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Mission: Responsible

By Bill Sheridan
MACPA Electronic Communications Manager

Looking for ways you can help restore faith in the profession? Take a number — the line forms at DeLeon & Stang.

Nearly two years ago, the Gaithersburg firm made plans for a little internal retooling. Its goal was simple: to define a mission, vision and set of principles that would help guide the firm for years to come.

That was late 2001 — before Enron, before WorldCom, before Sarbanes-Oxley. Today, the firm is enjoying a rebirth that's centered on its new values of integrity, trust and innovation. But it's enjoying something else, too — its role as one of the profession's visionaries who decided to do the right thing before federal regulators made them do it.

"I was concerned that people would perceive what we've done here as our reaction to (the accounting scandals), and that's not the case," said Richard Stang, a partner with the firm. "In fact, it was our way of clarifying what we do as a firm, which lends itself to doing the right thing and avoiding all these problems in the first place."

An all-inclusive process

The process began in late 2001, when the firm found itself lacking in middle-management expertise and began hiring personnel to fill the void. Soon DeLeon & Stang had a tax manager, an audit manager and enhanced marketing abilities. With the expanded staff, though, came the need for some reorganization.

That's where Michael Daigneault came in. Hired as the firm's director of advisory services and marketing, Daigneault previously was president of a company that had written nearly 500 codes of ethics for various companies. His new employers were looking for something a little more extensive.

"The first thing they asked me to do was a firm-wide, in-depth assessment of the firm," Daigneault said. "Think about that: You bring someone on in a senior role, and the first thing that senior person does is analyze the very firm that's hiring him. That's one of the reasons I came here — because I thought they'd be open to that kind of scrutiny."

They were. That analysis led to a comprehensive process in which the entire staff helped identify the firm's mission, vision, values and long-term strategy.

It started with an initial firm-wide brainstorming meeting that produced a draft mission statement: "Improving the financial lives of our clients, our staff and our community." Next came a series of seven four-hour meetings devoted to identifying the firm's values and developing a set of principles. A "principle statement" was drafted.

Then the staff got a hold of it. Four four-person teams took the draft of the principle statement and "made it real," said Daigneault. "They said, 'We're going to make it live, we're going to tell people what the culture of this firm is really like. I used to run an organization that's written 500 codes of ethics, and I'll tell you categorically that what the staff came up with is 10 times better than anything I ever wrote, because it's the reality of the firm. It's their words, not mine."

Months of work produced a completed mission statement that read, "Improving the financial lives of our clients, our staff and our community with integrity, trust and innovation." They also produced a principle statement that includes words like "dependable," "professionalism," "honest," "excellence" and "quality."

Walking the talk

Of course, words like that don't mean much until they're put into action, so DeLeon & Stang next went to work on strategy: How were they going to put their new values to work?

Part of the answer was, "Spend money and go public." The firm placed a series of full-page ads in Gaithersburg-area newspapers, with each ad focusing on one of the firm's values — integrity, trust and innovation — in an effort to promote and position the firm within the community. Each ad included the tagline: "Counted on for our integrity. Passionate about earning your trust. Committed to financial and business innovation." More money was spent on a complete redesign of the firm's letterhead and business cards to include its new statements of mission and principles.

"You don't get business from these types of ads," Daigneault said. "Instead, you're giving back to the profession. You're putting a stake in the sand of the community that says, 'This is what we stand for.' When you make it this public and promote it this hard, it does create brand, but we think it also enhances the profession and makes a statement to our clients."

The firm's primary strategy made an equally emphatic statement. The firm took out more ads in which it outlined which professional services and activities it would provide — and those that it would not provide.

Those positions were put to the test in November when the firm was approached by a potential client. The client — XCEL Federal Credit Union — asked DeLeon & Stang to provide bids for both internal and external auditing. As part of its strategic plan, though, the firm had decided that doing both could call into question its independence. Instead, the firm submitted separate proposals for the two jobs and urged the credit union to hire two independent firms to conduct the audits.

In a letter to the credit union, DeLeon & Stang partner Allen DeLeon outlined the firm's position.

"We genuinely believe it to be to your Credit Union's advantage to pick two independent firms to conduct your internal and external audits," DeLeon wrote. "We think this will provide your Credit Union and its members (with) the very best — and independent — professional services available. Of course, there may be some in our profession who hold positions at variance with ours and we do not take our position to disparage their hard work. Rather, in these rapidly changing and challenging times for the accounting profession, we thought it was important for us to state our principled position clearly — and then walk our talk. We think it is likely you would want nothing less from your auditor."

The result? Representatives from the credit union called DeLeon and told him the firm's position convinced them to split the auditing functions. DeLeon & Stang was awarded the internal audit job.

The firm also has taken on the role of teacher, especially for some of its smaller non-profit clients. Many of these organizations have either dysfunctional audit committees or no committee at all, and DeLeon & Stang personnel are educating them about what changes they should consider making.

"We're wrestling now with whether to bring that issue strongly to the forefront and say, 'These are the things you ought to do,'" DeLeon said. "They might even want to embrace some of the Sarbanes-Oxley provisions that make sense even though (those provisions) don't apply to them. There's some risk associated with doing that, but I think it's the right thing to do and I think most clients will respect us for raising that issue."

The right thing at the right time

Clients aren't the only ones who like what the firm has done. DeLeon & Stang's employees also have embraced the changes — indeed, they seem proud to have been a part of the groundbreaking process. When the firm's full-page ads were printed in local newspapers, copies of the ads began appearing on bulletin boards throughout the office.

"People are sensing that the firm is stepping up and they want to take that step, too," Daigneault said.

The staff has become so tuned in to the process that the partners have reorganized the firm's review structure to allow select staff members to review the partners' performance. These "upstream evaluations" are then evaluated by an independent consultant, who then feeds the results back to the partners.

That type of openness is evident at every level of the firm's reorganization, and it's winning DeLeon & Stang new fans throughout the community.

"I think the caliber of our prospects have gone up a level," Stang said. "I'm talking to a higher level of both business and individual prospects. Reputation-wise, there have definitely been some enhancements."

The partners themselves are sensing not only that they did the right thing, but that they "got to the future first," in Daigneault's words. Though not done in reaction to the accounting scandals and subsequent reforms, the firm's reorganization couldn't have come at a better time.

"When we were working on this in June (2002) and the storm clouds were rolling in, we were thinking of this as an opportunity," said Jody Vilardo, a partner at the firm. "We had our (mission and principle) statements, we knew where we were going and we were telling people. That was so far ahead of what anyone else was doing. I think a lot of other people were hoping it would all just go away."

"I really feel like we've done the right thing," DeLeon said. "Let's face it: Things are changing. Sometimes you have to become part of that change and not stand in its way."

And that doesn't mean you can't be successful in the process.

"It's nice to be on the side of the angels," Daigneault said. "That's going to be a competitive, strategic advantage for this firm. We'll push it, and not apologetically. We can genuinely have integrity, trust and innovation and make money, and that's OK."