Ep. 104: Ed Lam - Building a Continuous Improvement Culture
Edward Lam, Chief Accounting Officer at Exeter Finance, joins Count Me In to talk about building a culture around continuous improvement, the future of work, and implementing various leadership strategies to best guide and shape an effective accounting and finance function. In this episode, Ed talks about how he has witnessed his own job change in the last 3-5 years, what he's done to develop change management skills in alignment with the necessary shift in responsibilities, and how to get buy-in from all stakeholders involved. To wrap up the conversation, Ed also shares his thoughts and what is still to come for accounting and finance professionals. Download and listen now!
FULL EPISODE TRANSCRIPT
Welcome back to Count Me In, IMA's podcast about all things affecting the accounting and finance world. I'm your host, Adam Larson, and this is episode 104 of our series. Today's conversation features Ed Lam, the Chief Accounting Officer at Exeter Finance. Ed is an accounting and finance professional who has seen many changes to the profession over the years. In this episode, he talks with Mitch about his thoughts on the future of work and how he envisions the role of the finance leader, evolving even more. From change management and continuous improvement to leadership and organizational culture development, Ed offers great perspective on what is needed to gain buy-in and succeed. Keep listening as we head over to the conversation now.
So Ed to the kick off this conversation, can you tell us a little bit about how your job has changed in the last three to five years and then taking it a step further? You know, what do you anticipate kind of happening even more in the next three to five years for the future of work?
Yeah. you know, I'll basically, define the last three to five years in three phases. It's basically a stabilized standardized and optimized. So when I first came in, I think we had a, basically an under-resourced accounting group, without the right technology and, you know, basically, inconsistent processing. So the first two years was just looking under rocks and finding and identifying and addressing any risks and any, any errors in our process. So it took a little while, a lot of hard work, but I think we were always looking to kind of develop a stable and repeatable process and that just has to be built, over, over time. And, as a transition from fighting fires into having more reliable processes. So that was basically about year three heading into year four. But then starting, back in early 2019, we started to look for the opportunities to start optimizing processes and bringing on new technologies. So, you know, I think the optimized stage has been the most fun, just because you start seeing a lot more buy-in from the organization now that we built the trust and credibility, we need to basically, stack on, improvements in how we do things. So that's the, you know, for the last five years, just an evolution, it's been ongoing. We still have a ways to go, but we can definitely see the opportunities from there. So when we talk about the future, the next three to five years, I'd say over the coming years, my role, in directly managing my operations is going to continue to diminish actually. And that's the due to the strength of my staff and having efficient processes in place. So, you know, the focus then she has really a way from day to do day to day doing and managing, and just really a lot more on those continuous coaching and development. I've had to learn to embrace that a little bit, because it's a different aspect of being a hands-on manager. But it's actually a little more meaningful than, what I started doing, which was basically, giving bad news to my CFO whenever we found a mistake.
That's really interesting. you know, you talked about optimizing and some of the changes to your role, obviously expectations of you the organization in general, but how have you been able to kind of change your management skills? Like you were just kind of talking about, but in a way so that everybody you're working with understands what the necessary changes are for the organization to truly optimize its processes and move forward?
Yeah, I think changing the management skills comes down to, you know, you go from, individual contributor skills, you know, and just being a subject matter expert in areas and basically telling people, you know, what the right answer is to basically focusing more on, encouraging communication and collaboration, and specifically outside of the department, because that's been a shift, you start off early on just looking inward and saying like, how can we, ensure that we put out a good product for our customers? But once you've done that, then basically the collaboration is a means of allowing you to influence the larger organization. So it does take a lot of time to build, those strong relationships with other groups, and that has to be encouraged. It's not just me talking to my counterparts and other divisions, but it's encouraging, all of the staff that part of the role is to not just give output to other groups, but to also communicate and understand, you know, why they need the things that they asked for. So, you know, again, taking the time to increase collaboration, encouraging that within, my org, and then supporting it and staying engaged with any change management initiatives. I mean, it's a way of basically, you know, evangelizing for transformation, right? So, you know, we're actually lucky to have a change governance committee at Exeter and that's something we can engage in where, anytime there's a change that impacts more than one division, it does need to get brought up through an intake process with change governance. So we stayed very engaged in that group, and it does involve executives and that's pretty important as well. So, you know, a lot of, how, I changed my management skills is just taking, any of those intake forms that has the potential for impacting my group or other groups that are aligned or adjacent to mine, and basically sharing that information in a meaningful way.
That's great. I know any, conversation that we've had around the future of work and the changing profession, the word influence always comes up. So for you to bring that up again, you know, it's, it's right on target with what we're hearing, but I really liked the encouraging communication collaboration. That's something that I think will really stick, and truly shows the shift right, in the roles of the profession, the individual, is no longer just that contributor, like you said. So I think, some people who are maybe not as familiar with some of these changes, you know, they might have a little difficulty straying from the traditional, you know, finance and accounting work. And then the day to day that you were talking about the management style, how do you go about getting the buy-in from these different stakeholders in your department or these cross-functional teams across the organization that you're working with? What role do you get the team, you know, how do you get your team to really buy into this kind of new initiative?
Yeah, that's a, that's a great question. And, you know, one thing that you hear a lot of success begets more success, right? So, I think part of this is just attacking incremental improvements early on, and they can be very, very incremental. They could be small improvements, but you celebrate those accomplishments, and then also behind that consistently discussing what's next on our roadmap. We're gonna discuss roadmap from a little bit, but just the possibilities, and then periodically visioning kind of like the optimal state. So, let me give you an example. when I first started with Exter, our close process took more than seven days, and sometimes just to address like an issue or, you know, something that was broken, it could be up to 10 days to close the books. So, you know, with some of the technology that we've introduced, including a new general ledger and an account, sorry, loan sub-ledger, with a lot of the process improvements we put in place, including a close checklist and some management workflow, and the, obviously a lot of staff development we've been able to bring the accounting close down to consistently less than four days. Now that was basically incremental going from seven to six to five, I think two or three years ago, we were targeting five days now we're targeting three, but since last year I've been talking about completing the close in one to two days and eventually a continuous close. And that's the vision, that's a long-term vision, but you basically sell that once you actually have small successes and the team is actually open to more change. Right. And so team members are now seeing that that's a very achievable goal, actually. And, so this is about consistent visioning, not saying that, Hey, we're going to get there overnight. Okay. You have to basically talk about that when people are in the right frame of mind and then just being really earnest about belief in the team and their ability to get there. So I think that's worked pretty well as far as the buy-in, because I think all the entire team in Jays are waiting to kind of hear, you know, what's next, we're working on the 2021 technology roadmap. We're a little behind, but when that rolls out, I think there were basically write a sink, their teeth into it.
So beyond these necessary changes, right. You just talked about 10 plus day close, obviously that that's something that needs to change, you know, beyond the necessary day-to-day tasks and things like that. I'm sure something that really, you know, goes along with success, begets more success is the culture, right. So how do you, you know, how do you go about building a culture around continuous improvement? How do you normalize change so that people expect this? You know, I know you're talking about a roadmap coming up and, you know, they, they're anxious to get into that because of the change, but how do you build this desire for improvement or in the whole culture of your team?
Yeah. You know, there's a couple of things, you know, and one of the first things that, I think about is making sure that you join an organization, that's open to basically cultural change. And that there's the potential for a cultural shift and that's kind of what stirs the drink. So, you know, I signed on to Exeter or knowing that it actually had the potential for that kind of like, you know, a significant change and transformation. And then you also need to make sure that the people on your team are willing to learn new things. Okay. I mean, they don't come in saying, Hey, I've transformed organizations, but they have to be open to those possibilities. And, you know, it's a little tricky when you're in the interview process, that actually has to be something you seek out. But then beyond that, you know, we're lucky in that the change is kind of built into the evaluation processes. You know our semi annual evaluation is very similar to other organizations where we talk about core competencies are graded, but then also, goals. Right. And so, you know, obviously, you know, sort of competencies are, you know, are, are needed, to be in place so that you of consistent work quality, they reflect doing the job, but sometimes that's it, right. The goal setting is what's really important. Okay. With respect to, you know, changing the culture, you know, the goal setting is continuous, and it has to establish that there's always something new on the horizon and the, and then the right behavior then gets rewarded because obviously, you know, those are basically embracing those initiatives and, you know, up and down the chain in our org, okay. Even at a, junior staff level, there's always going to be goals that reflect changing or improving some aspect of their job. Right, and we focus on that type of behavior because if they do it right, then they get rewarded and again, success to get success. They basically embraced the next goal because they can see, basically direct alignment, right, with their career development, with their compensation and that ultimately the vision that we have for them.
So along with all of this, you know, I'd be remissed if I didn't discuss the technological advancements that are being implemented, you know, across the whole profession. You know, and it's very hard to envision how that will continue to evolve, but, you know, if I could just ask you, how do you envision the role of a finance leader growing even more in the future, taking into account the necessary changes that you discussed? The technological changes, which we haven't really discussed, but we know it was a part of the role, you know, maybe not the day-to-day stuff, but the bigger picture sustaining this culture, continuing improvement, all that. How do you see your position becoming more valuable for the organization as a finance leader?
You know, and this is a little counterintuitive and it might be more specific to my experience at Exeter, but I built a lot of, functions, with them, my direct management, work. But then I ended up giving some of that up. So, so I think one of the lessons I've learned is building from within, but not being afraid to let go and so let me kind of tell a story around what happened over the last three to five years. And this relates to actually like the data and, technology transformation, which oftentimes I find that finance takes the backseat to operations with respect to kind of resourcing and prioritization. So when I started, I hired on a director of financial systems, that would basically act as kind of a project manager for all our finance apps. And then I also hired on a senior financial analyst that basically did a lot of like the data analytics, pulling in like, databases to provide the ability to, you know, do more analysis. And I grew both those functions, but as they became more successful and put on product that other departments and, that sectors notice, it really drew their attention. So, you know, over time, the director of financial systems and the team that she built, got annexed by the IT group, and my senior financial analyst got brought in under our strategy and BI groups, and both of those are outside of finance, but they were very critical players. They and their teams in the delivery of two transformational initiatives. One was our loan sub ledger, which basically takes millions of transaction records and captures in a database and automates the generation of all the journal entries we need to maintain our books and records, and this was developed over two and a half, three years, and then our new general ledger system, which is transformational, and that is a high capacity, low code, no code, platform, and it's allowed a lot of flexibility just within a general ledger functionality. Okay, so, you know, basically I, I started developing these functions with my group, and then I had to give them up to the, the, the functions and the divisions that actually managed you know, data and technology. But they basically in turn, gave me the mandate and commitment to serve the finance division. So it's no longer a function owned by me, but I'm now basically the primary customer. So, I guess, you know, when you talk about the role of the finance leader, sometimes it's not about having, a lot of FPE or, a larger, larger function. Sometimes it's about, um, you know, seeding the organization and then allow others to pick it up. And, I feel like I've gained more influence just by letting go of those functions and putting them in departments or divisions where they belong, but actually, you know, having those individuals that, I hired, showcase their competence, right. And basically kind of spreading, you know, a lot of the knowledge that they gain through these initiatives, to the rest of the organization. I think that's been kind of my role. I think it's just bringing the right people, giving them challenges to meet, and then at some point in time, you know, they can kind of share their knowledge with the rest of the org.
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