presentations. developed countries. Former DTT global CEO, The partners encouraged their staff to take James Copeland, Jr., once said, “We take pride opportunities to practice their new-found skills in preparing our people to help clients excel in a whether these were in formal training sessions, marketplace without borders.” monthly meetings, or larger assemblies. Each year, the firm participates in the Global This new practice inspired the staff to pursue Development Program. Partners identify and more formal courses in presentation skills. Thus, nominate candidates from the staff pool. Then the attendance to the presentation skills modules of the candidates undergo a rigorous selection process firm’s training programs significantly improved. where they undergo tests and are interviewed The same was true for the non-audit service by a panel of partners. Finally the firm submits lines. Everyone was motivated to be trained very the names and credentials of the short-listed early on to develop the confidence for business candidates to DTT for consideration into the presentations. program. The successful candidates are employed by more advanced DTT firms (such as those in Exporting Resources via the Global Development the United States, in Canada, in Australia and in Program other advanced countries in need of multi-cultural Operating in a vast marketplace without borders, trainees) for at least 18 months, after which they DTT continues to build on global expertise and then return home more experienced. Each GDP reinforces this in an initiative known as the Deloitte participant, upon his/her return, brings with him/ her valuable experiences and knowledge learned from the more advanced practice, which knowledge

Chapter 4 THE NORMING PROCESS 55 are shared and transferred to others in the home The next practice review was done in 2003 firm. The graduates of the GDP usually become covering both the audit and enterprise risk “champions of learning,” and participate proactively services. Once again, the firm was commended in other major initiatives of the firm. for its achievements and commitment to the DTT standards. Conchita congratulated everyone in DTT’s Hand her June 27, 2003 memo to the firm’s staff after the practice review, and emphasized the firm’s resolve DTT also had a significant hand in helping the to be “The Best,” as follows: firm adopt a single set of internationally accepted standards. DTT ensured that the firm adopted “The 2003 DTT Practice Review Team (Suzie from the beginning, the DTT standards. Practice Gough- Leader, Cissy M. S. Chiu, Lee H. Vensel, reviews on CLMC were conducted by DTT every and Steven Lee) completed their tasks today. two or three years. In such practice reviews, DTT partners from various countries conduct Generally, the team reported that as a young a review of each of the service lines (audit, tax, and growing practice, our firm has gone a financial advisory, enterprise risk services) long way. They appreciate our “family culture” and existing practices in risk management, and the enthusiasm of our professionals. Our quality assurance, practice management, human full implementation of AS/2 and our firm’s resource management, information technology continuing support to AS/2 adoption by way of infrastructure, and DTT methodologies. Such a adequate provision of computers were favorably review measures the firm’s methods against DTT- noted. Our risk management was cited and prescribed standards and best practices. The first overall, we fared well. There are of course areas formal practice review on CLMC’s audit practice of improvement…. We need to implement a was conducted in 2000 (a year after becoming a number of enhancements and recommendations DTT member firm), and the firm received very to further raise the bar of compliance by our good marks. The following is the practice review practice. … team’s report: Based on the preliminary assessment reports, I “We appreciate that your firm only became wish to congratulate all for bringing our practice the Deloitte Touche Tohmatsu Representative to a level that we can be proud of. We can be the Firm in Philippines in 1999, and the training best and with joint resolve, we will be the best!” of the firm in the Deloitte Touche Tohmatsu audit approach only took place late last year. It In the same year, CLMC’s tax and financial advisory is clear that the management of the firm has practices were also subjected to the same scrutiny taken a keen interest in ensuring the quality of from the DTT reviewers. If one were to realize the audit process and that [the] partners and that the benchmarks applied were crafted and staff have participated in the AuditSystem/2 established by bigger and more advanced practices, training.” – Quoted from the covering letter “raising the bar of compliance” by a small practice dated September 8, 2000 of Alan Flanders, head with limited resources operating in a less advanced of the practice review team who conducted economy, was truly a real feat for the very young a practice review in 2000 and addressed to CLMC practice. Conchita Manabat, the firm’s Managing Partner at the time.

56 Part TWO Left to right – Manuel O. Faustino, Deloitte Deputy Regional CEO Todd Smith, Deloitte Regional CEO Manoj Singh, Conchita L. Manabat Later in November of 2003, upon the initiative The immediate step following the review, based of DTT’s newly-appointed Regional Managing on recommendations by the review team, was Partner for the Asia Pacific, another DTT team the formation of a “Task Force to implement came to Manila to perform a review of the firm’s the recommended changes.” In her message for overall operations to determine ways of achieving Christmas 2003, Conchita wrote: greater efficiency and ensuring profitability. “… 2003 is a year of “settling down” for us. In its report, the review team recognized the The preceding four-year period was a ramped- partners’ commitment to the practice and openness up time for building our firm faced by major to adopt best practices. Here is an excerpt from changes in the landscape of accountancy, the team’s report which was discussed with the globally and in our country. We have grown partners: rapidly amidst all the many challenges in the environment and I wish to thank all of you for “… we do want to recognize that we were that.” impressed overall by many aspects of the practice – the partners have demonstrated their “I see the coming year as an opportune time to commitment and ability to grow the practice to a focus on the three E’s: experience, efficiency and critical mass in its four years of existence provide effectiveness. We gained valuable experience quality service to our MNC clients and attract in the last four years of Deloitte membership. and retain high quality employees….. The firm We will enhance it further by opening ourselves is very open to various forms of non-financial to new ideas and ways of doing things. We support and training of its staff, managers will embark on major initiatives that will re- and partners so that the firm does not have to engineer our practice. The regional Deloitte ‘reinvent the wheel.’ It is particularly open to office will drive the effort. A new practice best practices.” management system is being rolled out which is a major component of the many changes that are The team submitted recommendations to address forthcoming. All of these initiatives aim to make operational issues including the implementation of us efficient and effective.” a practice management system, the conduct of an efficiency review, and the addressing of concerns “As we welcome 2004, let us consider the good facing the practice such as leadership succession characteristics of the monkey in the Chinese and expansion. calendar that symbolizes the coming year.

Chapter 4 THE NORMING PROCESS 57 The monkey is very clever, talented, creative, few weeks, you may be called upon to assist with cheerful and generous. Just like the monkey, our activities, which will include:  we are inherently brainy, reliable, adaptable and virtually unsinkable as proven during the * Reviewing certain audit engagements, past Andersen events. We have the power to for the purpose of identifying best practices change things when required. We improve and and opportunities for efficiency. This do things better, and at times, we even amaze review will occur in two phases, the first ourselves at what we are capable of doing. Let consisting mostly of certain clients with March us be guided by the monkey as we embrace 31 and June 30 year ends, and the second best practices towards a successful practice of consisting of certain clients with December 31 accountancy.” year ends, The task force, or “Re-engineering Task Force” as * Presentation of training to all partners, it was termed, consisted of two CLMC partners managers and seniors as to the best practices and three DTT partners: Manuel Faustino and and efficiency opportunities that were Luz Bernardo from CLMC; and from DTT, Loretta identified, Ayers – the US Partner, Todd Smith – the Deputy of the Regional Managing Partner, and Ron * Meeting with the audit teams for the Barrington – a US Partner and the COO of the engagements selected to review their FY 04 Thailand practice. The role of DTT was strictly audit plans, and advisory, and this was put in writing in a Task Force Agreement dated December 30, 2003 signed by the * Providing planning, scheduling, budgeting two parties, CLMC and DTT. and billing guidelines for FY 04 audits. The re-engineering initiative was active for ….The success of the Audit Efficiency the most part of 2004 with company-wide and Planning Effectiveness Initiative is participation, as the majority of the partners, dependent on the active participation of all managers, and staff were involved in one way or our partners, managers and seniors in the another. Its major achievement, perhaps, was the planning of our FY 04 engagements. We launch of an Audit Efficiency and Effectiveness thank you in advance for your participation Initiative in the first quarter of 2004. Other in this process.” accomplishments were the introduction of partner goal-setting and performance management system, The Audit Efficiency and Effectiveness Initiative the implementation of a practice management resulted in the improvement of approaches to system, and enhancement in the monitoring of engagement proposal preparation, planning, operations, including cash flow management, client execution, and management with the mandate billings, and collection. Manuel sent the following of a more extensive involvement of partners and memo to the audit staff on March 5, 2004: managers in all stages of the audit. It also brought about a more effective capture of time spent and “…The primary objectives of this Initiative are timely billing of clients for work performed. These to enhance the quality and effectiveness of our needed the re-tooling and re-training of staff on audits, while at the same time improving our more efficient ways of their performance. The task audit profitability. Over the course of the next force spearheaded the initiative by conducting

58 Part TWO a series of extensive seminars and orientations returned to the firm, and eventually became among the audit partners, managers, and staff. partners, Bernadett in 2002 and Diane in The DTT practice reviews continued on every two 2005. Bonifacio Lumacang, on the other hand, to three years to ensure that the global standards of was sent also to the San Francisco firm and DTT were adhered to. returned to Manila to eventually become a partner in 2006. Opportunities, the Motivating Factor The opportunities to grow, learn, advance, and get Despite the continuing debate among partners promoted constitute the top three reasons why the and managers on the cost-benefits of the employees and professionals considered CLMC the program and the tangible results to the firm “employer of choice.” They further claimed that (because it was difficult to get assurance the opportunities for national and international that the participants would return), CLMC exposure in training and learning compensated for continued to send participants year to year the level of compensation package that CLMC gave (except in 2006 when the firm temporarily to the staff (vis-à-vis the competitors’ package). suspended participation to further re-evaluate The following programs were some of the the cost-benefits issue). In 2007, the firm opportunities in learning that contributed to the resumed its participation and proceeded with firm’s competency development, its norming and the process of selecting the candidates to the high standards for quality service and performance: program. o Global Development Program – GDP, the The GDP Graduates (up to 2005) international assignment program previously described, was the most popular program and 1998/99 - Sebastian Rodolfo and Chona Aguilar it was everyone’s dream to be part of it, to be were in the DTT Los Angeles and San sent by the firm to work on an international Francisco offices, respectively, during the assignment for eighteen months and to transition year when CLMC became a DTT “experience the world.” CLMC had always member firm. supported the GDP for the benefits and opportunities the program would bring to the 1999 - Bernadett Sanchez was posted in the staff and to the firm. The benefits to the staff Los Angeles office while Diane Yap was were immediate like higher income, more assigned to the San Francisco office. advanced training, international exposure Wilma Oliveros of the Tax group was also while the benefits to the firm were seen as more sent to the Tokyo, Japan office for a short- long-term in coming. term hands-on training. At its inception as a DTT firm in 1999, CLMC immediately sent two candidates to 2000 - Bonifacio Lumacang was sent also to the the program: Bernadett Sanchez was taken San Francisco office while Joven Abrillo in by the Los Angeles practice, while Diane was sent to the Melbourne office in Yap was accepted by the San Francisco Australia. office. After completing the program, they 2001 – Agnes Sabino was accepted by the DTT office in Seattle while Guillermo Brace, Jr. was sent to the New York office.

Chapter 4 THE NORMING PROCESS 59 2002 – Alaime Galido was accepted by the Seattle international experiences from the program office while Jennifer Nieva was assigned to with the firm. They had championed certain the San Francisco office. improvement initiatives, had been assigned to larger and more challenging clients, and 2003 – Alex Bustarde was accepted by the Tri- had become speakers and trainers within and State office in the US. outside the firm. Best of all, the program had accelerated their eventual elevation into the 2004 – John Eric Rodillas was posted at the partnership as Partners. Toronto office in Canada. o Practice Reviews – As previously discussed, DTT periodically conducted practice reviews 2005 – Gilbert Angeles and Sherwin Sampang of its member firms in order for managers and were accepted by the San Francisco and staff to develop competence and confidence, Boston offices, respectively. and for the member firms to uphold DTT’s global standards. These reviews evaluated the Some of the GDP graduates regrettably decided member firms’ adherence to DTT standards not to return to honor their commitments to and practices especially in the utilization of CLMC, or if they did return, eventually left DTT’s audit enabling tool and software, the the firm mostly for overseas opportunities, AS/2, and all the other elements of the quality thereby contributing further to some of the assurance and risk management systems. partners’ concerns with regard to the efficacy These included the procedures for acceptance of the program. Thus in 2006, as previously and continuation of clients and engagements, mentioned, the firm had to temporarily independence, recruitment, advancement and suspend its participation in the program for a development of professional staff, consultation, year. This came at a time when a shortage of engagement quality assurance reviews, and supply of audit professionals was happening in overall client service.2 developed markets such as in the United States In preparation for these reviews, CLMC due to the increasing demand for experienced undertook self-reviews on a more frequent auditors brought about by increasing work schedule and with more rigid standards. In engagements required by the Sarbanes-Oxley the early years, a peer review exercise was Act on audits of publicly listed companies. The done where partners and managers were Big Four firms therefore needed to hire more tasked to review one another’s engagements. experienced auditors, and the Philippines was The practice has since evolved to create naturally a good source of English-speaking cross-functional, cross-level internal practice experienced auditors to satisfy the increasing review teams after each major busy period. overseas demand. Many therefore looked at the The exercise brought to light issues on GDP assignment as an excellent springboard non-standard practices, areas that could be from which to accept offers from other Big improved, areas where more training and Four firms for employment abroad. orientation may be required. These resulted in For the returnees however, it had given them the development of quality manuals, guidelines, the opportunity to share their own unique 2 Staff Bits, September 2000, Vol. 1, No 3.

60 Part TWO and standardized procedures and development Subsequently, a similar program was conducted of training programs specific to the identified by a former DTT partner of the New Zealand training needs. In the process, members of the practice, Neil Stiles, who came for two review teams and those being reviewed had consecutive years to facilitate two management gained valuable insights and learning from one courses: “Management Excellence” for new another. managers and “Leadership Excellence” for CLMC also had opportunities to put some of senior managers, directors, and partners. its people in practice review teams to assess Traditionally, these programs were offered DTT member firms in other countries, thus in regional DTT training where the firm can enabling them to gain greater exposure and only send one or two participants abroad. The to learn from practices of more advanced partners decided that it would be better to firms. Among those who received this type of bring the programs “in-country”, i.e., bringing exposure were Mamerto Jayco, Angelito Cu, the foreign facilitators into the country rather Diane Yap, Bernadett Sanchez, and Bonifacio than sending the firm’s people out. They Lumacang for Audit, and Imelda Tapay and believed the programs brought skills needed by Shefali Raina for Financial Advisory Services. all of its senior professionals and holding it in- o Managers’ Development Program – This was country will benefit more people in the firm. one of the learning initiatives of the firm to Other Staff Enhancement Opportunities develop its managers, engaging the services CLMC’s partners had always been desirous of of foreign experts and instructors to conduct enriching its people’s experience to develop them the training. The first of such initiatives was not only as service professionals but also as well- conducted and facilitated by Frank Pohl from rounded individuals. One way of enhancing the DTT New Zealand and Kim Rose, a learning professionals’ skills and experience was to allow consultant of DTT from Forum Corporation. them to travel the world and expose them to The session focused on Business Development practices in more developed countries in other and Creative Problem-Solving through the use ways than the aforementioned GDP participation. of the framework on diagnosing client values, The partners, therefore, had taken every identifying value orientation, and managing opportunity to send their professionals abroad, information. These were deemed essential to whether for client assignments, training, or other the service staff to be able to develop a deeper exposure. understanding of clients’ values. The session For example, CLMC had been a contributor of also included exercises on giving and receiving trainor resources to the US office training program. feedback which enabled the managers to Even at its early years as a DTT member firm, improve relationships within the organization CLMC had shared its resources regardless of which translated to better service to clients the need for resources locally. Chona Aguilar, a in the delivery of professional services – all former GDP program participant who returned towards fulfilling CLMC’s mission of helping to CLMC as Manager, was sent as an instructor to clients and its people to excel.3 the US Office in Leesburg, Virginia in July 2000. Melissa Sanchez-Delgado, then a Senior, was sent 3 Staff Bits, December 2000, Vol. 1, No. 5. to handle the New Hires Training at Scottsdale,

Chapter 4 THE NORMING PROCESS 61 Arizona in September 2000. Although Chona left audit professionals in the worldwide organization the firm afterwards, many others aspired for similar of DTT. This was known as Partners in Learning assignments for learning that can be shared with (PIL) and was fully implemented by around 2003- others. On the other hand, Melissa moved up the 04. However, the adoption of the PIL curriculum at ladder, handling the firm’s Quality Control and CLMC was not without challenges. The firm had to Learning functions, and ultimately becoming one have the training of trainers, and had to undertake of the firm’s partners in 2006. the re-orientation of the audit staff, and the revision The effort to create and provide opportunities of training policies before the program could be for continuous training and education had never fully assimilated into the routine learning programs ceased. In fact, two of the firm’s strengths as of the firm. rated by its staff through the DTT Global Survey There were other learning management challenges were: (1) Learning and Education, and (2) Client within CLMC itself. For instance, learning-hour Relationship Management. It was no surprise requirements for every professional had already then that the professional and support staff then been established at the start. Each professional continue to acknowledge these strengths and to needed to complete at least 40 hours of learning in clamor for more opportunities for further training a year. But implementing the policies and eliciting and education as career path development and job conformity had not been easy. While personal enrichment/enhancement. development had always been a priority to most Other programs that contributed to the norming of CLMC’s people, oftentimes the schedule for process at CLMC were: The scholarship programs training had been put aside and sacrificed by the to the Asian Institute of Management and other demands of many hours of client servicing. As prestigious institutions, Leadership Programs for the years progressed and the training program partners in Ivy League Schools (Wharton School became more organized, the implementation of of the University of Pennsylvania, Kellogg School policies also became stricter. With a push from the of Management at the Northwestern University, Managing Partner and support from the partners IMD Business School in Lausanne, Switzerland), and managers, everyone soon recognized the Dale Carnegie Leadership Training, the annual US importance of having adequately trained teams, Technical Excellence Program held in Hong Kong and consequently gave complete support to the and in Singapore, skills development (management activity. Monitoring systems and learning tools and leadership excellence, IT training, business were also established globally, thus helping with the writing, negotiations, project management, effective smooth and uniform implementation of policies presentation, personality development, etc.), all and programs across the borders. That was because updated technical courses and training, including compliance with the required learning units had to new developments in accounting and auditing be reported to and monitored by the regional office. standards. After the events that affected the industry in recent history post-Enron, there was growing challenge Audit Learning in the worldwide practice to push for stronger Risk The basic training program for Audit evolved from Management which required the severe review and internally developed training modules until the tightening of policies and standards. Accordingly, DTT global office finalized a curriculum across all global meetings, conferences and training programs

62 Part TWO were conducted by DTT to focus on this critical The GEM established the standards of area to ensure that country firms all over the world measurement (a model of how a staff should meet/ are organized and prepared to address the evolving exceed expectations in his/her performance) that issues. enabled the supervisor-evaluator to assess more Global Excellence Model objectively the performance of the staff. This The Global Excellence Model (GEM) was probably was documented in a form called “Engagement one example of CLMC’s ability to adapt to new Performance Review” (EPR), and was accomplished ways of doing business. Being a young firm gave by the evaluator after each engagement, usually it the flexibility and the ease to maneuver to adapt quarterly (and not only at the end of the fiscal new practices. GEM was a Deloitte global initiative year). The EPR from the employee’s supervisor on human resource management which covered became just one of the evaluations that an employee areas such as performance management, learning, received. There were ratings from peers, the score career development, and feedback. It provided from the client’s evaluation of the engagement, standards of measurements and processes for the score from the employee’s involvement in personal development across levels. Particularly various initiatives of the firm, the ratings from the important to CLMC was the GEM’s performance results of training (either as trainor/instructor, management system which was immediately and trainee, or both), and from other involvements painlessly adopted by the firm after its appointment and responsibilities. The Score Card thus evolved by DTT. into a “360-degree” evaluation process to respond Score Card and Performance Management to the need for a more objective and well-rounded The idea of implementing a score card system quantitative measures of performance that started in 2001. This was intended as a tool supported the firm’s initiatives and strategies. to aid the performance management process. Management wanted its people to take The challenge from the start was to reduce the responsibility for their performance results and subjective judgment of performance evaluations. for their future by introducing objective measures It had been generally perceived that an employee’s of performance that were transparent and within assessment was largely dependent on the opinion the staff ’s control. Another objective was to and judgment of their evaluators, usually their develop well-rounded professionals in the areas supervisors at work. Many felt that they had of leadership, service, learning, and marketing. been unfairly evaluated, and many worried that It was also meant to level the playing field and since assessments were done too far at the end of reward people based on their contributions to the fiscal year, their promotion might be affected the firm’s performance, which was not always by isolated, random events affecting superior- through service delivery. For instance, there were subordinate relationships that would unfairly those who contributed more in marketing and negate the true evaluation of their performance. A developing accounts, or in developing professionals change then in the method of evaluation had to be through training or quality reviews, or those in fashioned, which evolved from a simple evaluation administrative functions. Their contributions, even process to a system that followed guidelines rolled if different from the client-servicing professionals out by DTT across the globe called the GEM. who comprise the majority, were recognized.

Chapter 4 THE NORMING PROCESS 63 The Score Card initiative went through a process environment. While not accepted at first, the staff of evolution and again, was not without challenges. soon appreciated its merits because the exams It started with a very crude framework but was forced them to study and to learn the revised nevertheless launched to let the process flow into standards, something that they would have likely the system, generate interest and be imbibed by put off if they had been on their own. the staff. More heads however were needed to Norming in Non-Audit Service Lines further develop and refine the concept. While it Evolution of the Consulting Group started as an administration initiative, the service The Consulting Group started with a skeleton professionals started to get involved as they realized force of three professionals: Luz Bernardo (as its impact on their lives and their future within the practice leader), Diane Yap, and Clarita Nunez. firm. As the initiative progressed, the process of The group started operating under First Philippine enhancing and refining the mechanics proceeded. Consultants, Inc., as re-established by Conchita A committee was finally formed, with membership when she left her former practice in 1997. After coming from staff volunteers cutting across levels a year or so, Clarita left the firm and Diane and service lines, to craft the guidelines and to transferred to Audit (and eventually became audit recommend and implement the enhancements. partner in 2005). But additional resources were The final framework for the well-rounded Score enticed to join the group, and two of those in the Card was then in place by 2002. early years were Riza Arco and Imelda Tapay. Riza, Technical Exams who joined the firm earlier than Imelda, started The conducting of semi-annual technical exams as a Senior Assistant, and stayed on to progress (like simulated CPA licensure exams) was a unique as a Senior Manager in 2006. Riza supported Luz initiative introduced at CLMC. No other local in building up the consulting practice and in accounting firm probably has a similar practice establishing the norms within the group in the early then. The reaction when it was initially introduced months. Imelda, a more experienced consultant, was astonishment. Surely, certified professionals joined the group as Manager after CLMC’s DTT did not expect to be “again examined and tested” appointment in 1999. She handled the Business at work. They were done with the licensure exams Process Outsourcing unit (BPO) and the Financial and testing in school. Nevertheless they had to Advisory Services engagements (FAS). She undergo exams which became part of the CLMC eventually became a Partner in 2005. culture. The practice was initiated during the time In early 2002, a senior resource, Cecilio Amoranto when local accounting standards were being widely (a recent retiree at that time from the local amended in response to international pressures franchise holder of the leading international resulting from the widely-publicized scandals in the food chain, and before that, a retiree from a large accounting industry in 2001. The local Standards multinational information technology company), Council started adopting internationally accepted joined the group. He was an asset particularly in accounting and auditing standards. Because of the handling financial advisory engagements, thus many changes, accounting professionals needed to reinforcing the group’s credibility and leadership. be updated with the revisions and with the newly He was elevated and admitted into the partnership adopted standards. Thus, technical exams were as Partner towards September of 2002. implemented to ensure that CLMC’s professionals were keeping abreast with the rapidly changing

64 Part TWO Two other resources joined Luz in 2003 to move the to survive, the Consulting group was perhaps the group forward to a stronger position. These were most “neglected” of the service lines, not being Luisito Amper, who was with Deloitte Consulting directly connected with the more dominant Audit when it had its office in the Philippines, and Shefali service line. The group had to survive on its own Raina, an Indian national who provided her and had to carve its own strategies and future expertise as a Consultant particularly on financial almost unattended by the firm’s core management. advisory and corporate strategy engagements, and The group, however, saw opportunities to gain who supported Luz in carving out strategies for the important clients and expand its business. In fact, consulting group. Luisito initially joined as Manager opportunities abound which were considered quite to take care of the growing Enterprise Risk Services lucrative. The challenge, from the start, was to unit (ERS) and eventually became a Partner by build the capability to service engagements and to the middle of 2005 to lead that unit. With these find opportunities for potential markets. additions to the team, Luz had this to say: The group nevertheless had been able to develop its own successful strategies from year-to-year. “The team’s power cast is now complete. The In its early years, the two partners in the group, three service line units (FAS, ERS and BPO) Luz Bernardo and Cecilio Amoranto, defined making up the Consulting Group, are like legs the targets for the coming year. This was done, of a tripod, each providing the stability for the in consultation with Conchita and Manuel, as entire group to stand on.” Chairperson and as Managing Partner, respectively. Having just two partners in the group, the Norming for the group encompassed several areas: leaders were conscious about using leverage in strategy and direction-setting, staff assignments, management. This meant, encouraging the sense staff learning, and quality management. of initiative and ownership of the group’s direction and future from the lower ranks. The partners Setting Directions had always involved the managers in the annual planning session, where issues faced by the group The group was initially known by the traditional were identified, and strategies for the coming year name of “Management Services” when CLMC was defined as a collective unit. Thus, certain ideas for initially established. Upon CLMC’s appointment initiatives were proposed and outlined, not by the as a DTT member firm, DTT’s nomenclature partners, but by the managers. The motion caught of “Management Solutions,” which was used to on among the lower levels as they started to get describe the consulting services within DTT’s involved and to participate in the group’s various audit practice, was adopted. In 2004, DTT decided initiatives. In one of the group’s regular “bull” to keep its consulting practice worldwide and sessions, it became apparent that the staff desired to consolidate its consulting services practice to more than just being executors or participants of include Management Solutions, Human Capital, task forces. They wanted to become part of the and Consulting services. This was in contrast to the “brains” of these initiatives in setting the directions other Big Four’s move to divest themselves of their for the group. Thus, the planning process consulting practice. CLMC subsequently followed became participative. This certainly facilitated the in adopting the name “Consulting” services to implementation and the execution of the group’s encompass its non-audit and non-tax services. plans. Considered necessary as part of the firm’s product offerings but not necessarily needed for the firm

Chapter 4 THE NORMING PROCESS 65 Clamor for Specialization offered everything and every kind of consulting The group initially focused on business consultancy service to its clients. The in-house ability to deliver and business process outsourcing engagements specialized services was of secondary concern (bookkeeping/accounting services for clients), because resources and specialists from outside growing to about 45-50 in manpower when the the firm could anyway be tapped when needed, FPCI and CLMC organizations were combined and indeed, the group obtained support from in 1999 upon DTT’s appointment of CLMC as its outside experts. The foremost goal was to win an Philippine partner. However, during that time, engagement, which would give an opportunity to since the Audit group needed the critical mass and develop the group’s capability and credentials. If more experienced staff to service the rapid influx the client needed a financial consultant, it was of DTT audit accounts, most of the Consulting expected that the staff should be able to offer group’s professionals were absorbed by the Audit financial advice, even on a general basis and to group, including Diane Yap who was sent to discharge it fairly competently. If the client’s needs Deloitte’s San Francisco office as a participant to the involved an internal controls assessment, it was Global Development Program. Thus, at one point, also expected that the same staff should be able to consulting projects particularly BPO engagements, handle the case. Likewise, if a big engagement in had no permanent staff and were manned by BPO or an engagement in Financial Due Diligence “borrowed staff ” from the Audit group. The BPO came along, the same professionals had been service line suddenly found itself needing to hire deployed to these assignments. The consultants, and re-train new people. The initial strategy was to therefore, were encouraged to be flexible and use BPO as a training ground for would-be audit multi-tasking. This enabled the Consulting group, professionals. The initial training and discipline at the stage of its growing practice, to respond to provided by working in an accounting/bookkeeping most of the client requirements thereby gaining for environment became useful to the staff as they it the well-needed credentials and qualifications. became auditors. But the practice was met with Fortunately, there were major clients who were some ambivalence. While some of the would- willing to “try out” the group’s services and they be staff auditors and borrowed auditors felt that eventually and literally “grew” with the group. it provided them with the right training ground As the expertise developed, client requirements and a different perspective of the practice, others, also had gotten more complex. And as the practice however, found the work “demeaning” because matured, the group saw the need to revisit its they perceived bookkeepers or accountants to be of strategy and to focus on core areas where it had “lesser stature” than auditors. Consequently, there developed core competence over the years. It also were staff members who avoided being assigned wanted to develop only products or services of to such BPO or bookkeeping engagements. Faced higher value and potential. Formal lines were with these challenges, the group diverted from its drawn among the group’s major service lines, i.e., earlier staffing strategy and evolved to have its own enterprise risk services, financial advisory services, dedicated resources. and business process outsourcing. The assignments During the growth years, staff members in the of staff and most managers were clearly delineated. Consulting group were more general practitioners Each service line was made to develop its own than specialists in certain disciplines. They were strategies and be responsible for winning clients, encouraged to be so since the group at that time staff development and performance management.

66 Part TWO Enhancing Quality for learning. And then, in related “Technical Not having a ready-made strategy for staff Sessions,” someone was assigned to present an development and quality assurance, the group had industry report. There were ideas-sharing and to literally start “from scratch.” Training in the discussions on ways to improve the practice, obtain beginning was usually on-the-job and quality was clients, improve service delivery, and assess the assured through the close supervision of managers status of initiatives. Getting such regular updates on-site. The practice worked when the group was encouraged people to be more involved and to small but posed challenges in standardizing quality participate. Coordinating these sessions were and staff development when the group grew and shared by the group’s members. Responsibility for increased its manpower and clientele. organizing activities for a particular session was More regular and more formalized learning rotated among the staff. activities were eventually conducted, which were Likewise, the responsibility of running the daily mostly developed internally as there were no business news excerpts and business update, in ready-made curriculum and training modules the “Daily Biz Bits” was also rotated amongst the for the consulting service lines. For example, the staff. While organizing the articles and e-mailing ERS unit developed its own training modules and these may be routine, the practice hoped to achieve named the program, “learn@ERS.” Learn@ERS another goal: that of encouraging staff to read was regularly conducted and enhanced on a yearly business news and articles. In so doing, they got to basis. Likewise, the other service units, FAS and develop research skills and understand economic BPO, developed their own learning programs and updates and industry studies useful to business regularly conducted these based on their specific consultants. requirements. Practice development activities were shared by The QUALITY Initiative everyone. These were assignments and tasks that If the Audit group had its technical exams, the may not be directly related to client servicing but Consulting group also came up with its own contributed to developing the group’s capabilities, staff assessment initiative, which was called the client base and practices. Such activities included QUALITY! (Quality Upgrading and Learning learning curriculum development, learning Initiative – Test Yourself!). The initiative was implementation, setting quality guidelines, intended to challenge the staff to keep themselves knowledge-sharing, marketing, client-base up-to-date in their skill sets and to encourage development, publications, and other initiatives. self-development, i.e., encourage Consulting Each one had a role to play whether as coordinator, professionals to enhance their familiarity in key as learning champion, or as member of task forces. competency areas as well as to ensure a minimum Some examples of such responsibilities were standard for the group. the monthly consulting sessions and the group’s The tests were administered to assess the general publication, “Daily Biz Bits.” The group strived knowledge and over-all familiarity of the staff in to meet on a regular basis to update everyone on areas identified as key competencies. These were: developments and status of initiatives. The group (a) knowledge about Deloitte, CLMC and the held monthly “Consulting Sessions” (formerly Consulting group, their initiatives and knowledge “Solutions Sessions”) which served as a venue sharing websites, (b) basic business awareness, (c) English language, and (d) an elective which

Chapter 4 THE NORMING PROCESS 67 is the staff ’s area of specialization (ERS-Controls law firm lasted for about two years, after which Assurance, ERS-Internal Audit, BPO, or FAS). a less formal, more project-based arrangement The initiative was initially launched in 2004 and followed. This was to fill the void and to give was well-received by the staff. Thereafter, it was some breathing space for internal capacity to be conducted at least once every year and became part stimulated and rebuilt. Conchita, who was then of the life of the Consulting group at CLMC. As Managing Partner, spent considerable amount of the group expanded its client base, its manpower, time supporting the Tax group, oftentimes doubling and service capabilities, the group also had set as a tax adviser particularly for the most important guidelines in client servicing, from accepting clients and most difficult engagements. and client engagements to setting quality standards The group, in no time, was able to regain its for deliverables and service delivery. bearing and to replenish the needed resources. The As the service line evolved and standardized its biggest challenge was to re-build the practice as a practices, more opportunities came along towards stand-alone revenue generating unit rendering tax further improvement. The consultants were sent to advisory services. It was in the second half of 2000, various training programs, both here and abroad, that Manuel hired Luis Manabat, a CPA-lawyer. to learn new skills and the use of DTT tools, and to Conchita was at first reluctant in allowing this absorb best practices in other Deloitte offices. move, Luis being the son of her second cousin. But she was prevailed upon by the other partners in the Evolution of Tax Group decision, considering the needs of the practice and The Tax group encountered a very early challenge Luis’ potential contribution to the group. with the exit of the Leynes group in 2000. The The next challenge was reinforcing the manpower group found itself with only five people: a Partner, which meant hiring, training and developing Ophelia Jimenez; a Senior Assistant, Ana Liza more tax practitioners. One of the more favorable Tan; and three junior staff members. The group opportunities that arose out of the merger attempts immediately had to re-build itself. It was during in 2002 was that, in the confusion that ensued, this time that Manuel urged his friend, Luis the firm was able to attract two migrating tax Manabat, a tax practitioner to join the practice managers from the former EY firm that nearly as a Manager to support Ophelia in managing merged with the former AA firm. These were the tax group. The early years were tough as the Fredieric Landicho and Richard Lapres, who both group struggled to build capability and to establish later on became tax partners in the firm (Fredieric standard procedures. Initially a predominant in 2005 and Richard in 2007). Originally, Fredieric support group to the Audit practice, the Tax group and Richard were part of a group of about fifteen had to respond to the standards and requirements migrating audit and tax managers who approached of its internal clients: Audit group and its audit CLMC to negotiate to be hired en masse when clients. To boost the practice at the start, CLMC the “threat” of a merger between the former EY signed a Memorandum of Understanding in firm and the former AA firm was becoming March 2000 with a mid-sized law firm for alliance imminent. After a few months and failed merger in rendering professional legal services. Other talks, Fredieric and Richard applied in CLMC, on alliances were eventually formed with other law their own, and were successfully hired, further firms to support the group. The alliance with the strengthening the tax practice.

68 Part TWO Deloitte Asia Pacific Country Leaders Meeting with Deloitte Global CEO Bill Parrett (fourth from left) As the Tax group expanded and gained critical To ensure that the group was always updated on mass, it developed a formal planning and the new issuances of different government agencies, strategizing process giving ideas to possible it conducted regular monthly training programs new product lines and creating new areas for its staff to discuss the issuances of the Bureau of specialization, such as the International of Internal Revenue, Securities and Exchange Assignment Services (assistance services to Commission and the local government. This multinational expatriates), corporate services, tax activity was normally led by a manager and assisted due diligence, and tax compliance audit. The Tax by a senior and junior staff. The presentation group, in due time, was able to move away from its rotated within the whole group to give everybody early role as a mere “support group” to the Audit a chance to enhance and improve one’s research group, and developed into a stand-alone, self- and presentation skills. To provide international supporting practice focusing on higher-margin and exposure, the staff, more particularly the managers, more specialized engagements. These included tax were sent overseas to attend Deloitte seminars and consultancy, mergers and acquisitions, tax planning programs. and similar engagements. The group also explored The Quality Policy that Matters other niche services in the local market, such as The affiliation of CLMC with DTT in June 1999 conducting tax seminars and forums for audit and brought into the organization a high standard non-audit clients. of quality policy. While “BEING BEST/DOING As the practice grew and honed its processes, the BEST” was already in the mindset of the staff, the group developed further guidelines in interfacing DTT quality policy became paramount as it was with the Audit group such as protocols for not only at the level of personal performance, answering inquiries from auditors and audit clients, but was also now institutionalized. As a leading standard procedures for processing reviews, and fee global partner, DTT infused in the normative life sharing in servicing audit clients. In addition, the of CLMC the standards of excellence, as well as its Tax group initiated and developed its own formal processes and approaches that enabled them and training programs for its staff. their clients to excel in business and service. Like the Consulting group, the Tax group had a In October 2005, Bill Parrett, CEO of DTT, monthly publication, the “Tax Bits,” which was provided two answers4 to the question of: “What circulated not only within the firm but was also distributed electronically to clients and friends of 4 Bill Parrett, DTT CEO, “The World of Deloitte” Message from Office CLMC. of the CEO, 14 October 2005

Chapter 4 THE NORMING PROCESS 69 is the value that the people of DTT member firms CLMC to focus on things that “ought to be” as the deliver?” firm moved towards fulfilling its life purpose, and its vision-mission. “1)...the ability of member firm partners and As a result, the following were agreed statements colleagues to look beyond their own markets and that would encapsulate the CLMC Corporate forge extraordinary connections among different Principles: talents, cultures and people. When this happens, service excellence is delivered and sustainability On Opportunities: becomes possible for DTT member firms, their o We complement and influence one another to clients and the markets and communities in which all of us live and work; and 2)…it makes excel. me proud that you continue to perform with o We must develop our own abilities to recognize integrity and quality. When someone attempts to infer otherwise, you can count on Deloitte firm opportunities to our firm’s advantages. leaders to speak out as I did in a recent letter o We take every opportunity as a learning to the editor of the Financial Times. Yours is a terrific story, and one that I am always proud experience. to tell as often as I can wherever I go. New or o We see a positive outcome from every difficult experienced, partner or colleague, you are the key to Deloitte firms delivering excellence and situation. being recognized as truly the best – an admired o We do the best we can in everything we do and business.” have the grace to accept whatever the outcome. This being the thrust of DTT at the international level, it was imperative for CLMC to be aligned On People: with the global partners. It was essential too for o We treat people with fairness and due respect. CLMC, to fulfill its life purpose and to realize its o As professionals, we take responsibility for our vision and mission. Thus, CLMC had established the following strategy as part of the requirements to thoughts, words, and deeds. fulfill quality service. o While we act as one in the organization, we Our Corporate Principles recognize that individuals make choices in their lives. Once the organization had found its workable o Knowing our client’s business, we provide patterns of quality and quality performance, the value-added services that aim to better and process of maintaining and sustaining standards even exceed their expectations. of excellence required a set of corporate principles o We challenge people to excel beyond as templates for organizational function. During expectations. a management planning meeting in mid-2000, o We value relationships and care for the the partners formulated the CLMC5 Corporate advancement of our clients and staff. Principles as functional guidelines to corporate “norming.” In this session, the facilitator challenged 5 Staff Bits, Vol. 1 No. 3, September 2000 p. 2.

70 Part TWO On Processes: dynamic and dialectic forces of CLMC “alive and o Policies, standards, rules, and regulations are kicking.” Perhaps due to CLMC’s youth, there had always there to make us move towards one direction. been an openness to change across CLMC. The o Processes are best kept simple and firm had always been willing to embrace new ways of doing things. Even if changing was painful, understandable. CLMC adapted to the demands of the times and o Proper planning facilitates desired results. the requirements of its strategic partner, DTT, o Things can always be done better and/or its clients, and its people. While everyone did not always agree at every turn and a number of differently, and at the same time get the desired initiatives had been challenged, questioned, and results. resisted, the overriding principle subscribed to what was good for the majority and for the firm. On the Practice: Each new initiative was an attempt at improvement. o We are committed to excellence. If changing will make the firm better, then it was o We have as our guideposts: excellence, favorably accepted. The success of any change initiative at CLMC was efficiency, effectiveness, and innovation. influenced by several factors. Buy-in from the top o We learn and function as a team in order to provided the political will and political support for those championing the initiatives to make it succeed. happen. Buy-in from the champions rested in the o We are committed to be an “Employer of belief of implementers in the success and rationale of an initiative overcoming the challenges. It had Choice.” always been CLMC’s experience that after the initial o We hold integrity as our middle name. hurdle, people were still enthusiastic to take on the At the norming stage, these principles were needed initiative further, to undertake improvements and to serve as guidelines for individual and corporate to nurture what has been started. functioning. Sometimes the needs of clients, the needs of the people and the needs of the practice would Reflections and Insights converge at the same time, providing the impetus The advocacy for “seamless” delivery of and for change as was the case of the Consulting adherence to “quality standards” of services was a group. As the needs of clients were getting more priority in the minds of CLMC leadership. This was complex, the practice needed to develop expertise in conformity to the requirements of the norming and to respond to more high value engagements stage. But as new hires came in big numbers while the staff also felt the need for a more focused between 2001 and 2002, flexibility in doing development. In such circumstances, buy-in and business and revisiting policies and procedures cooperation from people have not been difficult to were a constant challenge. Growing and norming achieve. The only challenge was perhaps having the processes are never static as CLMC’s experience vision to perceive such a convergence and of seizing showed, as both processes required of leadership the opportunities when they happen. the challenge of keeping the balance of consistency and creativity, efficiency and effectiveness, predictability and innovation. And these kept the

71 Chapter 5 THE LINKING AND “Growth, change, and ultimately evolution LEVERAGING PROCESS occur as individuals, “Doing More with Less” Organizations, and society increase the depth of their Relationships by continually broadening and strengthening Their interdependent connections.” - Beth Jarman & George Land The image used to describe CLMC in Chapter Lewin and Regine7 studied such as Muhlenberg 3 was that of an organism in the “ecosystems Medical Center in Plainfield, New Jersey; St. Luke’s of organizations.” And like the way Lewin Industry in London, UK; Dupont of Charleston, and Regine6 viewed the organizations they West Va.; and Veriform in Greenwich Village, studied, CLMC could also be seen as one among NY. Valuing and building on strong relationships “companies enmeshed in business ecosystems.” that CLMC demonstrated were in consonance What did the CLMC leadership have in their with the research conducted by Lewin and Regine advocacy for business leaders and managers to as reported in “The Soul at Work” in 1999. Their be more equipped in shaping the future of their findings showed that “relationships are the new company? How were they to learn to understand, bottom line in business.” How did CLMC adhere to appreciate, and internalize ecosystems and their these principles and how was it guided by this belief dynamic evolutions in order to lead and manage system on relationships? change effectively? What were the underlying Since its inception, CLMC was keen on “daring themes in the thinking processes of the CLMC to care” for relationships. Conchita, as a matter of leadership and management in steering the firm to policy or lifestyle, would always come up with this such a phenomenal growth? statement, “We are in a relationship business more Connectivity than just an auditing/consulting business.” Such Right at the beginning, CLMC emerged out of the perspective defined the way CLMC dealt with the core belief that relationships matter and building staff, clients, regulators, and other colleagues in the on those relationships would be a strategic profession. leverage to the future. This same value system When partners and staff were asked what is was demonstrated and affirmed by companies that distinctive about being and working in CLMC, 6 Roger Lewin and Birute Regine, Weaving Complexity & Business: 7 Roger Lewin and Birute Regine, The Soul at Work: Unleashing the Engaging the Soul at Work (New York: Texere LLC.Business, 2001). Power of Complexity, Science for Business Success (London; Orion Business Books, 1999).

72 Part TWO Partners with Birthday Celebrants invariably the response was “we feel we are were ongoing, CLMC’s partners were meeting with valued here and we appreciate the personal and managers and staff to inform them of developments professional relationship.” Such sentiments and the likely impact of certain courses of action. by the staff were mirrored in the feedback on Managers were asked, individually, about their regularly held team-building, annual planning and thoughts on CLMC’s merging with another firm. leadership sessions, and similar activities. Likewise, they were asked, that if CLMC were to Relationships at CLMC had been nurtured through proceed with the merger, what were their concerns activities such as quarterly general assemblies, and their suggestions on important matters the breakfasts with partners to welcome newly hired partners should consider in the negotiations. staff, and celebrations of birthdays, anniversaries, The partners were in some ways guided by Christmas and even sports events, meetings, or the responses and inputs gathered from these regular sessions with managers and staff. All discussions and consultations. Even though the these were aimed at facilitating open dialogue and mergers did not take place, the managers and staff feedback as well as promoting camaraderie and were assured that their views would be considered bonding among partners and staff. by the partners in matters that would affect them. One basic principle adhered to by the partners was Perhaps another good example of the strength and “commitment to our people.” In most company bonding developed in CLMC throughout the years decisions, the staff ’s welfare always came first. was that the partners, managers, and staff prayed A guiding principle that the partners applied collectively at the beginning of staff gatherings and when making decisions was “what’s good for our important events. people.” Conchita and her partners had always Other initiatives that encouraged bonding and been conscious of their “moral responsibility” culture building among the people of CLMC to the staff. In some cases, particularly in major included the following events/programs: events affecting the firm, the employees were made part of the decision-making process, and had been Star of the Season privy to sensitive matters and developments. One The need for affirmation and acknowledgement such example was when the firm was separately is basic to the life and growth of persons and of approached by two large accounting firms in 2002 organizations. When this need is recognized and for a possible merger. As talks and negotiations rewarded, it is like “doing more with less.” A small

Chapter 5 THE LINKING AND LEVERAGING PROCESS 73 token of appreciation and recognition can animate Merienda with the Chairperson and inspire people to excel. For the Cebu office, Conchita had made a desire to During the early years as a DTT member firm, visit and chat with the Cebu staff on a regular basis, CLMC was faced with the enormous challenges at least once every quarter. Such meetings were of transition as a major international service firm. held in special coffee breaks where matters from The pressures of serving global clients and adopting client issues to salaries and administrative requests new systems and practices placed evident strain were discussed. on the people in the organization. To take their General Assembly minds away from these challenges and promote A General Assembly was held quarterly on harmonious relationships, management decided to corporate matters that require communication for launch a program that would boost the morale of information as well as for exchange and dialogue. the staff, promote camaraderie, a positive attitude, This was the occasion when announcements were and outlook despite the pressures that the busy made for the “good news” and the “bad news,” the audit and tax season brings. The guidelines at the “opportunities” and the “challenges”, new wins, start were very simple. Its aim was to take away the new assets, promotions, special events, arrivals and staff ’s mind from the little irritants that accompany departures, presentations and sharing, inspirational the pressures at work and see the bigger picture. messages from management, featured staff, and Although it seemed at first to be a popularity contest, many other points of interest for everyone and the the objective was more serious and the results were company. This was followed by updates on “Staff successful in giving the staff something to look Bits,” the monthly newsletter of the firm done on forward to and be happy about. This activity was the print until Year 2004, and thereafter via email. “Star of the Season” program, launched in 2001. Enrichment Programs In July 2001, the firm launched a three-component Breakfast with Partners / Cocktails with Partners staff enrichment program, facilitated by professors and instructors from the University of the The importance of connectivity to the human spirit of Philippines. Its purpose was “to enrich the every staff with partners corporate person’s knowledge with languages CLMC also held special sessions and special to broaden communicative abilities, with art treats for birthday celebrants where they were appreciation to enhance creative nature, and on given special tokens of appreciation. The monthly Filipino culture to increase awareness of social breakfast to honor the celebrants for the month was responsibilities and pride in origin.” Classes held in different venues at first, but to simplify the on three languages, Japanese, Mandarin, and arrangement, it eventually became in-house where English, were conducted for several weeks aimed there would be more freedom and space to include at enhancing the professionals’ communications interesting activities to the occasion. With the skills. The Japanese and Mandarin languages increasing number of staff complement, the activity were popular choices due to the emerging growth had been re-conceptualized and called “Cocktails in Japanese and Chinese clients. The program with Partners.” The quarterly program, organized included sessions on art appreciation, Filipino by departments, was a social function to encourage culture and values, music, ethno linguistic groups, informal interaction with partners in a cocktail setting.

74 Part TWO and urban culture. These activities promoted social and purposive effort to have its presence felt in the awareness and appreciation of the “finer things in academe and in the business circles was pursued. life.” The staff enjoyed and recognized the value of the program in adding to their personal knowledge o CLMC regularly sponsored tax seminars for and in improving their interaction with clients. clients and friends. This was usually done once every quarter and was aimed at updating and Such enrichment program was followed by several familiarizing clients on new developments in others through the years such as in-house English the tax and revenue reporting front. Expert language programs facilitated by professors speakers were invited to support in-house from top universities. Firm scholarships and expertise. sponsorships were awarded to deserving employees who were sent for training to English schools such o CLMC sponsored and conducted seminars as the Berlitz School for Languages. This greatly at the Securities and Exchange Commission. enhanced the skills of the professionals in business One such seminar was the Sarbanes-Oxley Act and report writing and increased their confidence Seminar on July 2, 2003, attended by the SEC in public speaking. The firm also undertook Commissioner, directors and officials. Loretta image enhancement programs for its partners and J. Ayers, the DTT Regional Partner for Asia staff. Managers and seniors were sent to the Dale Pacific on the audit of a leading multinational Carnegie School and Partners to the John Robert consumer products company, very competently Powers program for executives. shared her expertise on the topic with focus on some key provisions of the Act. This was While relationship was being built and nurtured repeated at Dusit Hotel with CLMC clients on within the organization, the CLMC partners and July 22, 2003, and again, in Cebu, for the Cebu professional staff made conscious effort to become clients on September 19, 2003. members of various professional organizations OX and associations that would cultivate networking o CLMC sponsored a seminar on International o be and social marketing. Partners strived to be part Accounting Standards on May 8, 2002, a of professional and socio-civic organizations and public seminar where Dr. Paul Pacter, the professional standards-setting bodies. To the Director of Technical Department in DTT- leadership, a firm’s credibility can be seen when its Hong Kong, was the resource person. This leaders and professionals are involved and engaged was one of a series of seminars conducted and in various aspects of professional, community and/ sponsored by the firm to inform the public on or public life. new developments in accounting standards, particularly during the period when everyone was transitioning to International Accounting Visibility Standards (IAS) and when so many changes were taking place in the accounting landscape.8 One concomitant impact of such connectivity was the firm’s presence in the community and in the industry. To pursue the vision of “to be recognized o CLMC often held career talks in major schools as the Employer of Choice”, CLMC made itself and universities, and one such event, for present or “visible” in various sectors. A conscious example, was when Manuel Faustino gave a 8 Staff Bits, June 2002, Vol. 3, No. 3

Chapter 5 THE LINKING AND LEVERAGING PROCESS 75 career talk at the Industry Orientation Seminar o CLMC participated in surveys of best at the College of Business Administration and employers in Asia, and one such survey was School of Economics of UP on August 16, conducted by Hewitt Associates in partnership 2000.9 with The Asian Wall Street Journal and the o CLMC presented, as part of a continuing Far Eastern Economic Review where 355 program, Gold Medal Awards for Accounting companies participated across 10 locations in Excellence to top graduates of universities like Asia – China, Hong Kong, Indonesia, Japan, De La Salle University and St. Scholastica’s Korea, Malaysia, Philippines, Singapore, College. One occasion was when CLMC was Taiwan, and Thailand. CLMC was one of 42 chosen by De La Salle University to present companies in the country that participated in the CLMC Gold Medal Award for Accounting this survey.13 Excellence to Jonathan D. Quiamzon, a graduating student (A.B. Philosophy and CEO Forum B.S.C. Accounting, cum laude). The award was handed by Manuel during the College of In early 2003, CLMC sponsored an Economics Business Administration’s Meeting with the Forum for Chief Executive Officers. This was a Dean on January 31, 2001.10 venue for an intimate discussion on the state of the o CLMC participated in University Job Fairs Philippine economy. CEOs from CLMC’s major in different colleges and universities usually clients were invited and actively participated in the during the months of February to March forum which was moderated by TV news anchor, each year. Such efforts peaked in 2001 when Yvette Novenario. Former Finance Undersecretary, the firm started to be sought as a major Romeo Bernardo, was the resource speaker and participant in career promotion activities. The his presentation generated a lively reaction and firm, since then, had regularly participated discussion from among the CEOs on the current in such activities held by major colleges and state of the Philippine economy, the challenges they universities including De La Salle University, face in doing business, and their take on how the St. Paul College, University of the Philippines, economy could be further improved. University of Santo Tomas, St. Scholastica’s College, and San Beda College.11 In one unique CEO/CFO Survey event, St. Scholastica’s College staged a “Mock Interview” event on January 29, 2001 where From a News Release of November, 2003 was the CLMC HR Assistant Mary Lao interviewed following report: graduating accounting students to prepare them for their future job interviews. CLMC was “KEY business leaders of the country are the only accounting firm present in the event.12 optimistic about the economic prospects for the next three years, and expect their companies will 9 Staff Bits, September 2000, Vol 1. No. 3 earn more next year than this year. 10 Ibid 11 Staff Bits, April 2001, Vol. 2., No. 2 These were among the results of a business 12 Staff Bits, February 2001, Vol. 1 No. 5 perception survey performed by professional services firm C.L. Manabat & Co. (CLMC), the Philippine member firm of DTT, a statement said. 13 Staff Bits, December 2001, Vol. 2, No. 6

76 Part TWO In an economic outlook breakfast forum held discussion that followed, Conchita, the chairperson last Nov. 19 in Makati City, CLMC said most at the time of the International Association of of the 70 business leader respondents of the Financial Executives (its first woman chairperson in survey conducted last September said they 35 years), led the exchange and interaction. There were “cautiously and decidedly optimistic” that was no better venue or forum where one could Philippine economic performance will be much best be visible and respected among peers than at better over the next three years. “ this occasion.14 This visibility gained for CLMC the credibility and stature among its colleagues in the In September of 2003, CLMC undertook a study profession and business. on how business executives, particularly the Chief The project garnered significant media coverage for Executive Officers and Chief Finance Officers of CLMC with a television interview for Conchita, a large companies, viewed the Philippine economy. video coverage in several TV networks, and a print A team of professionals from the Consulting and coverage in major business dailies. Audit groups of the firm, with the assistance of a Besides organizing and sponsoring public sessions University of the Philippines economics professor, on critical issues for client and public interest, Dr. Carlos Bautista, worked on the study. The CLMC’s Chair and partners had done speaking group’s thesis was that the Philippines was not in as engagements in various gatherings and conventions bad a situation as some naysayers and doomsayers on topics related to the profession and on topics of the time would have people believe. This was of interest to business. Conchita, in particular, proven by the respondents’ affirmation of a very had written regularly in business columns of positive outlook on the Philippine economy at the major dailies where insights and reflections were time. articulated and shared on issues, challenges, and directions of the finance and accountancy The initiative culminated with the presentation of profession. Manuel, on the other hand, gave talks the results by Luz Bernardo and Shefali Raina in or participated in discussions on current business a firm-sponsored public event on November 19, issues and concerns in various conventions such 2003, attended by business executives and the who’s as on topics of corporate governance and on issues who in government, trade and business. In the facing the accounting industry. Institutionality The concept of being an “institution” implies that the product or the service or even an organization itself has a name that has become a byword or byline in every household or community. This means it has surpassed the product or generation lifecycle and has survived the test of time. The work of Jim Collins and Jerry Porras15 on “Built 14 Philippine Star, January 19, 2005. 15 Jim Collins and Jerry Porras Built to Last (London: Random House, 1994).

Chapter 5 THE LINKING AND LEVERAGING PROCESS 77 to Last,” has distinguished organizations that of visionary companies studied by Collins and have survived the test of time which he called Porras17 such as 3M, American Express, Boeing, “visionary companies” or “premier institutions.” Citicorp, Ford, General Electric, Hewlett-Packard, Organizations that exhibit qualities or attributes IBM, Johnson & Johnson, Marriott, Merck, in “being and doing” that stand the test of time Motorola, Nordstrom, Philip Morris, Procter & are “institutions.” When an organization becomes Gamble, Sony, Wal-Mart, and Walt Disney, all have more than just an instrumentality to achieve strong, visionary, and unwavering leaders at the goals and objectives, but more importantly, has helm to take the lead and make these companies evolved and developed around core values to which “institutions.” people in the organization are committed, it can What was evident in CLMC at the beginning be inferred that the process of institutionalization and persistently felt throughout the stages of has begun. Has CLMC become an institution? growth that made it a phenomenon? Was being W. Richard Scott in his work on “Institutions and a “phenomenon” in its growth an indicator that Organizations” (1995:18-19)16 described this process CLMC had indeed become the emerging and one succinctly: of the leading firms in the country? One thing very evident in studying the unfolding processes of “As organizations become infused with value, CLMC was the strong leadership of the visionary/ they are no longer regarded as expendable tools; strategist founder/lady partner of CLMC. The they develop a concern for self-maintenance. professional staff and those who worked with By making a distinctive set of values, the her recognized with no unwavering certainty organization acquires a character structure, an that her professional leadership, competence, identity. Maintaining the organization is no fortitude, and character had been the key features longer simply an instrumental matter of survival of her success in leading CLMC to this level of but becomes a struggle to preserve a set of unique recognition and position. Her connectivity with values. A vital role of leadership is to define and people and institutions, her effort to make visible defend these values.” the work of CLMC as well as on the advocacy of professionalism, accountability, and social However, young at 10 years in 2007, did CLMC responsibility in and outside the organization have the leveraging feature of “institutionality”? and even in the international circles of influence, While the test of time has become the critical were indicators of such leveraging factors towards measure for a company to become an institution, institutionality. had this already been palpable or at least, A most important question to ask is: Was the unfolding, in the early dynamics of growth of leadership capability shared and disseminated at all CLMC, as it moved consciously or unconsciously levels of the firm? For a young and promising firm, towards becoming an “institution”? this continues to be a work in progress. The time it takes to develop strong, dynamic professionals One of the key factors that make an organization an equipped with leadership capabilities and capacities institution is leadership. Organizations that endure goes beyond a ten-year cycle. Certainly, this through the threats and tests of time, trials and triumphs, have always had strong leaders. Stories 16 W. Richard Scott, Institutions and Organizations (London: Sage 17 Collins and Porras, Built to Last (London: Random House, 1994). Publications, 1995).

78 Part TWO thought was in the mind of the founding partners/ Reflections and Insights leaders and the newly-promoted partners. In an The concept of “leveraging” is one drawn from interview, one newly promoted partner expressed the “Strategy of the Dolphin” by Dudley Lynch that leadership is the main factor that would tip and Paul Kordis. The authors argued that one of the balance to whether or not the future is bright the skills dolphins demonstrate when they think/ and great. This was the underlying theme of an perform breakthroughs is that of “leveraging.” This Executive Session held in June 2, 2005 on the means identifying those small steps. For “dolphin theme “PASSAGE and TRANSITION – Thinking thinkers” that make a difference, this means through CLMC’s Journey in Transformation.” inexpensive and time-saving small steps, but with Among the critical issues and concerns that foreseeable wide and great impact in the short and surfaced were: 1) Readiness for Change, 2) People long term. Retention, 3) Capability Building for Sustainability, The CLMC leadership of the firm did well to 4) Commitment to Purpose and Change, and 5) identify these leveraging opportunities. Priorities Transition Leadership and Succession Planning. identified, either through surveys or group These concerns were discussed and deliberated discussions, as major and medium concerns, as upon as basis for determining strategies to plan well as strengths, would be good indicators of such for change and transitions. It can be said that the opportunities. Decoding this feedback would be founding partners/leaders and the new generation the cues and advice that would need immediate of partners/leaders were painfully aware of the cost attention to propel the growth, change, and of change and transition. They further believed that transformation of the firm into the future. thinking through these issues can at least ease the trauma of transition.

79 Chapter 6 THE CONVERGING “If we believe in the rebirth of our civilization… PROCESS Then clearly this renaissance must begin in the Chambers of our own hearts…. We cannot wait Focus to Grow and Expand For society to change, or for our institutions and Organizations to be renewed. We, as individuals, - Must assume responsibility for our own personal Transformation. Georg Feuerstein, 1990 The following message came from then Managing In June 1, 2000, C.L. Manabat & Co. celebrated its Partner, Conchita, in the June 2000 issue of “Staff first anniversary as the Philippine member firm Bits.” of DTT. It was a moment to celebrate, a year to mark a significant milestone at the start of the “Greetings to all! Never have I seen millennium. A thanksgiving Mass was celebrated such accomplishments from a young and a “report card” was presented by Dr. Conchita accounting firm such as ours. Expecting L. Manabat, the Founder of the firm, enumerating to only get clients that are crossovers the firm’s major accomplishments: from the old Deloitte firm, we also had o The winning of several multinational accounts. unexpected but very significant wins o Introduction of the newest assets: Melanie this year. We achieved this because we stayed together and supported each Navarro, new HR Manager; Mary Lao, HR other, creating a cohesive and formidable Assistant; Luis Gerardo Manabat, Tax Manager; team. All this was accomplished Bernadett Sanchez and Chona Aguilar, the through everyone’s help – the partners GDP “graduates”; and the next batch of GDP and staff, our administrative people, and participants to leave for abroad, Joven Abrillo support from our partners in DTT. and Bonifacio Lumacang. o Announcement of salary increases, to the As our audit group stabilizes and as we jubilation of the staff. continue to provide excellent service o Projected transfer to the new expanded offices to our clients and prove ourselves to be and acquisition of new computers to ensure a the best audit service provider in the 1:1 ratio of computer to staff. country, we can look forward to expand The year that passed was tumultuous and the year our services and enhancing our other ahead was laden with greater challenges of more service lines in Tax and Management Solutions which promises higher growth and returns for the Firm.”

80 Part TWO complex work. The Managing Partner therefore Manuel recalls the experience in getting new enjoined everyone to rally to the call for excellence. accounts: The past year was only the first step in a long journey. And so it was that every anniversary “Deloitte-referred clients were easy to acquire as from 2000 and onwards, it was considered a usually the Philippine subsidiary already has a milestone of every victory celebrated, of every loss mandate from its parent company to take us in a lesson learned, and of every growth an occasion and we would immediately receive instructions for thanksgiving. There was a constant sense of from our counterpart (the Deloitte Global Lead gratitude that permeated and prevailed in the life of Client Service Partner in charge of the parent CLMC for every accomplishment and achievement. company audit) to visit the subsidiary. It was like the founder/partners would draw everyone around to converge at a focal point of We would then introduce ourselves in full force: thought and attitude of thanksgiving “for all that the force usually composed of Conchita, myself, has been and all that would be.” It was a belief a Tax partner, the Partner to be assigned, the system that invoked the deepest sense of gratitude Deloitte Advisory Consultant expat on the even amidst impending threats by such crises as the ground, and at certain times, together with the Enron Case and the Arthur Andersen fallout. In Global Lead Client Service Partner as well, who the light of these challenges, what conditions and would come to Manila for the opportunity to circumstances both in the internal and external meet the subsidiary’s top officials. We would environment predisposed the firm to make major make a PowerPoint presentation of who we changes? What strategies and targets were pursued? are, what we can do for them and why they How did leadership/management handle these should hire Deloitte/CLMC. It was a big challenges so that directions of strengths/potentials challenge at first as we did not have so much were tapped and challenges/limitations addressed? qualification as a firm to speak of in the early Winning New Clients years. But with the show of full force, we were Fortunately for CLMC, having the franchise holder a formidable team. At the start, we capitalized of the leading international fast food chain as an on all our prior experiences in our previous early client for outsourcing as well as anchor audit connections as senior partners of other major and consulting accounts provided the “bread and accounting firms. But once we won the first butter” that would sustain the firm in its early years. round of major clients including the leading It also provided the take-off point to acquire several multinational consumer products company other accounts and expand the client base at a (a top Fortune 500 corporation), followed by manageable pace. However, when CLMC became other huge multinational accounts whose names a DTT firm and the staff complement doubled are topnotch trademarks, it somehow became overnight in June 1, 1999, the drive to gain “new easier to convince new clients that we had wins” became urgent. It was imperative that there the credentials. The roster of clients quickly would be no let-up regarding this pursuit. By 2002, grew and we thus needed the support and the the third year of CLMC as a DTT Firm, the roster resources of DTT. of clients more than tripled.

Chapter 6 THE CONVERGING PROCESS 81 Since our major client acquisitions included Luz recalls her group’s experience: the world’s most impressive and recognizable corporate names, confidence grew not only in “There were similarities as well as dissimilarities ourselves but also in how prospective clients in the Consulting (formerly Management would see us. Of course, the DTT support had Solutions) group’s pursuit of growth. We didn’t always been there. For example, when they have any so-called global consulting clients. The referred to us one of the big three life insurance very few that could be classified similarly are companies in the US, the client was first multi-country engagements that cover a few skeptical as we did not have prior life insurance countries. It would be “manna from heaven” if experience; and since accounting for life the Philippines is included in such engagements. insurance is specialized and requires additional Many times, the global company’s Philippine training, we then sought assistance from DTT. operation would be so small that no consulting We called its New York office and they arranged work would be in need in the country. Thus that an insurance expert from Australia would getting new accounts was significantly more come to provide the needed training to the local difficult. In addition, by its nature, most team. It happened and so we got the first US consulting clients are one-time engagements and based insurance company. From there, it became very few, if any, are recurring. The group has easier to take on another top life insurance to struggle above water every year “literally”, company in the US, and still another one from especially so during the initial years as it strived Canada. to build credentials. As with the Audit group’s experience, potential clients initially looked at We also got support from the Deloitte French us with much skepticism, especially when they practice, when they sent two senior managers consider how young we were as a firm and as serving as consultants, Frederick Mortamais professionals. At certain times, we were able and Patrice Brusciano. This was in connection to convince Ms. Manabat or Mr. Faustino to with our audit of the Philippine subsidiaries of a accompany us in proposal presentations to listed cement-producing conglomerate in France, prospective clients so the client would see some three of which are listed in the Philippine Stock “grey hair”, a great help in contributing to the Exchange. Then there was Lucia Pham (from perception, from a paying client’s perspective, of Canada) and Loretta Ayers (from the US) for wisdom, depth and experience. the leading consumer products multinational company and the resources from South Africa, Imagine someone diving into a lake and learning Karin Zharnack and Gina Faure, to help us with to swim right there and then, that’s how I would a copper smelting company acquired by a major visualize the consulting group’s experience. A Swiss conglomerate .” constant challenge was not having enough resources and talent. This was ironic because our Initial efforts at establishing a foothold in people will not have the experience if they are the market started to pay off. On the fourth not able to obtain it from a client engagement. anniversary celebration as a DTT member Likewise, we could not afford to get “expert” firm, CLMC had almost 300 people servicing resources full-time at the time. But we needed a large section of its clients, the multinational to start somewhere. We had to forge certain corporations. arrangements with “expert” consultants and more importantly, we have to believe in our

82 Part TWO abilities and develop the talent internally. We in the Philippines and Southeast Asia, a Japanese would sometimes approach new engagements information technology company, a leading with much trepidation and a sick feeling in the Japanese international food company, and a local pit of our stomach. However, the few clients that universal bank, to cite a few. had initially tried us were not disappointed. Some even granted us additional work to do. And from the Tax group, Ophelia remembers the Thus we saw the start of building the client base, following experience: our credentials, the confidence in ourselves, and the continued enhancement and addition to our “Initially, with the firm of Atty. Jose C. Leynes resources. joining us, there was not much problem on experience, expertise and resources. The initial In the group’s annual planning sessions, and in challenge was how to blend their practice with regular meetings which were held at least once a the new Deloitte firm. Our first major account month, we would usually end our presentations was an oil company, it was so big an account with this question: “What would you do if you that required almost all of our staff, juniors were not afraid?” It was a phrase that was and seniors and a partner to work on it full adopted by one of the senior managers (Shefali time. We even had to request for additional Raina) in one of our planning meetings. I liked resources from the audit group just to service using it to rally the staff, boost their confidence the account. The biggest challenge happened in their abilities and make them believe that before the first tax season as a DTT member nothing is impossible if they are not afraid. firm with Atty. Leynes’ withdrawal, along with I do not know whether it achieved what it his staff, from the practice. The Tax group then was supposed to achieve but I started to see was left with just one partner, one senior and something evolving after the constant meetings three juniors. The problem was how to service with the staff and as they see the efforts that the accounts with very limited resources. Major we were doing to grow the practice. The staff concerns were the audit clients since it is the started to get involved, suggesting and starting practice of the firm to have the tax returns of improvements themselves, leading initiatives all audit clients be reviewed by the Tax group whether it was to pursue new accounts or before finalizing the account. The group had no develop learning programs or organize events, recourse but to work double time to be able to etc. The struggle to keep afloat and add and finish the review on time. Ms. Manabat even keep the talent is still there and will always be doubled as Tax partner, to service the accounts. there. But the load that was becoming too heavy It was imperative for the group to speed up its became lighter, shared not just by the partners growth so it started to recruit tax professionals and managers but by the rest of the staff as well.” and it formed an alliance with a law firm. The challenge was to hire professionals with the right The concerted efforts paid off for eventually attitude and experience. From the start, we had the group had been able to acquire large and to instill in the minds of our new recruits that we prestigious clients, among which were a major have to do things differently--to be a professional regional development bank in Asia, a subsidiary of in all our dealings especially with clients and the largest food, beverage, and packaging company government agencies.

Chapter 6 THE CONVERGING PROCESS 83 Celebrating 7th Anniversary with Service Awardees With the addition of new resources, and an Acquiring New Assets alliance with a law firm and tax experts, While the increase of clients was brought in by the group started to build its client base and DTT referrals, CLMC was also working hard to service lines. To enhance its expertise, regular win more clients on its own effort. In parallel lines, training programs, internal and external, were the staff also grew and expanded. Staff orientation, conducted. It also sought the assistance of training, and formation activities had to be Deloitte to provide training programs to develop continuous because the learning process was an the professionals’ ability in handling multi- ongoing activity. There was always something new national accounts. The group also conducted with the international requirements of DTT, beside regular discussions on the issues encountered by the need for familiarity and facility in the use of our tax professionals on engagements handled. DTT methodologies and systems. Thus, every The purpose was to give the professionals the new hire was introduced and trained to the DTT chance to voice their opinion on the issues and standards, and became a new asset at CLMC. for the group to come up with a uniform position Attracting and keeping talent was a constant on those issues. With this, the professionals were challenge for the firm. In the early years, attracting not only trained to listen, respect each other’s talent was a priority issue. As a young firm, it was opinion but also more importantly, to develop a challenge to attract resources that were more camaraderie within the group. As we often drawn to the more established and older practices. say in the vernacular, “ang mabigat/mahirap Nevertheless, CLMC was able to get its own set na problema ay gumagaan/dumadali kapag of talents and most of them, demonstrated great pinagtutulung-tulungan” (translated “A difficult concern and loyalty to the firm. As CLMC grew problem becomes easier to solve if we help each and established its reputation, attracting talent other.”). With the right attitude and resources, was no longer an issue, but rather, keeping the the group has developed new service lines and talent. The demand for accountants, auditors has expanded its client base. In no time we were and consultants increased not only in accounting servicing huge global clients that included a firms but more so in corporations, as they strived major oil company, a Japanese technology to conform to the new standards. Overseas, company, a US consumer products company and particularly in the U.S., the demand for accountants many more.”

84 Part TWO and auditors continued to rise due to the widening in stride, considered as “noise” and part of the gap between what universities can produce and firm’s development. The partners’ consistent what the industries and accounting practices stand in all of these was that the bigger picture need. In most cases, CLMC chose to let go of its and the greater good prevailed in all decisions resources as the partners saw them getting into made.” better positions and better opportunities (especially those who found opportunities overseas). CLMC’s Meeting New Challenges list of “alumni” has grown and is still growing and the partners can only hope that the alumni all value Every client win, every service engagement, every their experiences with the firm. project negotiation, every year and every asset acquired, were new challenges to CLMC. When Luz, also the partner in charge of HRD, had this to CLMC was born at the Penthouse, the space was say: cozy and comfortable. But it soon became limited and crowded as the number of staff increased. “In a professional services firm like CLMC, When DTT became a partner, the new challenge where people are the primary resource, it was was not only in space and staff, but also in a constant challenge to manage people. As in structures, systems, processes, and technologies any other practice, we had a lot of challenges. that come from the demands of global and We had an assortment of people with differing international services. New floors were acquired, attitudes and expectations. We had leaders, we rooms were renovated, computers were purchased, had followers and there were those who cannot programs and systems acquired to improve the decide where they would like to be and are efficiency and delivery of services to client. Also, content just watching on the sidelines. We also when clients increased and became diversified, the had those who would do anything just to catch new challenges became focused on experience and management’s attention even in unconstructive expertise in the particular business of the clients. ways. We had received, even at the beginning, These were met through continuous training and threats from the staff of mass resignation and the learning opportunities and other professional like. We’d been fed with lies, and we’d received development programs availed of and accessed for white papers and anonymous hate mails, some the staff. even posing as celebrity reporters. We were sometimes amazed by the creativity. Some had However, with the increase of clients as well as been carefully and professionally presented, staff came the concomitant increase of complexity others were plain irreverent. Everything, of needs and requirements. Increasing pressure however, was taken in context, every criticism was thus felt by individuals at the level of their and comment taken seriously. Nothing was experience. To understand this, DTT in 2006 taken as “trivial” and ignored readily, for every conducted a worldwide survey of priorities feedback from the staff was considered as coming emerging in the workplace, and the result below from a certain cause, whether perceived rightly shows the profile of priorities expressed in or not. Those that genuinely concerned the particular by the Philippine professional staff: betterment of the firm were carefully considered and adopted while the others were merely taken

Chapter 6 THE CONVERGING PROCESS 85 Summary of Priorities: Asia Pacific Countries Philippines increasing external pressures from regulatory/ influence groups created feelings of restlessness Work/Life Balance 3 and uncertainty in the organization.” 4) Majority of the respondents “strongly Compensation and Benefits 1 agreed” and “agreed” that “there is increased consciousness on issues such as increasing cost Recognizing Success 2 of operations, sales of services, diminishing productivity gains of the firm.” Hiring and Staffing 5 5) Majority of the respondents “strongly agreed” and “agreed” that “there is a shift Developing our People 7 of environment trends/thrusts that seem to impact on the organization now with a different Performance Management 4 challenge.” 6) Majority of the respondents “strongly agreed” Firm Communications 8 and “agreed” that “currently the organization seems to be simultaneously doing two types Management of Change 6 of activities, that is, trying to be creative and innovative while making renewal efforts on Firm Leadership 9 doing the best practice.” All of the above items were indicative of the Multi-Culturalism 11 common issues and concerns at the stage when things were converging in the organization and Learning and Education 13 challenges were brought about by both internal and external changes of the task environment. Supervisor/Manager 10 However, it is interesting to note in items 2 and 3 that a number of participants had indicated Client Relationship Management 12 responses under “neutral” and “disagree.” These indicate that the challenges had probably not only been in terms of “competition of resources Corollary to the findings of the global survey of internally” nor only of the “impact of new DTT on priority issues identified by the staff in technologies, expanding markets/clients … various countries, the perceptual survey on the that create restlessness and uncertainty in the items that relate to the concerns of the CLMC organization.” It could be inferred that the greater organization showed the following: challenge as perceived by these respondents might have been any or a combination of those 1) Majority of the respondents “strongly agreed” identified as priorities in the global survey done and “agreed” that “during the past four by DTT, namely: 1. compensation and benefits; years CLMC experienced rapidly increasing internal and marketplace complexities creating pressures to differentiate and proliferate in products and services. 2) Majority of the respondents “strongly agreed” and “agreed” and with a number of “neutral” and “disagreed” that “In recent years internal competition for resources emerged as a critical issue.” 3) Majority of the respondents “strongly agreed” and “agreed” and with a number of “neutral” and “disagreed” that “the impact of new technologies, expanding markets/clients and

86 Part TWO Memorandum of Agreement Signing for CLMC Cebu Office with Partner Geronimo Sta. Ana 2. recognizing success; 3. work/life balance; 4. As the client base of CLMC expanded nationwide, performance management; and 5. hiring and it became clear that a branch be set up in another staffing. From these indicators at a particular stage city outside Manila. BusinessWorld, corporate of development and change in the organization, it is news section on September 17, 2003, reported: reasonable to consider that CLMC was in transition “Auditing Firm Expands In Cebu – Auditing Firm at the time between norming and fulfilling stages C.L. Manabat will open an office in Cebu, the first as identified by Land and Jarman. From the other outside Metro Manila to respond more effectively perspective of Adizes’ corporate lifecycle, CLMC to the requirements of its clients.”19 This branch at the time could have been very well between is located at Unit 704, 7th Floor of the Ayala Life “adolescent” and “prime” stages. Having been only FGU Building, Ayala Business Park, Cebu City, in the industry for nine and a half years by June with Partner Mr. Geronimo Sta. Ana, leading the 2006, the accomplishments and achievements of practice. CLMC were already phenomenal milestones to acknowledge and to celebrate. Some excerpts from a 2003 internal memo by Pursuing Achievements and Accomplishments Conchita gives us a flavor of the circumstances CLMC had great and high goals to achieve. The around which the Cebu practice was set up: vision to be “the leading professional service provider” in the country and to be recognized as “The Cebu office has been contemplated since “the Employer of Choice” propelled the leadership/ our appointment as Deloitte member firm. The management to pursue more achievements and regional office prompted us to consider getting accomplishments in the service. In 200218, the the Cebu practice of the former DTT member breaking news was that “BSP accredits CLMC as firm in 1999. I had a discussion with its head one of six audit firms for commercial banks.” but I thought that the economics of his practice were not justified at that time. Prudence dictated that we forego the opportunity in 1999. 18 INQ7.net, Inquirer & GMA Network, 17 August 2002, Breaking 19 BusinessWorld, 17 September 2003, Corporate News. News.

Chapter 6 THE CONVERGING PROCESS 87 Deloitte said that it was my call and they were to the Cebu operation will be profitable and can support me. We were, nevertheless, cognizant of stand on its own. The imperatives for the Cebu the importance of an office in Cebu, the second initiative are the following: largest business district in the country. There have been several subsequent opportunities to i. The growth in our clientele in southern establish the Cebu practice and we have carefully Philippines: for Mindanao, a major evaluated each opportunity. multinational company engaged in fruit processing and canning, a pulp company, a At the height of the 2002 Andersen transaction, group engaged in tuna canning and for the the former head of the Cebu practice of a major Visayas, a major Japanese steel company and firm contacted me for possible cross-over but a publicly listed sugar milling company. Note his expectations were too much for us. At that that the salary scale in Cebu (the center of time, we were the only major accounting office business and finance in southern Philippines) without a branch in Cebu. He also negotiated is much lower than in Makati and culturally, with another Big 4 firm where he finally forged the southern business community would feel an agreement. more at ease dealing with co-southerners. The southern Philippines have different dialects Earlier this year, when word was out that our other than Pilipino which is the national firm was considering putting up an office in language and spoken in Manila. With the Cebu, a partner of the Cebu practice of another Cebu office in place, we have already started major accounting firm contacted me for using our Cebu resources to service our possibilities. His head office had asked him to be clients in the Visayas and Mindanao. This relocated to Manila for there was a consolidation will translate to savings in costs of servicing of the three offices in the Visayas to just one clients (as we would no longer be sending office in Cebu with one of the heads of the other staff from Makati). two offices assuming the post. Again, we took our time in considering that option. ii. A leading competitor has offices in Davao and General Santos, both cities in Mindanao, Because of the due diligence we observed in on top of the Cebu office. The major accounts evaluating the establishment of a Cebu office, we from the south were all former clients of the were tagged as slow decision-makers by those leading competitor from incorporation until professionals who approached us for the Cebu the shift to CLMC. Winning the accounts office. We believe that we took the right approach was a major victory and having a southern as we looked at all angles. DTT’s Deputy office was something those clients would Regional Managing Partner had been in the loop welcome in terms of ease of dispatch of staff, in all of these developments, and when we finally coordination and the local dialect. There decided to put up one, he said that the move will are areas in the south that are sometimes make us a real national practice. “hot spots” even for professionals from Manila. Having a southern office will assure This year’s Cebu initiative was subjected continuity of service. to a detailed study. While the study used conservative cost assumptions, it showed that

88 Part TWO iii. Our target companies in the southern Many companies in the Philippines are subsidiaries Philippines always ask for the presence of of large and listed U.S. companies and are therefore the local office due to the need to liaise with subject to the SOX. And further, the Philippine local government units and other agencies of SEC, in due time, adopts U.S. and international government in the south. Cebu has several best practices, and as such, the same seminar was special economic zones which hold a lot of conducted by CLMC for the directors and staff of potentials for us.” the Philippine SEC. Another accomplishment that CLMC could claim Reflections and Insights as a milestone in its history was on the advocacy CLMC’s feat in terms of growth was extraordinary and promotion of accountancy standards and in an industry where most of its successful rivals governance. In a series of seminars for clients held reached their status through decades of operations in Manila and in Cebu, in 2003,20 CLMC sponsored and evolution. Leaders in CLMC had to “be born the seminar on the SARBANES-OXLEY ACT outright” and assume lead roles immediately. The (SOX), which was signed into law in the U.S. in price of such an extraordinary speed in success 2002 with the goal of restoring investor confidence was not unfelt, and was perhaps indicated by the through corporate, accounting, and audit reforms. 20 Documentation Files of CLMC