Boomer’s Blueprint

Leadership, management and administration: What’s the difference?

Leadership, management and administration: Many view these terms as synonymous. However, 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.

Leaders are primarily responsible for the firm’s vision and planning, while managers are mainly responsible for execution and creating value. Administrators must deal with processes 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.” He defines the levels as:

  • 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 the accounting profession operate at Levels I and II. Why? Because that is what they have been trained to do, and that is what was expected of them in their early years. They focus on themselves and chargeable hour expectations. How can they get to a higher level?

A lack of management and leadership talent is the No. 1 challenge I hear from firms. Larger firms have developed leadership programs, but few provide training for managers. The primary reason they give is, “We don’t have the time.” This is much like a chainsaw operator saying he doesn’t have time to sharpen the chain. Growing a large number of people into Levels III, IV and V requires development and committed resources.

People leave firms because of bad managers, not because of the firm. One of the keys to retention is quality managers. Another is a training and learning culture where people grow. A firm requires administration, management and leadership skills at all levels. 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 an effective leader. This requires time and a program if firms want to improve upon their success ratio and develop a training and 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 that have a part-time managing partner or CEO. 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 to succeed. The biggest risk is they are viewed by many accountants, including some partners, as overhead, rather than as a strategic asset.

The following 10 strategies will help your firm ensure visionary leadership, quality management and efficient administration.

1. Hire people with integrity, intelligence and energy. In today’s market, this is difficult if you are looking only at accounting majors. Expand the scope of your search to include business administration, finance, information systems, computer science, data analytics, project management, marketing and fine arts majors.

2. Build 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 conative 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 group (CEO, COO, CFO, CIO, CVO, CTO, CMO, etc.) requires professional training that is often not part of an accountant’s 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 integrates with their performance evaluation and compensation — including partners. Grow or go!

6. Develop managers. It bears repeating: Talent leaves bad managers, not firms. Competent managers must be developed. Excellent managers deliver consistent results. 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. You cannot meet the needs of your most important clients without 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. Accounting built its business model on an effort-based economy. Firms must move to the results- and experience-based economies. This requires 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 to focus on the firm’s vision. Defining target clients and filtering clients who do not meet your criteria are essential 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 upfront and have frequent and consistent communications. 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 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?

MORE FROM ACCOUNTING TODAY