Company audit: Let a SWAT team pinpoint your company’s problems

When a TEC member tells us about an operational problem inside or outside their own company, it’s time for a SWAT team to swing into action.

SWAT stands for Special Weapons and Tactics. The SWAT team, also known as an Audit Team, typically includes four or five people: members of the CEO’s TEC group and perhaps an industry associate or board member. The TEC group chairman sometimes leads the group.

The CEO pays TEC nothing extra for this, except to the true outsiders such as consultants, or a board member. Payment is between the CEO and those invited onto the team.

The SWAT Team goes in with checklists that were created by the CEO and the chair of the CEO’s own TEC group. This ensures everyone is on the same track as team members make their rounds throughout the company.

An internal SWAT Team, assembled by the CEO, operates similarly, but within a different context. It includes:

  • A cross-section of key company employees who are made “ad hoc” members of the team.
  • An outsider, either from the board, if there is one, or another CEO business acquaintance who is asked to participate.
  • An industry consultant, if appropriate, assuming the consultant has had a close working relationship with the CEO.

Selecting SWAT participants is the least difficult part of the process. The most difficult part is preparing for a major intervention.

Defining the SWAT challenge

The process uses the historical method of analyzing “strengths, weaknesses, opportunities and threats.” Why? Because it helps to distinguish between what I call “false fronts” from genuine symptoms and unknown causes.

So let’s start with a classic problem: Unexpected loss of a key customer, accompanied by a corresponding loss of revenue and profit margin.

The first step is to answer these questions:

  • In our relationship with this customer, what were our strengths compared to the competition?
  • Compared to our competition, what were our weaknesses?
  • Compared to our competition, did we miss any obvious opportunities?
  • What major threats does the loss of this customer pose to our business overall?

Sales, marketing, and customer service employees should have major input here. Comments from engineering, manufacturing and accounting employees might also be helpful. If possible, ask the customer why they’ve decided to leave you.

Next, the audit team must debrief every employee or work team within your company that “touched” the customer. The audit team asks, “If you can recapture the lost business, how would you respond differently to better strengthen and protect the customer relationship?”

Also, “Can you suggest ways we can proactively restore the lost business?”

Finally, “Are any other key accounts in jeopardy of being lost to our competitors? What steps, if needed, can we take now to preempt another loss?”

It’s critical that the SWAT team maintains a positive, upbeat, constructive demeanor during this process. If employees perceive that this is in any way a “blame game,” the audit won’t be effective.

How to explain this to your employees

Before the audit team begins its work, all employees need to hear from the CEO about the audit and its specific objectives.

Tell supervisors or team leaders first–this is very important! Preferably, you should distribute the information to all other employees by reading a prepared script, delivered via meetings, emails and bulletin board postings.

Then, gather all supervisors and let them ask how the impending audit will affect their areas of responsibility. To repeat: The meeting, led by the CEO, should be upbeat. If possible, introduce members of the audit team and let each of them say something about the audit.

At the end of the audit, you’ll need a summary report for all supervisors or team leaders who can then tell their employees about it. We’ll talk about the content of that report shortly.

The CEO’s role

No one person has greater impact on the outcome of the audit than the CEO who must listen well and help clarify misunderstandings.

The chair of the audit group should be someone other than the CEO who has good facilitation skills. That way, the CEO can sit back and listen to the input while not worrying about managing the process.

CEOs in this role should ask themselves these questions:

  • How much of the input I’m hearing is based on fact or speculation?
  • Are we problem-driven or solution-driven in terms of our response to this customer situation?
  • Can I see any “cause-effect” relationships in terms of describing what others see as the root cause of our key account problem?
  • What am I seeing in my employees, or in the way they view the business – things I didn’t see or know before?
  • Are we asking the right questions?
  • Are we avoiding defensiveness?
  • What have I learned from the audit interviews?

SWAT team or internal audit?

In academic circles, people debate whether to use the term “SWAT team” or “internal audit.” Both, they argue, have negative implications. I have a different view based on our experiences in TEC.

Both terms boast change–not business as usual. If an internal audit doesn’t lead to change, then not only is it a wasted effort, but it chips away at the credibility of the CEO and the audit team.

I participated in an internal audit of a major components division of GMC. When the audit team met with the general manager to report our final results and recommendations, he stared us down in clear contempt, because many of the results pointed to his inadequacies as a leader.

No remedial action was taken. I’m not going to say this is “cause and effect,” but within one year, the general manager was reassigned to GMC headquarters in Detroit.

When to order an internal audit

We have focused on an external situation here – the loss of a major customer. Many internal situations can also deserve an audit. Based on my TEC experience, here are a few:

  • An alarming increase in the number of customers who reject a product.
  • High employee turnover.
  • Low morale.
  • Low productivity compared to historical records.
  • An alarming increase in customer complaints.
  • Reoccurring IT problems.
  • Poor financial performance in general.

The outcome

This is obviously the whole point of the exercise. Within 30 days after the audit is complete, this should happen:

  • The SWAT Team writes an “action list” with dates, time to completion, and accountability. It must be published and communicated to all supervisors and team leaders.
  • A personal letter or email from the CEO reports on the highlights of the audit and how it translates to every employee.
  • The CEO sends a personal thank you or gift to audit participants.
  • The company creates a hard copy of the audit team’s report – focusing clearly on the strengths, weaknesses, opportunities, and threat analysis, and the proactive recommendations going forward. This should be available to all employees but required reading for supervisors and team leaders.

Harry S. Dennis III is owner and chairman of the board of TEC Wisconsin/Michigan. TEC is a professional development group for CEOs, presidents and business owners. He can be reached at (262) 821-3340.

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