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New structures for strategic growth: CMAs are taking on prominent strategic leadership roles in administering public accounting firms, adding corporate structures to established partnerships to create stronger businesses.

Professional accounting designations represent particular skill sets in the marketplace, and their holders add specific value to an organization. The distinction is becoming clearer, as CMAs play an increasingly prominent role in building successful businesses.

This trend is attracting recruiters from every field to the value of the CMA designation. This includes public accounting firms, which have started looking outside of their partnerships for professionals who can effectively manage the day-to-day operations of their organizations. Firm administrators, unheard of 20 years ago, are emerging in significant numbers in the North American and international public accounting firm marketplace.

Staying competitive in a public accounting firm is as challenging as any other business, and finding efficiencies isn't necessarily the forte of a business built on individuals with a specific skill set. And there's a lot to manage: use of charge time, use of non-charge time, effectiveness of marketing time, practice efficiencies, project turnaround time, client satisfaction results, professional development and more.

Todd MacDonald, a business development consultant who works with a variety of mid-market accounting firms, has seen the trend develop first hand. "In the last two years, three firms that I work with have hired firm administrators to manage their businesses," he notes. "The big four firms have always had leverage, they've always had administration people, but now many other firms are hiring administrators."


Management accountants make excellent candidates for these positions. With their natural focus on the strategic development of organizations, they add important strategic leadership expertise to public accounting practices. Nigel Jacobs, CMA and Lyle Strachan, CMA, are prime examples of how management accountants can help mid-market CA firms grow with strategic leadership. Jacobs is the CEO of Taylor Leibow LLP, based in Hamilton, Ont., and Strachan is COO of Mintz & Partners in Toronto.

Neither Jacobs nor Strachan would hesitate in acknowledging that they joined well-established firms. Both businesses were established in the late '40s and have grown from small operations into solid mid-market firms with international affiliations. The question was, simply, how do we grow from here effectively?

New initiative

Jacobs joined Taylor Leibow in 1994, before he'd received his CMA designation. At the time, he was an office administrator and internal financial accountant.

"Before I was considered for a senior management position, Stephen Wiseman, the executive partner, had brought in a CA/CMA, thinking that someone with the combined background might help with a strategy of professionally managing the firm," says Jacobs.

"The model we implemented started in the U.S.," notes Wiseman, CMA, CA. "We're members of an international association and a member in Baltimore had developed this model we felt we could use. We are one of the few who have done so in Canada, but it's an inevitable trend, and important to manage transition and succession issues."

As Jacobs advanced in the CMA Canada Strategic Leadership Program (SLP), he brought ideas from the program into his workplace and demonstrated that much could come from a management accounting expertise. In 1996 he was appointed director of operations. The new level of responsibility involved managing personnel (including all of the administration staff), controller functions and assisting in marketing, as well as attending partner meetings.

"At that time I was bringing a lot of concepts from the SLP into the office. Through that we developed customized training and a process management system," he notes.

By 1999, Jacobs felt the company needed a strategic plan and introduced the company to SWOT [Strengths/Weaknesses/Opportunities/Threats] analysis. "At that time I took on a bigger role at partner retreats, where typically company strategies are conceived," he says.

After three years of proving his value to the company, and developing his skills at the same time, he made his proposal to the partners. "I said to them, 'these are the things you're doing, this is what you're not doing, this is what you could be doing. I'll run the company for you to assure that these things happen.'" Jacobs hastens to add that his collaboration with Wiseman, who taught him a great deal about the public accounting industry, was an important factor in enabling him to make this proposal.

The partners accepted his proposal, and he was promoted to CEO in January 2002. As CEO, Jacobs assumed responsibility for the partner retreat, strategic planning, corporate governance, practice management, financing, merger opportunities, practice development, budget planning, the HR function, and ensuring growth and accountability of all service areas. That covers 11 partners and a staff of about 64.

"Regardless of the size of an organization, if you want to grow, you have to go corporate, and if you're going to do that you need someone to manage the process," he notes. "Accountability can become weak in an organization with many partners. If you take away certain functions from partners, you also take away the excuses they have for not doing what they're there to do--namely, manage client relationships, bring in business and generate income. Once you've done that, you can run a more effective, efficient and accountable organization."

Good to great

Jacobs has also improved partner performance by bringing in Todd MacDonald to help partners set goals and give them the tools to market themselves. Jacobs has brought in consultants for new HR initiatives as well--new recruitment techniques, staff satisfaction surveys and new human resource guidelines. "I've tried to stress that change is a process, not an event, so that we can work through that and continue to develop in the right direction."

He has also stressed that all clients are clients of the firm, not of individual partners. Encouraging this way of thinking is a critical part of the shift towards a corporate structure, and not everyone finds it easy to make that shift.

Jacobs uses the example of a company with which Taylor Leibow merged recently. "Some of the people who joined us just didn't fit the culture and couldn't adapt, but others, once they understood our approach, have become a very valuable part of the business."

Some of these changes relate specifically to a "good to great" initiative that both Jacobs and Lyle Strachan encourage in their growing businesses. The initiatives are based on the ideas of Jim Collins, published in his book Good to Great. The book has several basic precepts. First, you have to have disciplined people to turn a good company into a great company. Then, you must get the right people on the bus, in the right seats and get the wrong people off the bus. There's much more to the book than that, but that's where everyone has to start.

With the right people in place, it's a lot easier to get your leadership strategies to work. And it has worked for Jacobs. "All of the tough decisions we started making in 1999 are starting to show results--succession planning initiatives, process engineering, goal-oriented approaches to business, an enhanced partner performance-based compensation system and a renewed bottom line focus," he says. Future items to be implemented will include a Balanced Scorecard. "And so much of that had to do with the CMA. I've been effective working not only in the business but also on the business.

"It all comes back to skill set development. None of the partners here had any significant strategic leadership or management training, and once they saw me apply it, they recognized the value, and that has helped me promote myself into positions of greater authority, responsibility and, ultimately, accountability.

"Adapting to change is key to the success of organizations today and in the future. The presentation skills and the ability to build consensus and engender teamwork I attribute to my training in becoming a CMA, and are key success factors in my ability to gain respect, trust and ultimately to successfully implement change. I have often been asked by fellow CMAs how I'm able to work effectively in a CA firm--particularly in view of the popular opinion that managing professionals is like herding cats. My response is always the same--the skills of the CMA can be applied successfully in any organization where all contributions, regardless of designations, are welcomed and recognized."


Loyalty builders

Lyle Strachan officially became Chief Operating Officer at Mintz & Partners in July 2003, but he had already started implementing some of his more ambitious plans for the office before his appointment, while in the role of CFO. This included introducing a new document management system and preparing his good to great strategy.

Mintz & Partners first brought a firm administrator into the fold seven years ago. "We wanted to run the firm like a business," says Harley Mintz, managing partner of Mintz & Partners. "We needed someone to run all the operations while the 22 partners focused on taking care of clients, taking care of their teams, and bringing in new business."

Mintz wanted to put the focus back on client service. The firm was still doing well, but it wanted to go a step beyond. The partners saw that they needed someone who could be passionate about managing the administration of the firm.

The cultural shift going on at the company today has come hand-in-hand with a move to a new, state-of-the-art office. After 15 years in the same space, the company was upgrading its physical and cultural presence.

Before assuming the role of COO, Strachan began selling his change initiatives among the partners.

The document management strategy, for instance, involves turning Mintz into a virtually paperless office. All of the firm's files, from its offices and off-site storage--8.8 million documents in all--are being scanned into the company's Hummingbird Document Management System. This will take about half a year to complete, but the savings and convenience of the system are considered worth it.

"We're saving 4,000 square feet of office space alone," says Strachan. "The off-site storage will disappear completely."

The end result won't necessarily be a completely paperless office, but it certainly gets close. All correspondence--reports, audits, billing--will be done using e-mail and the Internet, and the system will include portals and specific files for each client. Field auditors will have portable scanners at remote locations to file documents. Scanners and photocopiers will hook into the system so that documents can be scanned directly into any client's dossier.

Any documents relating to a client, including time sheets and contracts, will be accessible through this system. And client documents, like tax files, financial statements and research, can be reviewed on the Web with clients, so that a dialogue is possible with the client from anywhere.

"The portal is the critical piece of the puzzle," says Strachan. "This will help us monitor our relationships with clients carefully and thoroughly. It's our differentiator in the marketplace."

Strachan also hopes to add value for clients through the system. "We will be able to send industry-specific news to each of our clients via their own Virtual Private Network (VPN), along with other reports that are relevant to their business. The current marketplace is challenging for public accounting firms, and will be so for many years to come, so any value that we can add to our services will bolster our place in the market."

The system will also allow partners to do their own on-screen billing. Through PDF files, partners will be able to type in their own notes, which also means that the billing process can be accelerated. Clients are billed at the end of an engagement, not at the end of the month. Strachan notes that the underlying principle to this initiative is that everything that can be done on-line will be done on-line. To date, Mintz has already transferred a lot of processes on-line--from budgets and financial statements to processes for audits, tax returns, cheque requisitions and time requisitions. "We are creating efficiencies by thoroughly using our technology."

Niche expertise

Despite the breadth and depth of this initiative, it isn't the biggest one for which Strachan is a champion. That rests with his niche initiative--focusing Mintz & Partners into four niche specialty units. The four are real estate; manufacturing and distribution companies; sports, entertainment and leisure; and public companies.

"We analyzed our client base, ranked it by industry, then looked at the billing and industries where we were strongest," he notes. "Once we knew which niche groups were strongest, we asked for volunteers among the partners to lead each area. That person became the go-to person. We no longer are going to have generalists.

"The problem with any partnership of this kind, whether it be accountants or lawyers or any other firm, is that silos naturally form," Strachan explains. "But by creating niche areas, those silos are leveled and more sharing and dialogue occurs within the organization. This close contact will build morale and lead to a higher level of service."

Strachan hopes to see concrete success from these niche groups within three to five years. Strategic plans for each have been developed and the change has begun.

Harley Mintz is already well aware how these changes affect the business. "Lyle has really grown since he joined us and has broadened his mandate," he notes. "His analytic skills are impressive. He has the ability to step up and look down at a problem and see it from all angles. He took all of our systems and made them more user friendly, which is helping us to generate better information. And better information helps us serve our clients better."

A naturally boisterous personality, Strachan isn't shy about what he sees himself bringing to the business. "As a CMA, I'm able to bring strategic leadership to an organization like this," he says. "The CAs need to do what they do best--meet with clients and bring in the business. I'm here to handle the other side of it. The CAs realize they can't do both effectively and are better at doing what they're trained to do. It all comes back to the CMA and the skills it has given me to manage. The [CMA Canada] Strategic Leadership Program gives you the confidence to propel yourself to greater heights in whatever capacity and industry you choose. I happen to love what I'm doing right now, and know that without my CMA background, I wouldn't be in this position today."

Robert Colman is editor-in-chief of CMA Management.
COPYRIGHT 2004 Society of Management Accountants of Canada
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Article Details
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Title Annotation:Profile
Author:Colman, Robert
Publication:CMA Management
Article Type:Cover Story
Geographic Code:1CANA
Date:Feb 1, 2004
Previous Article:Small business to medium enterprise: making the leap by addressing a few key challenges.
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