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A way to build future leaders.

Does the daily practice of public accounting adequately prepare promising CPAs to lead their firms into an uncertain future? Many in the profession fear it does not. An excellent technician doesn't necessarily have the experience to develop local office policy and a successful business generator may not be trained to untangle personnel problems. When one firm began to wonder about the source of its future leadership, it created a program that has met its own needs and that can be adapted by other firms of all sizes.

The management group of Clifton, Gunderson & Co., a firm with 40 offices in 10 states, set out to investigate how it could ensure a supply of qualified future leaders. (Previous management training had been handled at annual managers' retreats and partners' meetings.) It considered option such as recruiting seasoned people from outside but concluded the best strategy was to work from within to identify those with leadership abilities and train them on how to use their talents.

"The genesis was a discussion about the need to identify early potential firm leaders, not just future partners," says managing partner J. Curt Mingle. "We were growing rapidly as a firm and were clearly short of individuals with leadership qualities who would be willing to assume positions in the firm, such as office partner in charge, that required leadership, not just management, skills.

"Like many other firms, our talented young people had great technical skills and the normal management training, but something was missing. The something was leadership training. This encompassed the need to understand the current and future professional environment, the need to see the big picture in terms of firm direction and priorities and the need to inspire and lead others in achieving firm (not just office or individual) goals. The program we developed is helping us meet those needs."


The management group, which consists of Mingle, Carl George, director of business operations, and Joe Lhotka, director of professional practice, worked with the firm's staff industrial psychologist, Ron Winkler, to build a two-year program of specialized training from scratch. "We decided we needed to design a program that best fit what we felt was the current and future culture of the firm," according to George, who coordinates the program. The final result - the leadership career program (LCP) - is made up of five components:

* Individual development needs analysis. Psychologist Winkler oversees this area, which is designed to identify each program participant's development weaknesses and strengths, focusing especially on the attributes neccessary to become a successful leader at Clifton, Gunderson. The analysis is based on psychological testing as well as surveys of a participant's staff and peers to gauge decisionmaking abilities, communications, technical and professional skills and other relevant characteristics.

Winkler works with the LCP participant to set priorities for improvements and develop an action plan with goals that might include receiving outside training in areas such as negotiation, organization or communications skills. The plan and later follow-up discussions are strictly between the participant and Winkler, a feature George believes adds credibility.

On-the-job training. Every LCP participant has to satisfy two requirements in this area. Each must attend at least one firm partnership board meeting to gain firsthand knowledge of policy decision making and how the board and management relate and work together. All class members also must perform one operating office administrative review, a 1- to 2-day examination of operating procedures and controls, adherence to firm policy, financial results and opportunities for improvement, at an office other than their own.

More individualized training assignments are developed by the participant and his or her local office partner in charge (PIC), depending on the LCP participant's strengths and weaknesses and the office's needs. Assignments might include becoming involved in personnel decisions, forming office policy or taking part in budget management. George reviews all class members' proposed programs.

Formalized continuing professional education. LCP participants attend three two-day LCP group meetings annually. Typical agendas include freewheeling and strictly confidential roundtable discussions on firm or office problems, presentations by outside speakers and reports on required readings as well as informal pizza parties at which participants watch and discuss leadership videos. George sets the agenda based on input from other management group members and the LCP class itself, as well as past experience of what has and hasn't worked.

During the roundtables, participants are asked to discuss a problem in their home offices, and class members offer ideas and follow how the problem and its solution evolve over the two years. Bill Vincent, who entered the first LCP class in 1989 as an audit and accounting partner in the Cedar Rapids, Iowa, office and is now PIC of the Madison, Wisconsin, office, found this tremendously helpful.

"You're talking about real-life problems and real-life issues that affect the firm," he explains. "We had 11 people in our class and all had different, major problems that needed attention. The fact that we heard about and helped to resolve them - that was very important, to see how it works." Vincent credits his elevation to PIC in part to what he learned in the program.

Participants also attend state and national management of an accounting practice conferences, American Institute of CPAs private companies practice section conferences and those offered by the American Management Association and other groups. "We try to round out the program through formal training at conferences and listening to each other and learning from the management group," George says.

Exposure to the management group was the most important part of the program for Vincent. "As a partner in the firm, you don't get access to the management group that often. This gives you a day or two with these three people who've gone through an awful lot, especially in terms of managing offices, " he says. "Access to them was something you don't get from taking a class or reading a book."

* Reading assignments. Participants are given a schedule of books they must read and discuss at LCP meetings, plus a lengthy list of recommended readings. Volumes usually are leadership books not necessarily geared to CPA firms (see the sidebar above).

Kris Kaland, an LCP graduate who is now the firm's director of audit and accounting, found the reading assignments really valuable, particularly when they pertained to the weaknesses identified in her individual needs analysis. She would have added even more titles to the long list of leadership selections, particularly in practical management.

* Progress and assessment. Participants must report regularly on what they've accomplished it, on-the-job training.

Although all the participants believe the LCP program can be modified for different firm needs, careful planning and structuring when working with nontechnical subject matter such as leadership are important. "Going into it everyone was a little leery about how concrete it would be, but it was very well laid out," according to David Barber, who was promoted from manager to PIC of the firm's Macomb, Illinois, office during his tenure in the program.


Participants are organized into classes that run consecutively for two years. The firm decided to target managers and those who've been partners from roughly one to three years because the major time commitment necessary could be too onerous for more advanced partners with widespread duties and responsibilities. Participants say the program is best for those who enjoy working with people and don't mind occasional conflicts. Kaland also believes senior managers might get more benefit from such a program because they have less management background and may be more flexible in their approaches than partners.

Class members spend about 200 hours annually on LCP work which typically breaks down into 40 hours of formal CPE (this includes the LCP meetings), 40 hours of on-the-job training and 100 to 150 bours of reading assignments. "It's a personal time investment made by the participants. They know that up front," George says.

Local PICs are solicited to nominate potential participants but are not required to do so (they are allowed only one nomination to preserve confidentiality). The management group expected that conflicts between class members' LCP tasks and their normal duties would be a major problem with local offices, so when the program was introduced, it wrote all PICs to establish that the LCP curriculum must come first. "If the individual wants to invest the personal time, then we should be willing to invest the firm's time," George says. "We tell the PICs that if they can't afford to have someone participate, then please do not nominate that person." As a result, he reports excellent cooperation from PICs and other local partners.

The group uses Winkler's input to select the LCP groups, which have a maximum of 12 people. Twenty-three people have graduated from the program and 10 are in the current class. The firm has made no major alterations to the LCP since its initial design, but it has made format changes to reflect each class's needs and interests. "One thing we've found is that each class is different, so we have to format the curriculum around the class's culture and personality," George says.

For example, one class responded well to open and wide-ranging roundtable discussions, while another more experienced class preferred very focused examinations of specific issues. The management group asks for feedback on what participants found most or least valuable and will toss out its meeting agenda if one exercise proves too useful to curtail to go on to other agenda items. There are no time allocations for agenda items.


George says the firm considers LCP a definite success. It has produced a number of new PICs and has helped better define specific qualities the firm needs in its leaders. The classes' analyses of important issues have generated useful ideas and the program has enabled the firm to test new concepts that might ultimately become firm policy (see the sidebar at left). And, firm members report, it has instilled greater confidence and a sense of camaraderie among the emerging leaders in the program.

"There were quite a few people in our class I didn't really know very well and now I have a network of people to turn to for help with management and technical questions," Barber says. He also obtained contacts outside the firm through the conferences he attended as part of the program.

George characterizes LCP costs as a small part of the firm's training budget and says the major expense is the participant's individual time investment. A PIC's time commitment in working with an LCP participant varies with each on-the-job training program.

Formalized leadership training is not solely for larger firms, he insists. "The program could be adapted by any firm, there's no question," he says. "A smaller firm that can't afford the dollars and time that we spend on LCP could focus on pieces of the program, such as on-the-job training or formal CPE. Any firm could take the generic format and adapt it to its own personality. We all need more leadership, whether the firm is big, small or medium-sized. And more and more firms are looking toward structured programs."

LCP graduates say some of the least expensive aspects of the program, such as exposure to firm leadership and the readings, are among the most valuable. "Spending the day with the top-level people in your organization, and having access to their knowledge and experience, were the most important things," according to Vincent.

And for Barber, although the time-consuming reading assignments were "probably the biggest hassle, at the same time it's something I got a lot of benefits out of. It got me in the habit of reading business and management publications regularly."

The program seems to offer a broader view of the business of public accounting. "When you're practicing accounting, it's so easy to keep your head down and to try to stay current with all the technical changes going on in the field that sometimes we lose track of changes in the business environment and management issues," Barber says. "This certainly gave me a greater awareness."


These books are required reading for Clifton, Gunderson's leadership career program members. 1. MAP Selected Readings, AICPA Management of an Accounting Practice Committee, Practitioners Publishing Company, Fort Worth, Texas. 2. Service America! Doing Business in the New Economy, Karl Albrecht and Ron Zemke, Dow Jones-Irwin, Homewood, Illinois. 3. The Leadership Factor, John P. Kotter, Free Press (Macmillan), New York, New York. 4. The Creative Edge: Fostering Innovation Where You Work, William C. Miller, Addison-Wesley, Reading, Massachusetts. 5. Successful Manager's Handbook: Development Suggestions for Today's Managers, Personnel Decisions, Minneapolis, Minnesota.


* WHEN CLIFTON, GUNDERSON & Co. began to question the source of its future leadership, it created a training program that has met its own needs and that can be @(lapted by other firms of all sizes.

* THE FIRM'S LEADERSHIP career program (LCP) is made up of five components: 1. A confidential individual development needs analysis. 2. On-the-job training assignments. 3. Formalized continuing professional education conducted in-house and outside the firm. 4. Required reading. 5. Progress and assessment reports by the participants.

* PARTICIPANTS ARE MANAGERS and relatively new partners. They spend about 200 hours annually on LCP work.

* THE PROGRAM HAS produced a number of new partners in charge and has helped better define specific leadership qualities the firm seeks. The costs are a small part of the firm's training budget.

* FORMALIZED LEADERSHIP TRAINING isn't solely for larger firms. Smaller firms can adapt segments of the program, such as on-the-job training or formal CPE.


Clifton, Gunderson's leaders believe there will be a key shift in the profession during this decade to getting work and then staffing it instead of getting staff and then finding work. The firm's second leadership career program (LCP) class prepared papers on the viability of part-time partnerships. This is partner Kris Kaland' synopsis of their conclusions.

Our firm has become increasingly concerned about the peaks and valleys in our business cycle. Close to 75% of our net income is earned from January through April. The partners in the firm book close to 50% of their charge hours in these four calendar months. We have moved toward hiring part-time professionals for busy season. The LCP was asked to study whether the part-time concept also could work for partners.


A part-time partner is a general partner who works less than 2,000 hours in the firm's practice of public accounting. As a general partner, the individual has an ownership interest and falls under the normal partnership agreement.



* The formal part-time designation justifies the existence of partners with significant available time in the off-season.

* It addresses quality-of-life considerations. Partners have more time available to raise their families and pursue nonconflicting interests outside the firm. Working part-time could lower stress associated with public accounting and increase productivity when the partner is working.

* The arrangement is ideal for partners nearing retirement. It provides an excellent opportunity for younger partners to develop their client management skills under the tutelage of a retiring partner and assist with the orderly transition of clients.

* The part-time designation can work well for a partner. with limited client contact who functions as a technical resource by performing research or reviews in the tax, audit and accounting or management consulting service areas.

* It can be a recruiting advantage, especially for women anticipating motherhood and others more interested in their quality of life than the sacrifices and commitments necessary for full-time partnership.

* Part-time partners can be compensated accordingly, so the program can increase average partner earnings, assuming the firm operates as effectively with a mixture of full- and part-time partners.

* About 50% of accounting graduates are female, but many of these women leave the profession before partnership. Part-time partnership can aid in the retention of women in the profession, assuming they are leaving because of the difficulty of full-time commitment.


* Client service may suffer when the part-time partner is not available.

* Communication problems may develop if other partners cover when the part-time partner is not in the office.

* There may be opportunity costs for business from current and potential clients not developed during the part-time partner's absence.

* In this litigious environment, a partner may not be willing to assume the risk of potential litigation while working part-time and therefore not actively participating in daily firm decision making.

* The program might be perceived by managers and other staff as a hindrance to their advancement to full-time general partners.

* It may send a negative message to our full-time general partners, employees, clients, referral sources and the general public that the profession does not require the full-time effort, commitment and dedication of a partner. Does this make sense considering the increasing complexity of the business world and the competitiveness of public accounting?


* A part-time partner should not be allowed employment outside the partnership without the specific written approval of the firm's managing partner. It is essential when the partner is absent from the firm that he or she not work in areas that conflict with the firm's business. * Part-time partners' capital requirements should be based on estimated income in the same ratio as full-time general partners. They should participate in the same profit-sharing system as general partners and have profit-sharing units in the same ratio as full-time general partners. They should be allowed to vote their profitsharing units and to run for the board (although there is some question whether they could be elected).

* A change in status from full- to part-time should be approved by the entire local office general partner group.

* Part-time designation should never be used to justify the continuation of a marginal full-time partner.


* Part-time general partner status might work in certain limited circumstances, such, as when partners near retirement and when there are temporary life-style changes, such as the birth of a child. It also may work for certain technical resource positions.

* Due to client service, opportunity cost and other issues, it would be difficult for the part-time partner designation to work for a regular client partner. Generally, an individual who is going to be a partner or owner of a public accounting firm today must possess the dedication, leadership and commitment necessary to see that the business prospers. This requires a full-time effort.

* Those who are not willing or able to make the full-time commitment probably would be more satisfied as employees and less interested in partnership - especially considering the risk they would be assuming.


Late last year, the firm's board of directors voted to allow partners the option of part-time partnership, especially for partners with personal quality-of-life reasons or for those nearing retirement. It's unlikely a part-time partner will participate in the LCP, however. "All of our partners are leaders in different ways," says program director Carl George. "But so much of leadership consists of dealing with people every day that I think it would be very difficult for someone who's absent a lot of the time to be an active leader in the firm."
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Title Annotation:includes related article on Clifton, Gunderson & Co.
Author:Kaland, Kris
Publication:Journal of Accountancy
Date:May 1, 1993
Previous Article:Charitable remainder trusts.
Next Article:FASB 109: auditing considerations of deferred tax assets.

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