Hint: It’s not about billable hours.
by Rick Telberg
At Large
Does an accounting firm operate by different rules than any other company? When it comes to public responsibility and legal liability, the answer is
surely “yes.”
But some new research I’ve been conducting suggests the laws of nature in business entities apply just as strongly to accounting firms as to any
other organization.
Join us Tuesday July 14 for a live webinar on
“The New Rules for Leadership in Accounting Firms Today.”
Click here to learn more.
Accounting firms are hardly exempt from the laws of business just because they happen to be partnerships, or because they offer professional services. Indeed, the rules that govern success or failure most surely apply to accounting firms as well.
The question is why do so many accountants avoid the facts of business life? Successful corporations operate with strong leadership, a healthy respect for a diverse range of skills and functions, built-in change and innovation efforts, tough workflow and quality controls and strategic financial and marketing plans.
From among this list, few factors may be as critical as leadership and management. Some 16,000 books have been written on the topic, and few can agree even on a simple definition. Over the past few years, I’ve been working to define and measure the qualities of leadership and management in the accounting profession. I’ve canvassed hundreds of firms, some in person, some by telephone interview and hundreds more in empirical surveys.
The differences between the successful accounting firm and the less-than-successful accounting firm are stark. In my research, I’ve divided the successful and the not-so-successful into two opposite categories to make the comparisons starker. I call them the “Leaders” and the “Laggards.” And I think I’ve boiled it down to a few key elements. The complete findings will be disclosed in a series of webinars starting July 14, available here.
First of all, you don’t need “leader” in your title to be a leader in your firm. Leadership entails more than simple power to command or coerce. In fact, command or coercion is rarely indicative of a leader’s success. Too often, it is the sign of a failed organization, an organization that relies too much on the power and influence of a single person is not self-sustaining. When the leader moves on, for whatever reason, he or she leaves an organization in crisis.
True, we judge leaders by results. In seeking out the best leaders we look for the outcomes that define leadership. But outcomes alone are not predictive. The tales are legion of strong, persuasive, charismatic leaders who presided over great corporate achievements that eventually went sour, or worse. You don’t need to look far past Wall Street, Washington, D.C. or Detroit to see examples of powerful people who led their organizations into ruin or drove their plans into tatters.
So, the single most predictive quality of leadership is not, in fact, results. The recurring question must be: What are the key factors that produce results? And, on this question, there is agreement rule: Judge leaders by their followers.
The ultimate test of leadership is in how results are achieved through the actions and behaviors of others. “The main job of a leader is to create other leaders,” according to Bob Bunting, the driving force behind Moss Adams CPAs and a former AICPA chairman.
“True leaders bring out the best in their people,” according to Aubrey and James Daniels, performance management consultants writing in “Measure of a Leader.”
You can define “the best in people” as courage or heroism, as integrity or diligence or as creativity or consistency. Every organization can define it differently, and often it does.
But the job of a leader is to understand the qualities and behaviors an organization needs in its people, and to develop and nurture those qualities and behaviors.
6 Responses to “How to Judge CPA Firm Leaders”
Edward.Herbst
Rick:
No single factor is more important in success than Leadership; and none more complex. I don’t have a silver bullet answer regarding what leadership attribute or principle is the key criterion; I think that’s the condundrum – and beauty, of leadership – it can flourish in many environments and with many styles – and be equally emaciated or suffocated by environments and styles.
I didn’t write to wax philosophically – when I read your article, I was struck that a professor at my alma matter (SUNY Buffalo, Jacobs School of Mgt), Jerry M. Newman, took a sabatical and took jobs at fast food restaurants. “My undercover life at McDonalds” his key take-away: The difference between great and successful restaurants, even within the same franchise chain, boils down to: solid LEADERSHIP! A good manager, who inspires others and holds people accountable for sucess wins the day. I think we all can anchor to that, since we’ve all been to good, efficient and clean places and likewise suffered those which toil under poor leadership…
I thought it interesting that this common theme transcends industry and business – and not surprisingly, is equally true within the CPA field.
Thanks for the article and thoughts on leadership.
Kind Regards,
Ed Herbst
Jason S. Inman, CPA, CIPM
Knowing when to lead and when to listen.
Asking questions that lead to a conclusion instead of making a statement.
Serving instead of being served.
Jason S. Inman, CPA, CIPM
MCDONNELL INVESTMENT MANAGEMENT, LLC
Client Accounting and Reporting
Corey Lord
This was a great article!
One thing I’ve always noted about leadership is that good leaders are also good followers. By this I mean that they are always willing to listen to their own followers for ideas and let their followers lead themselves and sometimes the organization. Good leaders often give good direction or a compass for the organization and provide clarity and practicality to an project’s objectives or an organization’s mission.
Chad W. Davis, CPA, MBA
I just read your article on leadership in a successful CPA firm. I loved it!
We actually named our firm Red Rock Business Advisors because we want to be valued business “leaders” advisors to our clients and our industry. My partner and I have both run other small businesses and we constantly talk about how many firms are made up of leaders who have only worked/led in the public accounting arena. Unfortunately, I think this has numbed them to the demands and requirements of leading and working in other industries. Not to say they’re not smart, competent accountants. Many are great, but they may not understand the “headaches” of other business leaders.
We’re actually working on a marketing plan to reach out to other CPA firms to show how we’ve used technology and our skill set to differentiate ourselves and market this strategy development for others.
I’d love to get your ideas.
Chad W. Davis, CPA, MBA
http://www.linkedin.com/in/chadwdaviscpa
Lance Mann
True leaders are always improving, not maintaining. They focus every day on improving themselves, the people they work with, the company they work for and their clients. They understand that everything and everyone has something that can improved upon.
Lance Mann
Dean Dorton Ford, PSC
Lexington, KY
Lisa Bargsley, CPA
Great article!
I’ve been doing my own research on leadership. For the past three or so years, I have been involved with a class learning about Edwin Friedman’s concepts based on Bowen Systems Theory. Bowen’s theory of self-differentiation and Friedman’s continued work in this area bringing it to organizations beyond families is fascinating to me. It brings tremendous insight in working with family business owners.
With that, a leader is someone who knows herself, knows the goals she wants to accomplish and does not allow others to influence the direction. That is, the leader has the innate ability to continue in a relationship with others who disagree, and then keep connected to them. Leadership is about functioning in such a way that others grow in their own maturity or self-differentiation. Leadership is about the organization continuing and functioning in a healthy way that promotes creativity, individualism, and self-responsibility.
And I agree – an accounting practice should be operated and managed just like any other business. We are not immune nor in an ivory tower separate and distinct from today’s business challenges.
Lisa Bargsley, CPA
Bargsley, Andrews & Steinbach, CPAs, LLP