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Rick Telberg
Rick Telberg
 

How to Judge CPA Firm Leaders

Hint: It's not about billable hours.

July 6, 2009
by Rick Telberg/At Large

Does an accounting firm operate by different rules than any other company? When it comes to public responsibility and legal liability, the answer is surely  "yes."

But some new research I've been conducting suggests the laws of nature in business entities apply just as strongly to accounting firms as to any other organization.

Accounting firms are hardly exempt from the laws of business just because they happen to be partnerships, or because they offer professional services. Indeed, the rules that govern success or failure most surely apply to accounting firms as well.

The question is why do so many accountants avoid the facts of business life? Successful corporations operate with strong leadership, a healthy respect for a diverse range of skills and functions, built-in change and innovation efforts, tough workflow and quality controls and strategic financial and marketing plans.

From among this list, few factors may be as critical as leadership and management. Some 16,000 books have been written on the topic, and few can agree even on a simple definition. Over the past few years, I've been working to define and measure the qualities of leadership and management in the accounting profession. I've canvassed hundreds of firms, some in person, some by telephone interview and hundreds more in
empirical surveys.

The differences between the successful accounting firm and the less-than-successful accounting firm are stark. In my research, I've divided the successful and the not-so-successful into two opposite categories to make the comparisons starker. I call them the "Leaders" and the "Laggards." And I think I've boiled it down to a few key elements.

First of all, you don't need "leader" in your title to be a leader in your firm. Leadership entails more than simple power to command or coerce. In fact, command or coercion is rarely indicative of a leader's success. Too often, it is the sign of a failed organization, an organization that relies too much on the power and influence of a single person is not self-sustaining. When the leader moves on, for whatever reason, he or she leaves an organization in crisis.

True, we judge leaders by results. In seeking out the best leaders we look for the outcomes that define leadership. But outcomes alone are not predictive. The tales are legion of strong, persuasive, charismatic leaders who presided over great corporate achievements that eventually went sour, or worse. You don't need to look far past Wall Street, Washington, D.C. or Detroit to see examples of powerful people who led their organizations into ruin or drove their plans into tatters.

So, the single most predictive quality of leadership is not, in fact, results. The recurring question must be: What are the key factors that produce results? And, on this question, there is agreement rule: Judge leaders by their followers.

The ultimate test of leadership is in how results are achieved through the actions and behaviors of others. "The main job of a leader is to create other leaders," according to Bob Bunting, the driving force behind Moss Adams CPAs and a former AICPA chairman.

"True leaders bring out the best in their people," according to Aubrey and James Daniels, performance management consultants writing in "Measure of a Leader."

You can define "the best in people" as courage or heroism, as integrity or diligence or as creativity or consistency. Every organization can define it differently, and often it does.

But the job of a leader is to understand the qualities and behaviors an organization needs in its people, and to develop and nurture those qualities and behaviors.

HOW DO YOU DEFINE TRUE LEADERSHIP? Tell me here: Contact
Rick Telberg
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Copyright © 2009 CPA Trendlines/BSG LLC. All Rights Reserved. Used by Permission. First published by the AICPA.

About Rick Telberg

Rick Telberg is editor at large/director of online content.

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Disclaimer: Any views expressed in this article do not necessarily reflect the views of the AICPA or CPA2Biz. Official AICPA positions are determined through certain specific committee procedures, due process and deliberation.