KPMG International: Organisational Structure - Essay Example

KPMG International: Organisational Structure KPMG is a global network of professional services like firm offering services like audit, advisory and tax services to its clients in 144 countries with the help of around 137,000 strong workforces. With stakes in almost all corners of the globe, KPMG can indeed be termed as a truly global company. The global economy has made it almost mandatory for international corporations that an effective strategy is adopted for managing the diversity. Companies are moving towards flatter organisational structures, and the global economy is allowing the movement of the workforce across national boundaries, effective interaction amongst diverse workers becomes more critical for the smooth organisational functioning. The need for designing an effective and efficient organisational structure arises because of the need to define the roles and responsibilities of different departments and managers. It is meant to divide the tasks, the work flows and coordination activities. Besides formal hierarchy, it also includes informal communication channels. Due care is exerted to define the relationship amongst different departments so that smooth communication channels exist amongst all the departments while exercising the powers and authority or while fixing the accountability issues. The structure of an organisation varies depending up the size of the organisation, complexities of its business challenges, its client base, the nature of its activities, the product or service profile, geographical or regional span of the activities etc. The salient features of a functional and evolving structure is that it not only defines the degree to which formal decision making is held by a group of people, but it also encourages experimenting with innovative ideas. There are many ways in which the structure of an organisation can be built. Some of the key elements of the organisation structure are; Flat or tall structure: This depends upon the types of business and size of the operations as well as the workforce. Key advantage of having departments and divisions is that each department is able to focus on the specialised task, accountability issues can easily be sorted out and roles are clear. But quite often such departmental structure also results in compartmentalisation which in turn leads to communication gaps. In addition the efficacy of such structure also depends upon how well the company can address the issues concerning coordination and resistance to change. Levels of Hierarchy: Hierarchies are devised within organisation to have a smooth controlling and coordinating mechanism. Span of Control: This includes the number of people directly reporting to the higher up. Flatter structures require a wider span, as the number of people often happens to be more. Under such situations the organisation needs support for other coordinating agencies as well Command and Control chain: The command and control chain becomes crucial in case of disputes arising between two or more departments or between two similarly placed managers within the hierarchy. Delegation or decentralisation of Power: This is devised by the need for control on the part of the management, increasing consistency and reducing costs. Factors favouring decentralisation include the extent of complexity and diversity prevailing within the organisation. KPMG is an international organisation with footprints in many countries, so in order to have an effective control over the organisation; KPMG needs to respect the prevailing diversity as well. The organisation is divided into three main functional areas namely; Audit: This division provides independent auditing services to a number of companies. KPMG provides appropriate resources and technological tools required for supporting the internal controls within those companies. The Audit Committee Institute (ACI) of KPMG also provides resources to audit committee members and helps them in keeping pace with the latest developments in the related fields like governance, audit issues, accounting, and financial reporting. Key products and services under this division include, Statutory Audit, Financial Statement Audit and Audit Related Services like International Financial Reporting Standards, US GAAP reporting services, Prospective reporting, other forms of audit and attestation reporting. Tax: The tax services are meant to help out the client companies in managing tax risks and preparing them for tax compliance. KPMG offers its services for a range of taxes like business tax, international corporate tax, direct and indirect tax. This helps the client companies in adhering to the laws of the land and planning out growth and development schemes. The tax service include Personal Tax and Business Taxes like International corporate tax, Global indirect tax services, Global transfer pricing services, Global tax outsourcing, Global mergers and acquisitions, International executive services etc. Advisory: This type of services are mainly meant for assisting the companies, their intermediaries, public sector undertakings to mitigate the risks involved and optimise the performance levels. Once the companies know about their financial strengths and risks involved, they can accordingly plan for their long term strategies. Company provides advisory related to Accounting advisory services, Business performance, Corporate finance, Financial risk management, Forensic, Internal audit services, IT advisory, Restructuring, Transaction services etc. To devise strategic responses for emerging situations, the company is headed by a Global Board1, headed by Timothy P. Flynn as its Chairman. This body happens to be the principle governance and oversight body. Other members in this top body include, John B. Harrison as Deputy Chairman; Michael P. Wareing as the CEO for KPMG International United Kingdom; John Veihmeyer as the Chairman for KPMG's America's region operations; and John Griffith-Jones entrusted with the responsibilities of KPMG's Europe, Middle East, Africa, India region and United Kingdom. This is the top decision making body of the company. The global also comprises of board members representing different regions and territories, which help in providing valuable inputs for the board to take decisions. Such an arrangement not only appears duly representative of the geographical topography of the operations of the company, but it also helps the small team of top strategists to come out with appropriate responses to emerging issues. In order to effectively manage the span of the organisation, KPMG too has resorted to dividing the work and labour in such a manner that separate jobs are assigned to each individual depending upon the levels of hierarchy and functional areas. KPMG is a Swiss cooperative that operates as an umbrella organization for its member firms. The three main operating regions that the company has divided itself into are; Europe, Middle East, and Africa: Many parts of this region have been traditionally the forte of the company. Therefore, despite large number of clients the company can very well manage the region by clubbing these three areas. The company is quite aware and friendly with the extent of diversity prevailing in this region. The Americas: This region comprises of countries like the USA and some of the developing Latin American nations. This being a hugely diverse region, not only in terms of economic development but in the business practices as well, KPMG has made this region into a special one. Asia-Pacific: If the globalisation policies are to succeed, there have to be large number of consumers around for the companies. The Asia-Pacific region comprises of countries like India and China with billions of customers. The growing influence of both these nations in the Information Technology era, the phenomenon of outsourcing, the IT enabled services etc. are some of the factors which is also leading to an increase in the purchasing powers of the consumers in these parts of the world. Therefore, KPMG has made this region a centre of special attention as well. The basic structure of the company2 'is designed to support consistency of service quality and adherence to agreed values wherever in the world the member firms operate.' In fact the global reach of the company is stated to be one of the key strengths of the company. The effectiveness of such operations depends upon the effectiveness of the organisational structure of the company. KPMG is counted as one f the Big Fours in the accountings. The other three are PricewaterhouseCoopers, Deloitte, and Ernst & Young. An important ingredient for the smooth functioning of an organisation is to inculcate sets of values and cultures amongst all the stakeholders. KPMG too has prepared a set of values for its day to day functioning, which proves to be guide not only for the management teams, but also for the customer care executive dealing with the customers. The value proposition followed by KPMG includes3; Lead by example: The company calls for its workers at all levels to lead by example Work together: This is meant to bring out the best in each other and create strong and successful working relationships. Respect the individual: KPMG takes pride in acknowledging the skills and experience of the individuals and team members. Seek the facts and provide insight: In order to have a trustworthy relationship with its clients, the company believes in strengthening its reputation as a trusted and objective business adviser. Open and honest in the communication: Company believes in transparent functioning and providing adequate support to manage tough situation. This helps the managers in handling the circumstances fearlessly. Committed to communities: In order to come out with responsible corporate behaviour, the company believes in helping the society and environment. Act with integrity: KPMG calls upon all its associates and team member to strive hard to uphold highest professional standards; provide sound advice and rigorously maintain the independence. References: 1. Datamonitor (2008). KPMG International - Company Profile. Datamonitor Europe, London. 2. KPMG (2008). Available online at http://www.kpmg.com/Global/Pages/default.aspx (Feb 19, 2009) Read More