When Mark Hildebrand took control of Crowe Chizek and Co. LLC in 1999, he faced the challenge of trying to make sure the 64-year-old accounting and consulting firm didn’t become just another company in a crowded competitive landscape.
The market was looking for alternatives to the Big Four accounting firms, and Hildebrand wanted to make sure Crowe Chizek stood out. “If our products and services stay the same, then they will quickly become commodities,” says Hildebrand, Crowe Chizek’s CEO. “The price will go down, and we will not enjoy making the returns on our investments that we want. We have to constantly be looking at change in the market and understand that change. Our ability to adapt to that change is directly related to us getting the kind of return we want on our business.”
For 40 years, the company had chugged along quite nicely, averaging 18 percent compound growth, but Hildebrand recognized the company’s structure prevented it from taking advantage of changes in the marketplace and could put an end to that prosperity. “Clients were looking for more thought leadership, richer solutions (and) the model wasn’t going to get us there,” Hildebrand says.
If Crowe Chizek wanted to keep growing, it had to change to react to the new demands of the marketplace. So Hildebrand created a new structure for Crowe Chizek that would allow it to fully take advantage of the company’s assets and utilize its resources more effectively.
Providing the foundation
Any reorganizing had to be accompanied by the codification of the company’s culture and values to define what Crowe Chizek is and what its purpose is. “Once you know who you are and what’s important to you, then you can make decisions on what direction you want to go,” Hildebrand says. “Our organizational structure and our strategy change all the time. You’ve got to be grounded. You’ve got to know who you are and what is important to you. In the service business, you hire smart people, and they’ve got to feel that connection.”
It was particularly important for Hildebrand to focus on the values while he was changing the business structure. The changes were taking place as the technology bubble was bursting, and it would have been very easy for the company to stray from its business model.
Defining the values and making sure everyone considered them when they made choices prevented the company from making poor business decisions. “We were getting a lot of pressure from the markets, staff and clients to do some pretty crazy stuff invest in certain types of businesses and do service for free (in exchange) for equity all kinds of stuff,” Hildebrand says. “It was just a crazy time. My COO and I sat down just after we’d taken over. We just said, ‘You know, we really have to go back and fundamentally understand who we are.’ “We embarked on a process to really articulate what our core purpose is, what our values are and what our management philosophy was. We went back to our founding partners and we interviewed them. We interviewed some key partners that had been there awhile. We interviewed some key staff, and we came back and basically codified the essence of the values, the core purpose and the management philosophy within the firm.”
Hildebrand and his top managers developed 21 values, which Crowe Chizek summarizes as, “We care, we share, we invest and we grow.”
Those values are now used to help make decisions within the company. “When we articulated that to our people, they related to it at more of an emotional level,” Hildebrand says.
He constantly preaches the company’s culture and values, whether to new recruits or to veteran employees at the annual state-of-the-firm meeting. “People in this business work hard,” he says. “There has to be something more than a financial reward. People are motivated by a purpose.”
He also needed a way to measure progress and hold people accountable for the values the company adopted. While values can be hard to measure, Crowe Chizek employs a couple of surveys to gauge whether the company is hitting the marks it has set.
A third-party firm conducts a survey called the Secure Customer Index. It asks customers to assign a score to Crowe Chizek on a number of questions, including: Were they satisfied? Would they use Crowe Chizek again? Would they recommend the company to someone else? “If they give us top (score) in all three of those, the research shows they’re highly secure,” Hildebrand says. “We measure that every year. We publish that to our people and anybody that wants to see it. It’s not something we can influence other than by our behavior every day. “If we have a very low secure client rating, the stability of our business isn’t very good. We have close to 50 percent of clients that are highly secure. That’s a pretty high number. A number of clients would give us a four, so when you add up the 4s and the 5s, it’s quite high. We’re saying our goal is getting as many of them as possible to give us a 5 in all three of those categories.”
In addition to the annual survey, every time Crowe Chizek completes a project, the client is asked to fill out a Web-based survey. The long-term and immediate responses help Hildebrand know whether the company is staying focused on its values. “It’s important to us to know, is our client base secure, and are we doing the right things to improve that security?” Hildebrand says. “Building that long-term relationship with the client is real important to our business.”
Changing the way things are done
For years, Crowe Chizek which has offices in eight states was run on a geographic basis, with each office handling local clients. The leaders in various offices each created and offered new products and services for those clients, and while Hildebrand appreciated their initiative, the approach led to waste and duplication.
Hildebrand spent six months talking with leaders in Crowe Chizek offices around the country to figure out a better way to operate. “You’ve got to look at and understand where business is coming from and where you’re losing business,” he says. “What are the things that caused you to win the business? How are you positioned versus your competition? “Those are all things that have got to get funneled up at some point. You (need to) be able to sense. Am I in the right market position or not? Am I responding to those changes? Do I understand where that real value is going, and am I positioned to take advantage of it?’ It’s a lot of different sources that you have to look at.”
Hildebrand talked with a number of the firm’s clients to find out what their needs were. “Clients were looking for more thought leadership and richer solutions,” Hildebrand says. “The geographic model wasn’t going to get us there.”
In addition, Hildebrand made sure his top leaders were talking with their frontline people. “Our managing executives of each business unit have weekly sales meetings,” he says. “They talk about the business that we’re going after and how we position ourselves to get it, what business we lost and why we lost it. That’s where a lot of that happens.”
Those in direct contact with the customer are in the best position to understand when there is a need for change. “The people that are out there on the frontlines are dealing with clients every day,” Hildebrand says. “People that are selling, people that are delivering a lot of different sources you have to listen to to make sure that we’re still relevant. That’s the art of it rather than the science. It is staying close to those things and being able to sense a pattern.”
After analyzing the data, Hildebrand moved the company from its geographic focus to one that could better serve its clients’ needs, which were identified during the process. “I instigated what I call strategic business units, which are more along lines of industry or functional specialties,” he says. “Organizations evolve. ... It all comes from the market. If you stay market-focused, you can see where the opportunities are in the market. If you look closely enough, you can see the pressures and changes that are being put on an organization and you can start to see how that organization needs to change. “It’s helped us get the right resources to the market and find the opportunities and to prevent the parochial behavior that develops when you’re more geographically focused.”
Changing how a 64-year-old firm did business was not an easy task.
Hildebrand knew that a successful reorganization required getting top managers to accept the changes. Involving them in the discussions helped, but Hildebrand also made sure he was sensitive to their concerns.
While many took to the change right away, others were slower to respond. “Our partners consult and work with their clients every day, so they have a lot of business knowledge,” Hildebrand says. “They have their own ideas about how to do things. It’s a very healthy and open environment. Those environments can be difficult at times to change. “You want to be empathetic, [but] there’s a point where you actually start to indulge people. It’s great when people dialogue and disagree on things, as long as they’re bringing forward suggestions on how we can constantly improve.”
If they’re resisting simply because they don’t like change, that’s when the CEO must step in. “You have people that just don’t want to change, and they don’t have any good suggestions for how to improve it,” Hildebrand says. “At some point, you’ve got to say, ‘I’ve been fair here. I’ve listened, but you’re not providing any solutions, so this is the direction we’re going.’”
Getting buy-in throughout the rest of the company wasn’t as hard as he thought. “When they saw it and understood it, they said, ‘Yeah, this is the right way to do it,’” Hildebrand says. “When you’ve got smart people and they see something they believe is right, they adopt it. People gravitated to it.”
Even so, Hildebrand takes every chance he can to reinforce the changes. “Every opportunity you have, from face-to-face, to newsletters, to e-mails to state-of-the-firm meetings whatever communication vehicle you use you’ve got to use it to reinforce those things,” he says.
Hildebrand meets regularly with the heads of each of the business lines and the company also conducts a yearly employee survey to gauge employee satisfaction. “We look at specifically the kinds of things we need to do on a firmwide basis to address firmwide issues that might come up from those surveys,” Hildebrand says.
Surveying customers and employees is not a new concept, but Crowe Chizek takes it one step further and publishes that data for anyone who wants to see it. “In the future, you are going to see businesses need to start to change the annual reporting that they do,” Hildebrand says. “They’re going to have to provide more information on the value to their customers, the security of their customer bases and the security or the engagement of their people. “I don’t see many businesses doing that today. I hope over time we will see the reporting model evolve. I’m pretty proud of it. We’re willing to put that out there, and we’re willing to live by it. It has a very profound impact on our people. They know we’re open about it and not afraid to deal with it. They respect us for that.”
Under Hildebrand’s leadership as CEO, the firm has experienced 190 percent revenue growth. For fiscal year 2006, which ended March 31, the company posted $423 million in net revenue. When Hildebrand became CEO of the company in fiscal year 1999, the revenue was $144.6 million. “It’s really critical that a CEO or anybody running a business makes sure that their business stays relevant with the changes of the market,” Hildebrand says. “And the market is changing faster than it ever has.”
HOW TO REACH: Crowe Chizek and Co. LLC, www.crowechizek.com