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What are CPAs talking about

March 27th, 2014

Bill Sheridan always has interesting insights about our profession with an equally interesting angle that he posts on the MACPA blog. One that jumped of the page for me recently was one he called The Best Business Advice Ever: Be Willing to Change. As usual, Bill is right on the money so take a moment to read his thoughts.

But something else took my notice as I was reading his piece. It was the distribution of Blog topics for the MACPA (Maryland Association of CPAs) Blog, a copy of which I have reproduced below.

MACPA_Blog_log

What I find really interesting that of the 3,543 post tags 801 (24%) relate to Leadership & Management. The nearest rival for popularity is Legislative & Regulatory with Technology and Social Media coming in third.

I can’t help thinking the ranking reflected by this list pretty well summarizes the relative importance of these issue categories to the profession at this time.

The biggest challenge facing all professional service firms is the fact that for the most part the leaders and managers are consumed by the technical work of the firm which takes them away from leading and managing.

This I believe is why so many firms fail to realize their full potential and probably explains why those of us who have the opportunity to view the profession from an outside vantage point spend a lot of time thinking about and writing about leadership and management development. It would be interesting to probe this data a bit more to see whether practitioners also view leadership and management as a particularly important challenge.

In every case, without exception, the firms that I have worked closely with that have achieved industry-leading performance on all critical dimensions including profitability, growth, team retention, client approval and loyalty there is one defining characteristic: close attention is paid to leadership and management development.

In these firms the principal leader(s) has very little (if any) client case work because his/her focus is on implementing the firm’s strategy. The organization structure looks more like a traditional corporate model than a “partnership” of professionals i.e. a clear distinction is drawn between ownership and executive leadership.

I use the term executive leadership because I happen to believe the best firms create a culture in which everyone is encouraged to see themselves as leaders. An executive leader, by my definition, is the person or persons whose primary responsibility is to secure alignment between the organization’s vision, mission, values and goals and those of its people.  This necessarily involves time which will not be available if you are engaged in client work. More importantly, if the the executive leader(s) are doing significant client work the message they are sending to the troops is “to get to the top here, to earn the big bucks, you need to do what i do.”

Little wonder that technicians rather than leaders rise to the top in our industry. This explains why we see so often firms hitting one of two growth brick walls, the first being when a sole practitioner gets to about 3-5 people and is “so busy, getting work out the door” doesn’t have time to take the business to the next level.

Two Brick Walls

The second wall is hit when there are 3-5 partners and 20-30 people. Entropy again sets in. The founding partners, who may have had growth skills when they were young and hungry, no longer want to risk their equity on growth strategies (which is sometimes is another way of saying they don’t trust their younger partners to make sound judgments). The may also be enjoying the nice cash flow that emerges when growth slows.

New partners who have learned from their mentors that success is built on doing technical work often don’t know any better. Their belief system is so bound up in that billable-time mentality that they find it hard, if not impossible, to break free.

Furthermore, if their beliefs are tied to the idea that an individual’s contribution is measured by the size of a book of business or his/her billable hours they are very reluctant to agree to one of them being appointed as a CEO with little or no client responsibility.  And even if they can accept the need for a person in this role, what if none of them have the qualifications because they were all probably promoted because of their technical skills not their leadership skills. If this scenario plays out, when the founding partners leave the firm it goes into decline or flat lines.

Firms that want to continue to grow should be in a constant search for a potential executive leader among their team and irrespective of their size they should have a leadership development program in place to identify these people and nurture them.  Such a program should be accessible to everyone in the firm because a leadership philosophy is no something that attaches to a title. The essence of leadership is accountability and the essential role is change agent–which is what Bill’s blog post was about, the willingness to change. That is the primary role of a leader.

The challenge of course is one that all businesses face and that is to set team member expectations. For starters if you want to grow your business you need to hire people who want to grow themselves and can see the opportunity for that in your firm. If your revenues have been flat for a decade that might be a hard story to sell.

On the other hand, if you have decided to embrace an exciting vision that reflects solid growth, your team will have an important role to play in that which means they can expect greater responsibility (which comes with accountability.) Given this, you will have a good chance of attracting the talent you need to achieve your growth goals.

In other words, you need to embrace and articulate a solid business value proposition to attract clients and you need to have a solid team member value proposition to attract team members. In both cases these “value propositions” can’t be me-too propositions if you want to break from the pack. Putting this together is the quintessential role of a leader.

I hear a lot of firm owners today express concern about who they will be able to sell their firm to. I think a better question would be “who can I hand the leadership role to?” If you know exactly who that person is you will most likely have answered the first question. If you don’t have anyone in your firm who you feel (a) has the ability to take over or (b) doesn’t want to take over then you have to confront the brutal reality that you’ve dropped the ball on this aspect of leadership.

 

 

 

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