Management and Leadership in a CPA Firm – Part 4

Our fourth column picks up with our discussion about how to become a more effective people manager and developer. In our first three columns on this topic, we have covered 1) various styles of leadership/managers, 2) common excuses for not training others, and 3) why failure and “having your people’s backs” are such important ingredients in the development process. With this foundation in mind, let’s start focusing on what you should be doing right now.

The first question we ask is, “What skills and aptitudes are you trying to develop?” In other words, just saying to someone, “You need to improve” is weak advice. What specifically do you want to see improve? What career path are you developing a person for? How are you going to know if improvement has occurred? How are you going to communicate someone’s progress or decline? These are just a few questions that come to mind.

If we were talking about any small business, we would probably start with some simple job descriptions and go from there. But since we are talking about CPA or consulting firm development processes, we recommend staring with a competency model. I want to digress here for a minute and give you our view of a competency model. Many firms approach this as:

We build a competency model for staff, a completely different one for seniors, a completely different one for supervisors, all the way through partner/shareholder

Our point of view, and as you all know, we are wrong all of the time, is that while the specific focus areas or task accomplishments we would look for at each level are different, the broad areas of competencies covered by the model are the same for everyone. Here is an example of general competencies we look for:

• Vision & Strategy (including business savvy)
• Job Competency (including technical ability)
• Client Service (including trusted business advisor)
• Communication Skills
• Leading Change
• Execution (including project management and delegation)
• Ability to Lead (including leading by example and developing a following)
• People Development (including coaching and mentoring)
• Judgment/Decision-Making
• Marketing Focus (including industry knowledge and competitive awareness)
• Ethics/Character
• Building Teams

While the skills one develops as a senior will be different than those required of them if they are a manager, the same broad competency groupings apply for all professionals. For many, if not most, elements of any competency model, it should come as no surprise that the expectations increase the higher one moves up through the firm.

Where the wheels tend to fall off the cart in many firms, however, is in determining the relative importance of these competencies at different levels in a professional’s career. Let’s take a look at a couple of competencies as examples. For staff members, the relative level of importance of their performance in the Vision and Strategy competency would be much lower than the relative level of importance for a partner to perform well there. This is just logical. Next, consider people development – for entry-level staff, once again, the relative importance of this competency would be quite low – no surprise here. However, this should be relatively much more important a competency for supervisors, managers and partners. Why? Because all three of these positions need to be able to develop others. While each level will likely focus on developing different skills (i.e., supervisors might focus on developing their staff’s technical skills while partners might focus on developing the managers’ client service skills), they all need to be developing those that report to them. Now if your firm has created an added distinction of having technical and supervisory managers, then it would be no surprise if technical managers did not have as high a level of expected performance for “people development” as those working in the supervisory manager position. Finally, in this overview, recognize that as someone is promoted into a higher position, the relative importance to him or her of a specific competency could actually become lower. Consider technical ability. Within many firms, the belief is that managers should have the highest technical ability and that partners should be moving away from knowing how to actually do the work to developing and utilizing their skills to look at the projects from more of a strategic or global view. Because partners need to spend so much more time managing clients, implementing firm initiatives, etc., something has to give as they are promoted from the manager position. So while there is no doubt the partner group is still very technically competent, with the expanded requirements of the position, it becomes less important for them to maintain their intimate knowledge of a technical area and more important to apply the broad concepts around it.

The key here is to create some shared understanding within the firm about the relative level of importance of competencies, especially at the manager and partner levels. Without this overview of how it all fits together, when a firm tries to establish partner-in-training programs they don’t adequately define what those potential future partners need to do differently to become partners. Most firms simply say that you have to be able to develop a certain sized book of business. While we absolutely agree that this is an important competency, having someone that can bring in business but has hardly evolved in people development (i.e., only develops themselves and not others) or vision (i.e., can’t distinguish between what is good for him/herself as a partner versus what is good for the firm) does not a good future partner make. As well, creating a book of business is not quite the level playing field many make it out to be. Situations like the reputation of a firm within a specific niche, or the book the future partner currently works on and builds connections with, etc., all impact that person’s ability to bring in new clients. The bottom line is that we see a lot of partners that are only held accountable for maintaining a couple of competencies and allowed to ignore the development of others. The firm doesn’t focus on relative importance of competencies, and it doesn’t hold partners accountable to developing the more important competencies. While this can work in the short term, it is the single biggest reason for firms having to sell or not having an internal succession alternative. Firms need to require their partners to maintain and develop an overall set of competencies, including and especially those that are deemed most relevant to the firm, not just be allowed to opt out of evolving competencies they don’t enjoy.

Now that we have introduced this “relative importance” concept, we will pick up here in our next column and push further into the competency model topic as we continue to cover how to be better manage and develop those around you.