Knowledge Sharing Is a
Change-Management Exercise

Editor:
Steven F. Holub, CPA
Aidman, Piser & Co.
Tampa, FL

Editor's note: Steve Holub is the former chair of the AICPA Tax Divisions Tax Practice Management Committee. Ms. Totsch is a member of the Tax Practice Improvement Committee.

If you would like additional information about this column, contact Mr. Holub at (813) 222-8555 or stevenh@apcpa.com, or Ms. Totsch at (214) 757-3499 or melissa.totsch@ey.com.

What is knowledge management to a CPA firm? It is taking the staffs completed work efforts and capturing that information in one location for centralized retrieval and reuse by the entire firm. Why is this beneficial? Knowledge sharing increases the speed of giving deliverables to clients, improves work quality and leads to innovative thinking.

Knowledge Management Is for Everybody

Unmistakable differences exist among small and large CPA firms. Although small and large firms have a multitude of distinctions between them, to a large extent these differences disappear in the area of knowledge management. Regardless of firm size, all firms need to capture knowledge for reuse. In minimizing information overload and maximizing content usability, they can decrease time, effort and cost. In getting examples of quality client work to their practitioners, firms take a vital step in building their practices.

CPAs can improve service delivery and bring more value to their clients by leveraging the best practices of all practitioners. In turn, everyone benefits from the work others do. In todays accounting environment of increased risk, a knowledge-management solution can counteract and help decrease risk.

The Mindset

To share information, a firm must first adopt a knowledge-enabled culture. People make up the culture of any organization. They are the primary facilitators in the effective flow of knowledge, and include not only knowledge managers (who have the difficult task of keeping repositories of information current), but also everybody from staff to partner.

Knowledge-management stakeholders must be willing to commit resources. They must also be willing to set goals that encourage information sharing, and to determine and eliminate factors that hinder creating and networking knowledge. This is not an easy task, especially when knowledge has been hoarded, rather than shared. As a result, change management comes into play.

Managing Change

Change management, in its simplest form, is the process of managing change. When a firm has been carrying out its procedures the same way for as long as anyone can remember, it often meets resistance to change. The process of learning how to embrace change begins with awareness of the knowledge-sharing concept and culminates in educating others, which increases the level of learning over time (see Exhibit 1).

Through communication and training, everybody achieves a general understanding of the benefits of knowledge sharing. During the process, they also learn how to apply that understanding, by sharing and reusing knowledge contributed by colleagues.

Change affects a persons competence, confidence, control and comfort. By monitoring expectations and translating visions, firms can handle change management successfully and reduce its effect. Their people challenge is to connect the business proposition to everyones personal perspective. They can do this by providing firm personnel with answers to the following questions:

• Where is the firm going and why does it need to change?

• What is the difference between how the firm operates now and how it will operate in the future, once its knowledge network is in place?

• Which skills will need to change?

• How will the firm measure success and how will compensation be linked to performance?

• How will roles change to support the knowledge initiative?

• What is in it for me?

Speed-to-value and knowledge-reuse lead the pack in justifying the business case for knowledge sharing. Using current knowledge on engagements and incurring a lower cost of return by not reinventing the wheel follow closely behind. What happens when practitioners fail to share knowledge?

Example: An engagement team is looking for a design specification from SAP for a clients tax compliance system. One of the team members has a solution document that is two years old, but she knows that her colleagues have updated and enhanced the document at least twice since then. After making several inquires by telephone and e-mail, she finally finds the most current document a week later.

In the example, if the practitioners had been cultivating knowledge within a repository, the engagement team would have found the latest version of the document quickly. In this scenario, the firm lost efficiencies in this phase of the engagement, while the client lost any additional value it might have otherwise gained.

Knowledge Is Power

Too often, knowledge is perceived as a source of power leading to leadership and authority, jealously guarded, with conveyance (or sharing) occurring all too infrequently. According to Merriam-Websters Collegiate Dictionary (10th ed., 1988), knowledge is the fact or condition of having information or of being learned. In a knowledge-enabled culture, knowledge is power, because everyone is informed and learned. Knowledge will flow freely within the firm, with the majority of personnel using a knowledge tool as their first source of information. Knowledge-management functionality is embedded in core business tools and applications, which includes active discussions of common issues and solutions.

What is the starting point for transforming a firm into a knowledge-sharing community? It is important for firms to properly assess their needs before beginning a knowledge-management initiative. To achieve this, they need to define:

• The knowledge they need and why they need it;

• The purpose of sharing knowledge in measurable results; and

• The scope of what they want to do.

Ladder of Success

Once firms address their needs, they should look to their current rank on the knowledge-management ladder. Firms with minimal knowledge-networking activity will notice that the majority of information is found in the heads of its personnel, not knowledge repositories. Any database that may have held knowledge content is out-of-date; trying to locate documents results in frustration and wasted time. Little to no budget exists for knowledge-management initiatives.

At this level, any attempt by firms to consider what knowledge sharing can do is a step in the right direction. Firms can start small, by looking for information-sharing needs within existing work teams, or they can pick specific problems they could address more effectively if additional relevant information were available. Firms can also initiate a discussion database among their personnel. Most importantly, they should communicate the cost and time savings, and the increased productivity spurred by their knowledge-management activities.

Firms that have made some progress in knowledge-management rank at an intermediate level on the ladder. Their work habits at this stage gravitate toward being more community-oriented. They have adopted some knowledge-management tools and are adding to their knowledge repositories at a moderate pace, which has seen decreasing repetitive requests and fruitless searches for documents. These firms have observed that knowledge sharing works. They can continue to climb the rungs of the knowledge-management ladder by:

• Identifying areas that need improvement, through statistical evaluations on usage and submissions.

• Regularly polling their practitioners to get suggestions and new ideas.

• Giving and evaluating feedback.

• Continuing to communicate the savings in time and money and the leaps in productivity.

Regardless of a firms level (e.g., beginner, intermediate or advanced), the knowledge-manager role is critical to the ongoing development and success of any knowledge network. This position is the glue that binds and strengthens the system. Knowledge managers are responsible for encouraging and contributing to knowledge learning and growth, as well as for harnessing knowledge to aid the practices internal effectiveness. They act as moderators of knowledge repositories, keep them current and prevent information overload, which reduces value.

Factors such as a strong business case, clear and concise stakeholder communications and the firms capacity to change are all important to the successful implementation of a knowledge network. Other critical elements in managing the change to a knowledge-enabled environment are integrated planning and teamwork. One person alone cannot develop a reliable, efficient knowledge-management system. By creating a knowledge-networking community during the development stage of a knowledge-network system, and continuing community interaction once it deploys knowledge sharing within the firm, a knowledge team can effectively mitigate personnels lack of willingness to participate and accept change, a chief cause of resistance in any change-management undertaking.

Conclusion

Sharing knowledge opens doors and is a win-win arrangement for firms and their clients. Firms can effectively manage the change to a knowledge-management environment by getting people to believe in the project, promoting the business case for change and helping build support for the decision to change.

From Melissa W. Totsch, CPA, Tax Operations, Ernst & Young LLP, Dallas, TX