Ric Payne's Blog

What separates great firms from the rest of the pack is the quality of leadership and yet, with the notable exception of large firms, our profession pays little more than lip service to proactively encouraging leadership development.

I could spend time discussing why my thoughts on why this is so but I suspect we all know the root cause … training, developing, coaching, mentoring etc sound awfully like “time consuming” and in an environment where the general view is that “time is money” these activities don’t get much attention. Such an environment characterizes most small and mid sized (and therefore nearly all) firms.

In multi-owner professional service firms (PSFs) this is a particular problem because chargeable client work is generally considered to be a more valuable activity than running the business. Charging time yields immediate “financial” gratification whereas the payoff from leadership is not so visible in the short term. Leadership in such an environment is your night job.

More often than not lip service is paid to the role of Managing Partner and when push comes to shove critical decisions (both operational and strategic) are often made by a show of hands by the owner group with no one person having the time, interest, desire or the power to ensure successful execution. If things don’t work out everyone draws comfort from being part of the crowd rather than have the failure rest at the foot of one of them alone—there may be comfort in numbers but comfort does not equate to results and greatness does not emerge from comfort zones.

It is not much different for the sole practitioner. For the most part, the owner is the major rainmaker and fee earner. To make a living doing technical work is the name of the game and once again, leadership is the night job. It’s little wonder most sole practitioners find it incredibly hard to break free of the shackles of the small firm with 3-4 people.

BUT, here’s the really interesting thing. THE MOST PROFITABLE accounting firms on the planet are sole practitioners! These people represent less that 1% of all firms and they are making more than $1 million for themselves every year. How so you might ask? The answer is simple: these people have learnt how to lead, they understand the power of leverage and have built an organization of 20+ people who do the work that accounting firms do with a management group in place so that they can get on with the work that business builders do.

I believe it was David Maister who said “most firms are over managed and under led.” I agree with that. Management is essentially about the short term, it’s about this year’s income and this year’s problems. Leadership is about the long term, it’s about the growth of the firm and its people, it’s about seeing and seizing opportunities, it’s about innovation and going places others have not thought about.

Being a leader is a lonely role and in both multi-owner firms and sole practitioners leaders have no one there to give them a frank assessment of their performance. That being the case they should consider asking themselves some serious questions.

In the January 2007 edition of the Harvard Business Review, Bob Kaplan published a great article on leadership called, What to Ask the Person in the Mirror (you can buy the article for $US6.50 from the Harvard Online site.) It’s an article that I would recommend to any person in a leadership position (or aspiring to such a position) in any organization but especially one where there is no-one else there willing or able to give you candid feedback and challenge the way you’re running your business.

Kaplan poses a series of questions that relate to seven leadership challenges. Here is a summary:

Challenge 1: Vision and priorities

How often do I communicate our vision and our key priorities to achieve that vision?

Employees want and need to know where the business is going and how it is going to get there. It is not enough to pontificate a view of the world and the hopes and aspirations of the organization at the annual retreat and then check that task off the list as you move on to the next item on your agenda.

Challenge 2: Managing time

Does the way I spend my time match my key priorities?

When your team see you spending your time on matters that do not seem to connect with your stated top priorities they become confused and disorientated. Too often leaders find themselves dealing with operational problems rather than seeking and exploiting opportunities.

In professional service firms (PSFs) many so-called leaders focus on doing chargeable work. For technical specialists that is totally acceptable but that being the case, these people should not be expected to assume a leadership role other than in their technical area. The serious challenge is that in many (and I’d suggest most) of these firms there is pressure for all the senior people to be chargeable with the result that the business is not being led and instead is drifting aimlessly in the sea of mediocrity.

Challenge 3: Giving feedback

Do I give people timely and direct feedback they can act on?

Trust is critical for team member engagement and productivity. And the key requirement for a trusting relationship is regular, timely and candid feedback on performance. It’s a lot easier to avoid confrontation and put aside what might appear to be minor performance failures but that does not solve the problem. Instead, it implicitly endorses an acceptance of sub par performance which ultimately becomes serious under-performance. At that point, feedback is resented, trust is eroded and an effective working relationship breaks down. On the issue of trust, one of the best books I’ve read this year is Patrick Lencioni’s The Five Dysfunctions of a Team. I strongly recommend you buy a copy, it’s highly readable and not too long!

Challenge 4: Succession planning

Have I identified potential successors?

One of the most important criteria of a leader’s success is the quality of the management team he leaves behind after he leaves the job. If you can’t honestly say that you have picked at least one potential successor you are not doing you job.. Kaplan makes the point that people who do not think about their successors are generally not good delegators and this cascades down through the organization. As a result of this younger talent is not challenged and developed and is likely top leave for better opportunities.

This is a particular problem in PSFs because so much store is placed on the value of chargeable work resulting in the mistaken (in my view) belief that “leading from the front” means doing lots of chargeable work and being seen to put in lots of hours, working hard and fast—note there’s no mention here of working smart.

Challenge 5: Evaluation and alignment

Am I attuned to changes in the business environment that may require shifts in how we organize and run the firm?

Both the external and the internal environment of the business is changing. Clients needs generally as well as at the individual level will be changing as will the firm’s. For example, the position of the firm in its own lifecycle (this applies to your clients as well) will mandate a different set on priorities and organization structure. In a rapid growth phase, introducing new services is unlikely to be on the top of your mind but cash flow, hiring talent and workflow management probably are. On the other hand when your business moves into a mature phase and growth slows, your mind will need to shift to marketing, mergers and acquisitions, new service lines, talent development and profit management.

This idea reminds us of the relevance of the phrase: your past success is no guarantee to your future success. In fact, past success often leads to complacency which explains why so many firms stagnate and why Jim Collins is so right when he says good is the enemy of great.

Challenge 6: Leading under pressure

How do I behave under pressure and what signals do I send?

People react to different situations in different ways and what may cause you a lot of anxiety may not worry someone else. But the way you, as a leader, behave in response to different situations sets the tone for the whole organization.

Things don’t always work out the way you’d like and if you become agitated and look for people to blame rather than take responsibility yourself this will encourage everyone in the organization to (a) share your anxiety and (b) to look for someone else to blame. This leads to a very defensive, negatively focused, “keep your head low, protect your backside” culture which is not the stuff great organizations are made of. Highly anxious and expressive leaders do not encourage candid feedback from their subordinates relating to business challenges. As a consequence a situation may be allowed to develop which becomes much harder to manage later on and in turn leads to an even more serious challenge.

This is another reason why some people draw comfort from the “partnership” management model in which everyone can seek the shelter of the group . If you subscribe to the view that the “group” must take responsibility then your organization is effectively leaderless. The only responsibility a group has is to appoint and then support a leader. If the leader is not performing then the “group” should put someone else in the role but until that point the “group” should support the person and the position. In my opinion there is a need to separate ownership from leadership.

Challenge 7: Staying true to yourself

Does my leadership style reflect who I am?

Abraham Lincoln said “You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time.” Kaplan notes that a career in business is a marathon not a sprint and you try to be what you aren’t by nature you will have a serious challenge.

Different people have different natural leadership styles each of which are better suited to different situations. It is possible to observe and adopt behaviors that you have seen to be successful but you can’t change who you are. At the end of the day you must create your own unique style that fits with your personality and skills.

In responding to this question you should be asking yourself some additional questions such as: am I assertive enough or have I become tentative? Am I too politically correct? Am I too worried about getting on with or second-guessing my boss (or my peers) to cause me to hold back rather than express my views candidly?

One of the most important things you’ll learn when you read Lencioni’s book is that fear of conflict is one of the most important and debilitating dysfunctions of a team. Positive conflict is a necessary condition for trust. Teams that engage in productive conflict understand that its purpose to achieve the best possible result in the shortest possible time by drawing out the best in each other and finding solutions to challenges. This is the basis upon which all great businesses are built.

Challenge 8: Passion

Am I really passionate about this business and my role in it?

This is not one of Kaplan’s questions but I believe it should be asked. If you are not genuinely passionate about the business and the leadership role how can you possible expect your team to display any passion. Is this really what you want to be doing at this stage of your life then you are in the right place but you may need to change some of your behaviors to make the most of your opportunity.

Here’s how you can make some use of these ideas

Get a copy of Kaplan’s article and give it to each person in your partner group (and senior managers if you wish.) Have each person score himself or herself on a scale of 1 to 5 (where 5 is great) in relation to each of the challenges and then have each person anonymously do likewise for the other partners. The peer assessment should then be given to the person being assessed who will then review the feedback and compare it with his/her self-assessment.

Before the next step you might want to read The 5 Dysfunctions of a Team by Patrick Lencioni. You can start this by reading the summary that starts on page 191 and is a quick 28 page read – there’s a Team Assessment questionnaire on page 192 that will enable you to determine if you have a dysfunctional team. You might also want to visit Lencioni’s website www.tablegroup.com.

Now, the next step would be to get together for half a day as a group and talk about the impact the different leadership styles might be having on the organization and what you each plan to do about it. You never know, you might end up electing a new Managing Partner. If you are a sole practitioner do the same thing and have one or more of your team members assess you.  Click here to download the self assessment questionnaire from our site.

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