It was a chilly winter day in June 2010 Ben Adams, Chief Executive Officer (CEO) of StratAFin Inc., reflected on the previous Friday's company event when all the staff had spent the evening learning the diski dance, the official dance to celebrate the upcoming World Cup football tournament. The South African nation was united in its excitement about hosting this prestigious international sporting event held every four years in a different country, and the StratAFin atrium reflected this energy. The vast central area in the building was festooned with flags representing all the participating countries; the colour and diversity of the flags mirrored the diversity of employees and job function within the firm. All the staff, from the most senior to junior levels, had embraced the diski dance evening with great enthusiasm. This made Adams reflect on the profound changes that both South Africa and StratAFin had undergone in the last decade.

Adams had loved the adrenaline rush of leading his firm through large-scale change for the last seven years. his dilemma now was whether he had done enough to align the company with the new operating environment in South Africa or if at this point there was a need for radical change. If so, did he have the right team, culture and business model in place to implement it?

In the 1994 general elections, the African National Congress (ANC) was voted into power, and Nelson Mandela became the first democratically elected president (see Exhibit 1). In the eyes of the international community, South Africa was no longer "the polecat of the world."The new government inherited a country in which the provision of basic needs (housing, health, education, access to water and electricity) for the majority of the population was insufficient.The gross domestic product (GDP) real growth rate in 1994 was approximately 1.1 percent, and the country's Gini coefficient (measurement of inequality between rich and poor) was 59.3. By 2002, the GDP real growth rate had increased to 2.6 percent, however, the Gini coefficient had increased to 65, which signaled greater inequality between rich and poor over the previous eight years. Life expectancy had dropped from age 65 to 45, due largely to the dramatic increase in HIV/AIDS. During this period, the government focused on extending health care and crucial infrastructure of water, sanitation and housing to the broader population. After 2994. A huge Black middle class emerged, but there was still a need for a further transfer of economic power. As a result, there was a push for implementation of industry charters to address this and for Black Economic Empowerment (BEE) to be a consideration in most government policies. While initially there was no clearly articulated strategy, BEE was more carefully defined by the BEE Commission in 2000. A formalized strategy for broad-based BEE was released three years later in 2003. In 2010, there was still much debate in the media about racial issues and whether the transfer power had, in fact, taken place. The country still faced societal challenges with the education backlog, imbalance of wealth, systemic racism and perceptions of reverse discrimination. In spite of this, South Africa remained a rapidly developing state, the economic powerhouse of Africa. Furthermore, the 2010 World Cup football tournament encouraged much more global interest in the country, which promised interesting possibilities for South African businesses.

THE MODEL OF PROFESSIONAL SERVICE FIRMS

Professional service firms, such as accounting firms, are defined as organizations that employ professionals, that is, people who have obtained a qualification accredited by a professional body, who practice under the disciplinary rules and standards of such a body and who also are personally liable for the work they do.In addition, professional service firms focus primarily on the nature of the value of what they offer to their clients. The emphasis is on customization, and this is what differentiate professional service firms from other organizations. Most professional service firms are structured both vertically and horizontally. The vertical design consists of three levels: senior directors or partners at the senior level ("finders"); junior partners, associate partners, managers or associates at the middle level ("minders"), and professional assistants at the lowest level ("grinders"). The ratio of finders to minders to grinders is referred to as "leverage".Junior staff, called trainee accountants, work closely in project teams alongside more experienced staff, thereby learning the skills of the trade through an apprenticeship process while delivering service to client companies. Senior professionals are expected to share their highly personalized tacit knowledge, which they have acquired over many years of experience. Long tenure of the partners contributes towards robust retention of knowledge. This leverage results in an effective knowledge management structure and an efficient income generation strategy (because the majority of the work is undertaken by the "minders" but billed to the client at the "finders" rate). Furthermore, senior level resources are made available to market to market the firm and solicit new work.

Accounting firms motivate trainee accountants by setting the goal for them to become partners. Typically, the partner track after graduation is between seven and nine years. the practice of accounting and finance is learnt universities and via the trainee accountant system. Once out of this "apprenticeship" system, the option is to either progress up through the ranks of the corporate structure or to leave the firm. Generally, accounting firms employ more trainee accountants then are required in the long term, specifically because there is natural attrition at the end of the apprentice period. From a remuneration point of view, the general billing and salary arrangement in accounting firms internationally is that an accountant has to cover their cost to the company (salary) by three times through billing to clients. For example, an accountant earning R500,000 per annum should write annual fees of R1,500,000. Usually, the first third covers the salary, the second third covers overheads and the last third is profit to be shared among the partners.

THE LONG JOURNEY CONTINUES

While sitting in his office and thinking back on the diski dance evening, Adams contemplated the firm's journey. StratAFin had made huge strides. Through a multi-dimensional change process, they had reinvented themselves as a more professional and flexible organization better equipped to respond to the global and local opportunities being presented. However, the subject of internal transformation still weighed heavily on him. Mbizo acknowledged that the firm had a long way to go: "things are not right yet, but we still keep trying." Murray agreed with this sentiment: "We have made huge strides; we have done good work, and we can pat ourselves on the back because we deserve it in certain areas. But there's a lot more we could change; some of the ideas behind the Transformation Covenant have yet to be achieved." As Hollis explained the situation, "We have been on a significant journey, and we are now at a place where strategically everybody accepts that we have to do it, but operationally it is difficult. It is a long journey. If you allow people to take their eye off the ball, they do not focus on it. We can have fantastic strategic documents that everybody buys into and is committed to, but at the end of the day you have to operationalize those through individual action, and that is what is really difficult.

Question 1

Discuss how should Adams and his teams keep the organization aligned with changes in the environment? Support with THREE (3) relevant answers.(15 Marks)

Question 2

Evaluate whether radical change is a viable option at this stage of the change process?Justify your response with TWO (2) points(10 Marks)

Question 3

Assuming all of you in the group are in the management team of this company, recommend THREE (3) action plans what should all of you do as leaders in order to sustain the momentum of change(15 Marks)

Question 4

Analyze the challenges faced by StratAFin during change transformation process. Support with TWO (2)relevant answers.