Clicky Web Analytics Kerry Walters Shares Accounting Expertise: THE RIGHT WAY TO PRESENT LEAN ACCOUNTING

Saturday, February 21, 2009


Let me set the stage. While attending a Lean seminar, management learned about Lean Office. They were excited and wanted to implement it in their Accounting Department as soon as they could. The company had already implemented Lean Production. The company had experienced great success in production and wants to expand this success to the Accounting Department. Bill, Division Manager, has called a meeting to introduce Lean Accounting to the Accounting Department staff and their supervisor.

The Accounting Department is composed of a staff of five and a supervisor. On their way to the meeting, they have been joking about having another flavor of the month meeting. They all wondered what flavor it would be this time. They entered into the conference room with their note pads ready to jot down the important points of the meeting.

Bill welcomed everyone to the meeting. He began by talking about his trip to the Lean seminar and explained how excited he was about Lean Accounting. He explained that the purpose of Lean Accounting is to reduce the number of steps used when invoicing customers, paying vendors, processing payroll, etc. He said that with all these reduced steps, there will be less work to do. He concluded by announcing that Lean Accounting training would begin in a week. The meet took about 15 minutes.

The Accounting staff was rather subdued going back to their desks. What they heard from Bill’s description of Lean Accounting was two topics; there would be less work to do leading to leaning the Accounting staff. As Mary sat down, she began creating a list of names of people she knows that may be able to help her find a new job. Fred made a mental note to start taking a half hour lunch to show that he works hard. Mable is getting an upset stomach and may have to leave shortly for the bathroom. The Accounting staff was very impressed by Bill’s presentation.

Does this sound familiar? To often Lean Accounting is introduced in this way and with disastrous results. The office staff was developing employment contingency plans before Lean training is even started. A fifteen minute meeting is not sufficient time for a subject as important and powerful as Lean

Lean is all about how willing we are to teach, train and empower our employees. Let me start this story over using the principles of teaching, training and empowering. I give a brief summary of material Bill presented at this meeting. Bill has just told them that he was introduced to Lean Accounting at a seminar he had attended. Bill began by teaching the fundamental concepts of Lean. He explained how Lean was introduced to the Production staff and the time it took before any changes were made in the production process. He noted that some of the production processes were stopped; some were simplified or changed to take less time.

Bill said that some of the Production staff had expressed concern for their jobs. Since it took less steps and time to make the product, they thought there would be layoffs. Since it did take less time, the company was able to decrease their sales prices to their customers. Bill said with pride that production increased and company actually had to increase the Production staff much to the surprise to a few of the staff.

Bill then began to explain that he was taught that he could adapt the Lean Production principles to the Accounting processes. He asked the staff if they would be willing to try. He gave them a brief overview of what a value stream map was and showed them a sample of a value stream map. He discussed with them about the growth of the company and that more work was coming to the Accounting Department. He asked each staff member how they felt about Lean and more specifically Lean Accounting. He answered their questions which increased their confidence about the success of Lean Accounting. Although there was some skepticism, overall they seemed willing to try it. Bill told them that training would begin the next week. He asked each staff member to come prepared to discuss some procedures that could be simplified, changed or ended for the next meeting. He explained that in the next meeting they would be taught about value stream mapping and be empowered to make the changes they were suggesting. This meeting took over two hours.

As the Accounting staff left this meeting, each was thinking about the presentation and how it was going to affect their job. As they talked on the way back to the offices, they began to buy into Lean Accounting and began to believe that it might just work. What they heard from Bill’s description of Lean Accounting was three topics; that the Lean principles had worked in Production, the processing of accounting data would easier and take less time and that no one would lose their job. As Mary sat down, she began creating a list of some procedures that could be ended. Fred decided to create a flow chart of an accounting process. He hoped that during the training he could covert the flow chart into a value stream map and begin to eliminate waste. Mable had not been this excited about work for some time and could hardly sit still. The Accounting staff was very impressed by Bill’s presentation.

Initiating Lean Accounting requires more than a 15 minute overview if it is going to be successfully implemented into the organization.

1 comment:

Brian Maskell said...

Interesting comments on the introduction of Lean Accounting. I just want to mention that Lean Accounting is far more than applying lean methods to the accounting processes, it is applying entirely new accounting methods throughout the organization that support lean thinking. These include the elimination of standard costing methods in favor of value stream costing, creating financial reports everybody can immediately understand and use, integrating capacity analysis, lean performance measurements, and financial reports into a box score for decision-making, driving the company's improvement efforts from a clear understanding of customer value, radically eliminating wasteful transactions, largely removing the annual budgeting process, and much more. To your point, this is absolutely NOT about "downsizing" the accounting department but about bring the financial personnel into a more significant role within the organization. To take on this new role we must eliminate much of the waste from their current processes. Indeed - over time - many of these processes are largely eliminated, not just "streamlined".