While many view the terms leadership, management and administration as synonymous, significant differences exist among them.
It's not unusual for firms to expect employees to have the skills required for each. However, unique abilities determine whether someone enjoys their responsibilities and is successful at fulfilling them. The size of your firm, the capabilities of its people in these roles and its attitude toward accountability all impact its potential for success and growth.
DIFFERENT ROLES
There are significant differences between leadership, management and administration.
Leaders are responsible primarily for the firm's vision and planning, while managers are responsible primarily for execution and creating value. Administrators handle processes and tasks. All functions are important, and in smaller firms, one individual may be expected to do everything with input (or meddling) from owners. Most large firms now recognize the importance of governance, and keep the majority of partners out of firm management.
To illustrate this further, consider Jim Collins' five levels of leadership, as defined in 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 a majority of people in the accounting profession operate at Levels I and II.
Why? Because that is what they have been trained to do, and these roles were expected of them when they entered the profession. The focus is on personal execution and following through with chargeable hours.
THE NEXT LEVEL
It disturbs me to hear some partners say about emerging leaders, "They can figure it out -- I had to!" Interestingly, many of these same partners have not advanced to Level III as competent managers. In order for large numbers of people to progress up into Levels III, IV and V, they must be developed -- and resources must be allocated to make that happen.
While it's true that a few figure out how to manage on their own (or enroll in a formal management training program), the gravitational pull from Levels I and II is typically far stronger than it is from those above.
A lack of talent at the management and leadership levels is the No. 1 challenge that I hear about from firms around the world. While some large firms have developed leadership programs, most do not provide training for managers.
The primary reason? "We don't have the time." This thinking is not unlike a chainsaw operator saying he doesn't have time to sharpen the chain.
RETENTION
People leave firms because of bad managers -- not because of the firm. Quality management is a key to employee retention, along with a culture in which the firm's professionals are always learning. Effective training and learning is a two-way street: Each employee learns and helps others learn, too.
Becoming a more competent manager and effective leader should be any leader's goal. In addition, employees at all levels of your firm should have administrative, management and leadership skills. This can be reality, but it requires an investment in allocating time, outlining a process and defining a program. The result will be a significantly improved capacity to create value.
Firms often expect administrative personnel to have all skills, especially in smaller firms that employ a part-time managing partner or chief executive. This is a monumental expectation, and people are often set up to fail in the role of firm administrator. Those in this position must have professional development opportunities, peer networks and management resources in order to succeed. That many accountants -- including some partners -- view this role as overhead, rather than a strategic asset, results in a significant risk factor to growth.
PERFORMANCE3 STRATEGIES
Accounting firms of all sizes can implement the following 10 strategies to strengthen quality leadership, management and administration. Each requires planning, people and processes. We refer to this as Performance3 -- with technology acting as the accelerator.
A 1. Hire people with integrity, intelligence and energy. In today's market, this is difficult if you are looking only 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.
A 2. Build management and administrative teams around the firm's leader(s). In sports, a coach needs players who will follow through and create synergy. Similarly, firm leaders need the right kind of players on the management and administrative squads.
A 3. Use the Kolbe Index and Synergy Report -- measuring tools that indicate drive, instinct, mental energy and talents. The Kolbe Index takes talent and turns it into value. It does not find weaknesses in people, but rather weaknesses in organizations.
A 4. Utilize non-accountants in many positions. The C-group (the chief executive, operating, financial, information, value and technology officers) requires professional expertise that is often not part of the average accountant's training or experience.
A 5. All team members need personal development programs. The firm should assign learning ladders, and each employee needs a personalized development program that can be integrated with performance evaluation and compensation. This includes partners.
Grow or go!
A 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 projects with the most opportunity. They are evaluated on individual and team results.
A 7. Leadership, management and administrative personnel must take the time to think, plan and grow. They should share individual plans with the entire firm and clients.
A 8. Technology is the accelerator. Get digital as soon as possible. The needs of your most important clients cannot be met without technology tools. You must improve client service and do more with fewer people in the future.
A 9. Successful firms have successful business models. Recent surveys indicate that 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 efforts-based economy. Firms must now move to models built upon the results- and experience-based economies. Correspondingly, firms must take pricing and billing out of the hands of the many and make it the responsibility of a few. Partner compensation also needs to change in many firms.
A 10. Employee recognition is as important as planning and accountability. An annual review doesn't cut it with today's employees. They want to know expectations upfront and have frequent and consistent communication.
Accountability and employee recognition are the keys. Personal, 90-day game plans and accountability reviews ensure alignment with the firm's strategic game plan. Recognition efforts should watch for and reward individuals who perform in ways that reflect the firm's values, goals and initiatives.
While this list is not meant to be all-inclusive, it outlines a structure that firms can build upon in order to leverage leadership, as well as attain competent management with efficient and effective administration.
Gary Boomer, CPA, is the president of Boomer Consulting, in Manhattan, Kan.
