PART I

Brief profile and description

The Chan Bookkeeping agency was registered in January 2008 as a sole proprietorship owned

by Milagros H. Chan. Although its present registration started only 11 years ago, its history dates

back to 1963 when Mr. Jose D. Chan passed the CPA Board Exams and began his accounting

career. Mr. Chan began his professional practice with one assistant and five clients which to this

day has grown to over 200 in number. In 2006, Mr. Chan convinced the wife of his youngest

son, Marie Rose Jasmine A. Chan, to take up a second degree in Accountancy to help

him in the office. Unfortunately, on December 21, 2007, Mr. Jose D. Chan died after eight

months of fighting cancer and Mrs. Milagros H. Chan, his wife, took over the management

of the office under its current name. In October 2010, Mrs. Chan’s daughter-in-law, more

known as “Princess”, graduated from the University of the Philippines Visayas with a

degree in Accountancy and passed the CPA Board Exams six months after in May 2011.

She has since joined the office assisting Mrs. Chan in office management and client

relations. Princess presently acts as manager for the Agency and handles clients’

concerns and represents clients with government agencies.

When Princess joined the office, Mrs. Chan refused to take on new clients under

the agency and encouraged Princess to take them as her own clients. As Princess’

personal clients grew in number, this prompted Princess to set up her own accounting

firm and hire bookkeepers directly under her employ. Princess has always considered

the two sets of bookkeepers (those under her and those reporting to her mother in law)

as one and has always been communicating that during staff meetings. Only the source
of their salaries and benefits remains different, but the operations of the office consider

all of them as part of a whole. The personnel policies of Chan Bookkeeping Agency also

apply to the bookkeepers under Princess. The bookkeepers of Princess initially only

handled her own personal clients. But over the years, they have started handling clients

of the Agency and, likewise, the bookkeepers of the Agency have started handling clients

of Princess.

In 2015, Princess formed a partnership with four other CPAs called MRJ Chan &

Co. to be able to provide accounting services not offered by the Agency such as internal

audit, business process review, financial statement analysis, accounting information

system design, etc. The partnership hired its own CPA-staff to handle the day-to-day

operations while the partners have other daily responsibilities like teaching and business.

The initial agreement was that the partnership will not compete with the services of the

Chan Bookkeeping office. But as years passed, the clients of the partnership started to

request for monthly bookkeeping services which Princess eventually agreed to provide

through the partnership. Princess hired another CPA to help her in her own practice but

is now also part of the partnership. She is now handling clients both for Princess and the

partnership.

The three registered service companies are all holding office in one area and

sharing expenses such as electricity, telephone and messengerial services. Since all

three entities are growing, there is a need to review structures, systems and processes

to define the strategic directions of the different organizations and to avoid overlapping

functions.
VISION/ MISSION

Vision of Chan Bookkeeping Agency

Vision of MRJ Chan

Stakeholder analysis matrix

The stakeholders of Chan Bookkeeping Agency, MRJ Chan & Co and the personal account of
Princess are the internal or external people who have an interest in any of the entities and
affected by any changes in policies or activities of the organization. Table __ shows the
Stakeholder analysis matrix of the three entities.

Stakehold Interest Needs Implication Interrelatio

er nships

What makes them Needs of this group? Implication of Interrelation

qualify as a having these ships
stakeholder? needs for your between
business. What stakeholder
do we need to s
do and what will
it cost to meet
these needs?

1 Milagros Owner To have enough income Revenues

. Chan to cover for business should always
and personal needs be over
expenses;
Efficiency

Successor of To keep the legacy of Maintain

Jose D. Chan Jose D. Chan alive integrity

2 Princess CPA/ Partner Maintain professional Efficiency and

. Chan integrity Effectiveness

Employer Growth and profitability Continuous

business
 process
improvement

Successor of Continuity of Office Growth of

Milagros Chan Client base

3 CPA Future Managers Professional Continuous Employer

. Employees Development and attendance in
or reputation seminars
Potential
Partners Bookkeeper
Potential partners Enough Professional Growth and
Income profitability

Security

4 Bookkeeper Frontliners, Career Development Continuous

. s provide direct employee
service to clients development

Security of tenure Business

profitability and
growth

Benefits

5 Clients Benefits from Confidence in Efficiency and

. services provided Compliance Quality of
Service

Avoidance of penalties

Training of own Well trained

employees bookkeepers

6 Partner Good customer Ease in doing business

. govt relations
agencies
Receives Less need for monitoring Use of
contributions/ and correction of errors advances in
payments technology
 7 Families of Benefit from Security Competitive
. employees employees' take Salaries and
home pay Benefits

Enriched family life

8 Children Share in the Share in the profit Should be part

. of “business” of the company
Milagros
Chan

A. OWNER, MILAGROS H. CHAN

The primary interest of the owner, Mrs. Milagros Chan, goes beyond profit since the dying

wish of the late Mr. Jose Chan was to sustain the office. He wished for the office to remain even

if all their other family businesses close down. This dying wish is Mrs. Chan’s strongest motivation

to prosper the office even if she is not a certified public accountant. Along with this wish is

protecting the reputation that Mr. Chan has in Iloilo City among the businessmen and government

agencies the company works with. Secondary to this reason is her desire to have her own source

of income and support herself in her old age so as not to “burden” her children. Since she has

opted to turn over the operations of the company to Princess, she supports any change efforts

Princess engages in. A possible reason to hesitate in giving support is the corresponding cost

any change may entail. Mrs. Chan is influenced by her children and also the older bookkeepers

in the office who have been working for her for more than forty years. On the other hand, she

also has a strong influence on the decisions of Princess and on the support that may be given by

the senior officers to the change management efforts of Princess. She plays the connector but

her network of influence, however, has become limited to the said internal stakeholders. She

does not come in contact with the clients and representatives of different government agencies.
 B. CPA/ SUCCESSOR, PRINCESS CHAN
Princess Chan is the daughter-in-law and successor of Mr. Jose Chan as the certified public

accountant in the company. She took a second degree in accountancy primarily to help Mr. And

Mrs. Chan in running the office. Succeeding in its vision to be the accounting office of choice of

the businessmen and professionals in the region is for Princess like bringing back the glory days

of Mr. Chan when he was one of the most sought after accountants in public practice. Having a

good reputation as an accountant and transmitting this reputation to the firm is what Mr. Chan left

and what Princess wants to protect and build on. She is concerned about the efficiency and

effectiveness of work processes and systems in the office since the client’s experience may result

in the cancellation of engagements or referrals to new clients. The quality of service does not

only affect her integrity but also the growth and profitability of the company.

Princess is both the initiator and the change agent as she points out to her mother-in-law and

the bookkeepers the need for change and leads in making this change happen. As the CPA in

the office, Princess has a strong influence on Mrs. Chan and the bookkeepers, particularly the

young ones who she had a hand in hiring. The young bookkeepers she hired now constitutes

70% of the working force and can be highly influenced by Princess because of the open

communication she has developed with them. Out of the 30% of the older bookkeepers, half of

them also give Princess their support and they have frequently been called by Princess to help in

some decision-making processes of the company. Princess has a wide network of influence as

she deals not only with the internal stakeholders but the external stakeholders as well. She

coordinates with the decision-makers of their client companies and finds solutions for client

concerns or problems. She is also the company representative in meeting with top government

officials or key representatives of related government agencies.

As one of the partners in MRJ Chan & Co, she was the prime mover that organized the

partnership and allowed the group to use her name as their partnership name since the “Chan”

last name already has name recall. She performs the same role in the partnership as she does
in the Chan Bookkeeping Agency but to a lesser extent. She only deals with client concerns

directly when requested and when the employed CPA needs support in explaining to clients or

dealing with the BIR. Since the partnership brings her name, the delivery of services and the

success (or failure) of the partnership directly affects her reputation too.

Aside from her position as successor to Mrs. Chan, Princess is also influenced by her

husband and family. She seeks the growth and profitability of the company to help her husband

provide for the needs of their six children and ease the pressures on him as a main provider. She

also desires to sustain the office to be able to provide for her retirement needs and to be able to

pass on the practice to any of her children who may turn out to be an accountant as well.

C. CPA/ EMPLOYEES OR POTENTIAL PARTNERS

The CPA hired by Princess recently came back to Iloilo after working in Manila with one of

the bigger accounting firms. Her desire is to find work in Iloilo that will provide her the right mix

of challenge, satisfying income and flexible lifestyle. Sustaining the company for growth and

building its reputation will also rebound to her. As a former classmate and friend of Princess, she

is a strong supporter of Princess and is considered an ally in any planned change efforts. With

her experience and exposure in a big firm, she also exhibits a strong influence on the direction

Princess may take or consider. With Princess’ desire to keep her in the company, her opinions

and personal plans are strong considerations in the design of the organizational structure and in

the rewards and benefits system of the company. Her influence, however, is limited as Mrs. Chan

has no emotional attachment to her. She also deals with only a limited number of clients, interacts

only with a few bookkeepers and does not deal with external stakeholders in the government

agencies. Dealing with some of the bookkeepers in the organization makes her a connector

especially at times when she gives feedback to Princess on issues the other bookkeepers are not

bold enough to bring up. Since Princess considers her a future partner, her views and ideas are

always taken into consideration.

 However, she is also a partner in MRJ Chan & Co. and any plans of the company will also

affect her. Internal audit engagements of the partnership are usually assigned to her. Sometimes

clients of the Bookkeeping agency who request for internal audit are taken by the partnership as

clients and the client does not exactly differentiate one from the other because of Princess.

D. BOOKKEEPERS
The bookkeepers’ interest in the company is for the company to be able to provide them with

work and benefits that are also satisfying and motivating. They can both be an ally and resistor

depending on their perception of how any change will benefit them. The older bookkeepers will

primarily be concerned with how they can keep up with the demand of any changes. This will

particularly affect them if they will be required to face advances in technology that they will have

difficulty to handle. They also have a strong influence on both Princess and Mrs. Chan given their

tenure and experience in the company. The younger bookkeepers who have expressed their

desires for further learning, trips abroad and time with family and friends are considered allies

since these desires can be considered in future plans of the company. The bookkeepers have

their informal groups within the organization and members of these groups can influence each

other. As front liners in the company, the bookkeepers can also be influenced by the clients they

work with.

E. CLIENTS
The primary interest of the clients is for the company to be able to efficiently and effectively

provide their needed service. Motivated bookkeepers will happily satisfy their needs and specific

goals and objectives will give them the confidence that they are working with a reputable

company. They can be allies that will provide the necessary support to maintain the company’s
quality of service by giving their ideas, opinions and feedback. However, the company may or

may not take these ideas into consideration. Clients contributing a big part in the company’s

income, however, may have a bigger influence on company decisions. Their source of power is

in the impact of a withdrawal of their account to the company’s sustainability and profitability.

These are usually those family owned companies with multiple businesses/ accounts in the office.

F. PARTNER GOVERNMENT AGENCIES

Partner government agencies demand compliance from our clients through the work that we

do. The quality of our work also affects the volume of their work since errors in our work will also

complicate their work. They are passive bystanders who have no participation in the plans of the

company. They can influence how often training should be conducted depending on the rate of

changes in government regulations. Hence, they can influence how the company’s systems and

procedures.

G. FAMILIES OF EMPLOYEES
Families of employees are affected by the job security and satisfaction the bookkeepers

derive from their work. They are active bystanders who can influence the bookkeepers to resign

from work but have no known influence in how the company operates.

H. HEIRS OF JOSE D. CHAN

The children of Mr. and Mrs. Chan are the rightful heirs to any properties or businesses

they may leave behind. They currently have no involvement in the bookkeeping agency but they

can influence Mrs. Chan to create a corporation so that they can keep their share in the legacy

left behind by their father.

CULTURE ANALYSIS MATRIX

Ten stakeholders were asked to fill-up an organizational culture survey questionnaire to
determine the current environment in the workplace. The questionnaire consists of

Change readiness matrix

CHANGE READINESS MATRIX

YES NO

The Owner (Milagros Chan) is 100% behind this strategic process

6 4

The Owner (Milagros Chan) will not waiver in the face of opposition to the 6 4
implementation plan

We have managed change successfully in the past 9 1

This organization is growing, so everyone is confident that anyone who is 10

displaced will be found another job
 There are no areas where bookkeepers are not doing their tasks well, so no one 4 6
will feel that some kind of embarrassing truth will come to light in the future.

We do not have too many managers/ supervisors 8 2

We do not have the wrong kinds of managers/ supervisors 8 1

There is no concern that the strategic process will lead to a change that will 5 3
produce “winners and losers” amongst managers

We have the time available to invest in making change 10

The managers have the necessary skills 9

The frontline has the necessary degree of flexibility 9 1

AVERAGE
7.64 2.75

PART II

Identify Potential Change: STRUCTURAL CHANGE

merge 3 different practices into one organization

CURRENT STATE

There are three organizations in one office space.

All three offer bookkeeping services as their main source of revenue.
There is vague delineation of the organizational structure of the three firms.
Some bookkeepers render services to more than one employer/ organization.
Creates conflicting loyalties among the bookkeepers
Inherent conflict of interest
Princess is the common denominator among the three companies.
Three different cultures exist with the three different organizations.

JUSTIFY: why do you want to merge them?

1. Offer the same kind of service
2. Located in one office space
3. To share back-office support services
4. Overlapping external services offered and internal functions
5. Offer diversified business consultancy services that cater to business needs.
6. To become more efficient and effective: credit and collection, staff training and

DESIRED STATE:

A structure that will align the interests of all three organizations.

- Remove conflict of interest
- Eliminate overlapping services and functions
- Create synergy in the services offered. Services complement instead of compete with
each other.
- Harmonize culture of the three organizations
- More efficient and effective systems and processes

PART III
FORMULATE STRATEGY:
1. Merge Chan, princess and MRJ = partnership
2. Retire Chan, affiliate MRJ = sole proprietorship as princess
3. Merge Chan and princess into a corporation but keep MRJ as affiliate with separate
distinct services.

Describe advantages and disadvantages

STRATEGY Advantages Disadvantages

1. PARTNERSHIP ● One organization ● Clash in culture

● No conflict of interest and values
● Offer wider range of ● Unfair distribution
services of net income
● Unified strategic ● Run the risk of
direction being redundant
● Cost Efficient
● New resources and
competencies
● Expansion of
revenue streams
● Diversification and
integration of
services
 2. SOLE PROPRIETORSHIP with MRJ ● No unified
Chan & Co. as affiliate ● Offer wider range of strategic direction
services ● No integration of
● Unified strategic services
direction ● Clash in culture
● Cost Efficient and values
● New resources and
competencies
● Expansion of revenue
streams
● Diversification and
integration of services
● Commitment and
sense of loyalty of
CPAs from MRJ Chan
& Co.

3. CORPORATION Hierarchical - answer

● Offer wider range of to a board of
services directors
● Cost Efficient No unified strategic
● New resources and direction
competencies No integration of
● Expansion of revenue services
streams
● Diversification of
services
● Independence of
auditors

Princess as sponsor of change

Best Option: Partnership, why?
- Eliminate conflict of interest
- Full control of competitor
- Tackle and address cultural differences
- Unify strategic direction

Determine how transition process will happen

STEP 1: Create a sense of urgency

- Retirement of Mrs Chan will afford an opportunity to restructure to align the
interest of the 3 organizations
- With the changing business landscape driven by technological advances, there
are many opportunities open for the organization to pursue
 - Changes in government policies, rules and regulations that can change the way
services are delivered
- Pursue growth potential of the entire organization in terms of economic potential
and better services

STEP 2: Build a Guiding Coalition

- Princess as change sponsor

- Create an implementing team with members from the bookkeeping agency,
princess’ staff and the partnership.
- Discuss the change initiative and make sure each member of the team share the
same understanding of the proposed changes.

STEP 3: Form a Strategic Vision and Initiatives

- Identify personal goals and vision of each person in each organization and align
these with organizational vision, mission, goals and strategies.
- Integrate vision, mission, goals and strategies of the three organizations by
conducting strategic planning, regular consultations and dialogues.

STEP 4: Communicate the Vision

- Formal communication through emails, memos, meetings.

- Through social media
- Role-modelling: Timeliness in meeting deadlines and submitting reports.
Guiding coalition to submit before the deadlines.
- Reward systems based on performance.
- Promote divisional structure with services of the partnership distinct from the
services of the bookkeeping office.

STEP 5: Empower others to act on the vision

- Eliminate conflict of interest through a clear delineation of the services that can
be offered by the Chan Bookkeeping Agency and MRJ Chan and Company
- Break existing cliques and form new teams to create a new organizational culture
- Offer early retirement for those who do not support the change initiative
- Streamline existing systems, processes and functions (ex. Collection of
payments, transactions in government agencies) to improve cost efficiency
STEP 6: Plan for and create short-term wins
- monitoring of task accomplishments such as timely submission of financial
statements for ITR and publicly recognizing and rewarding high performing employees
- Demonstrate actual savings generated from shared services like collection of
fees and processing of business related transactions in government offices

STEP 7: Consolidate improvements and produce more change

- Identify and reward people who are more effective in implementing the change
- Promote deserving employees into leadership position who will help promote the
change initiative and become change agents themselves
- Implement unified personnel policies, salary scales, and key performance
indicators
- Create dedicated teams for the different services offered

STEP 8: Institutionalize new approaches

- Institutionalize the new organizational structure by highlighting the economic
gains and improved services as results of the change initiative
- Institutionalize rewards system through incentives and bonuses to recognize
employees who have been supportive of the change process