IMGCAP(1)]Many view leadership, management and administration as synonymous, but there are primary differences. It is not unusual for firms to expect individuals to possess the skills required for each. However, an individual's unique abilities will determine whether they enjoy the responsibilities and are successful.
Let's start first with the differentiators.
• Leadership: vision and planning;
• Management: execution and value creation; and,
• Administration: process and tasks.
All are important, and in smaller firms one person may be expected to do everything, with input (or meddling) from the owners. Most larger firms have figured out the importance of governance and tend to keep the majority of partners out of firm management.
To further explain these statements, I refer to Jim Collins' five levels of leadership from his book Good to Great:
• Level I: Capable individual.
• Level II: Contributing team member.
• Level III: Competent manager.
• Level IV: Effective leader.
• Level V: Executive.
I contend that the majority of people in accounting operate at Levels I and II. Why? Because that is what they have been trained to do and that is what is expected in their early years. They are focused upon themselves and the chargeable hours expected of them. How can they get to a higher level? Some figure out how to become a manager on their own or enter into a formal training program. The gravitational pull is often greater from Levels I and II than it is from higher levels.
The lack of management and leadership talent is the No. 1 challenge I hear about from firms around the world. The larger firms have developed leadership programs, but most have not provided training for managers. The primary reason they give is that they don't have time. This is much like a chainsaw operator saying he doesn't have time to sharpen the chain. In order for large numbers of people to grow into Levels III, IV and V, they must be developed and resources committed.
People leave firms because of bad managers, not because of the firm. One of the keys to retention is quality managers and another is a training/learning culture where people grow. It is most disturbing to hear partners say, "They can figure it out; I had to." In fact, many of those same partners have not advanced to Level III as competent managers.
Managers are expected to create value and are measured upon their ability to attain goals. One of their goals should be to become a competent manager and effective leader. This requires time and a program if firms want to improve upon their success ratio and develop a training/learning culture. Training and learning are a two-way street where everyone in the firm should be expected to develop others and learn.
Administrative personnel are often expected to have all the skills, especially in smaller firms where you often have a part-time managing partner or chief executive. This is a monumental task and often people are set up to fail in the role of firm administrator. People in these positions require professional development, peer networks and management resources in order to succeed. The biggest risk is that they are viewed by many accountants, including some partners, as overhead, rather than a strategic asset.
There are strategies that firms (of all sizes) can implement in order to ensure visionary leadership, quality management and efficient administration. It requires planning, people and processes. We refer to this as Performance3, with technology being the accelerator. The follow 10 strategies will help your firm overcome the obstacles and improve.
1. Hire people with integrity, intelligence and energy. In today's market, this is difficult if you are only looking at accounting majors. Increase the scope of your search to include business administration, finance, information systems, computer science and fine arts majors. Yes, right brain skills are important.
2. Build the management and administrative teams around the leader(s). Just like in sports, you must have synergy. The leadership of the firm must have their players on the management and administrative teams.
3. Use the Kolbe Index and Synergy Report. The Kolbe Index is a measuring tool that measures drive, instinct, mental energy and talents. Kolbe takes talent and turns it into value. It does not find weaknesses in people, but defines weaknesses in organizations.
4. Utilize non-accountants in many positions. The C-level (chief executive, chief operating, chief financial, chief information, chief value, chief technology, chief marketing and other "chief" officers) require professional training that is often not part of accountants' technical training or experience.
5. Team members need personal development programs. The firm should have learning ladders and each person must have a personalized development program that can be integrated with their performance evaluation and compensation. This includes partners. Grow or go!
6. Develop managers. Talent leaves bad managers, not firms. Competent managers must be developed. Excellent managers deliver consistent results. They also assign top talent to the projects with the most opportunity. They are evaluated on individual and team results.
7. Spend time to think, plan and grow. Leadership, management and administrative personnel must take the time to think and plan. They should also share their plans with the entire firm and clients.
8. Technology is the accelerator. Get digital ASAP. The needs of your most important clients cannot be met without the technology tools. You must improve client service and do more with fewer people in the future. The IT platform and business model are critical.
9. Successful firms have successful business models. From recent surveys, many at the administrative and management levels do not understand the limitations of the current economic model and they have not developed strategies for the future. The accounting profession has built its business model on the effort-based economy. Firms must move to the results- and experience-based economies. This will require taking pricing and billing out of the hands of many and making it the responsibility of a few. Partner compensation may also need to change in order to focus on priorities and the firm's vision. The right economic model won't matter if you have the wrong clients. Defining target clients and filtering clients who do not meet your filtering criteria are extremely important in a growth-focused firm. What got you to this level may not get you to the next level.
10. Employee recognition is as important as planning and accountability. An annual review doesn't cut it with today's employee. They want to know expectations up front and have frequent and consistent communications. One of the best ways to accomplish this is through accountability and employee recognition. Personal 90-day game plans, accountability reviews, and talent development ensure alignment with the firm's strategic game plan. Recognition programs must catch and reward individuals for doing the right things based upon firm values, goals and initiatives.
This list is not all-inclusive, but outlines the structure that firms should follow in order to leverage their leadership, and provide competent management along with efficient and effective administration.
Ray Kroc, founder of McDonald's, stated, "I didn't invent the hamburger; I just took it more seriously than anyone else." The best firms take leadership, management and administration seriously. Does yours?
