Information technology directors are often mistaken when working with consultants. I mentioned three of them in my last part.
There is a fourth that is potentially more serious than these three combined: the inability to take advantage of a consultant, either by engaging them or by making them an advantage to your advantage.
Background: My IT advisory team found that some of its practices violate fundamental financial compliance requirements in a way that could potentially lead to civil and criminal liability.
We presented our concerns to the client’s top managers as part of our preliminary review of findings. They, quite clearly, disagreed. Their books, they insisted, were squeaky clean, and they could not be challenged in our final analysis and recommendations.
As consultants, our honesty has certainly been the subject of discussion. But not what is negotiable. We ended the engagement and left the client’s halls and conference rooms so we would never be invited again.
Three years later, they shifted (unprofitably) their balance sheet to several billion dollars.
As it turned out, in just six weeks, our team of four people, none of whom have specialized experience in forensic finance and accounting, noticed a serious problem in the company’s financial practice, which the CFO, who delved into this topic every day , completely missed?
The fundamental rule of organizational dynamics is what made the difference, namely that every company hides people who together know about everything that has broken down and how to fix it.
The edge of the consultant: breaking the culture of silence
As external consultants, all we need to do is listen to a lot of people, promising them all anonymity as part of our process.
In return, they relieve the burden, relieved that they are finally talking to someone who cares.
This is the secret side of the consultant, and rebuilding it within the organization is harder than you think.
Imagine that you are an individual investor and you notice something that you think is a serious problem, such as constantly accumulating balance distortions. What are you doing
You will of course tell your boss. Your manager, however, has no authority, let alone budget and human resources, to fix the problem. This leaves your supervisor with two options. They can: (1) bury the problem and hope that it is not dug up until they go to less vulnerable pastures; or (2) refer the problem to your manager, who has the same two options.
Rinse and repeat until the problem reaches a manager who has the budget and authority and can reallocate staff priorities to fix it. It should do so, but it is not, because this manager, by definition, is also the manager who will be blamed for the problem when it becomes apparent at the level of the assault charge.
That’s when things get ugly because they’re still being fixed The main reason it may not be so difficult, and it can be dealt with calmly, correcting the accumulated damage – in this case, listing the balance, the inaccuracies of which have gradually accumulated over the years – can not be kept under control radar.
Assault on the prosecution: a big mistake of the bureaucracy
The most common “solution” as it is is a practice known as “hitting the wounded” – firing or disciplining everyone in the chain of reports directly under a leader who sits at the top of the problem tree and therefore logically owns them.
By establishing that they “bring people to justice,” the bayonet creates a political buffer that makes them part of the solution, not the cause of the problem. This level of protection allows them to fix what needs to be fixed without exposing themselves to danger.
A less popular solution is information. This is unpopular with individual participants because it is not a career-enhancing move for whistleblowers, and often leads to the hacking of the aforementioned wounded among their peers.
It is also unpopular because its impact is often insignificant. As a result, employees are reluctant to follow this path, and management is even less likely to encourage it.
The solution? Changing culture
What really works when an organization is run by a braver team of leaders is a change in management culture at all levels.
The change is that when something bad happens, everyone in the organization, from the board of directors and down, assumes that the root cause is systemic, not the person who laid siege to the case.
In the case of my client’s balance sheet fiasco, the main reason turned out to be that everyone was doing exactly what the situation they were facing demanded.
What happened is that a severely delayed system implementation, combined with a strategic decision to freeze the old system to be replaced, led to a cascade of PTFs (permanent temporary fixes for the uninitiated) to pass by the end of the month. PTFs, being temporary, have not been tested as thoroughly as production code. But, being constant, they accumulated and sometimes conflicted with each other, requiring more PTF each month to handle everything.
The result: the month was over, no one had to inform the executive sponsor of the new system about PTF and the risks they entailed, and no one had to admit that freezing the outdated system proved to be a bad challenge.
Everyone involved in the affected financial industries and the IT industries that supported them knew about: (1) this house of cards; and (2) that trying to warn management about it limits your career.
What should the CIO do about it
Bad news does not improve with age. Assuming that problems are caused by bad systems, employees can pay attention to problems – and organizations – to recognize and eliminate – problems if they are small and only slightly confusing.
On the other hand, assuming that the problems are caused by bad employees, it leads to the fact that the problems become humiliating money pits.
Or you can hire consultants every few years to figure it out. Just don’t ask them to disclose their sources.
Even though the sources are in your salary, they are still the advantage of the consultant.