3-D approach to firm growth
by AccountingWEB on
By Edi Osborne
A few of years ago my daughter was expecting our first grandchild. After being rushed through an inconclusive (for gender) ultrasound at the hospital, we decided it would be fun to have one of the new, popular three-dimensional ultrasounds done.
Because we went retail and it was done at a private clinic we could take our time, ask questions, have several people in the room, and video tape the whole event. And because it was 3D, we would have a much clearer picture of the baby’s face and features. My son-in-law, up to the day of the 3D ultrasound, had felt like a bit of an observer, not fully engaged in the gestation process.
However, once he saw Hazel’s face, hands, feet, and body, and watched her move about in her temporary home, his eyes widened and he got that look on his face that I’ve seen so many times in a classroom situation. That “A-ha, I get it!” moment when we move from being an observer with a conceptual understanding of something to being a learner where the information starts to take hold, to being fully engaged. I’ve thought of that day many times in the two and a half years since Hazel’s arrival, and the transformative impact the 3D ultrasound had compared with the conventional method.
I believe, when we apply a 3D approach to firm growth, we can see the same kind of transformative impact on the firm’s culture and performance. Growth starts with the understanding of the direct correlation between the state of the people and firm outcomes. Smart leaders know: “You don’t grow companies, you grow people and people grow companies.”
In a knowledge-based economy growing people’s knowledge makes sense. But only those companies that crank their investment in their people up to a 3D level will see the greatest benefit. Here’s what I mean . . .
Three dimensions of firm growth:
- Grow the Strategic IQ of everyone on your team
- Grow the Emotional Intelligence and people skills of everyone on your team
- Grow the effectiveness of internal processes, tools, and resources (and the ability to utilize them)
Let’s look at each of these in more detail:
1) Strategic IQ represents the level of engagement your team has regarding the future of the firm.
Here are some key questions to determine your firm’s level of Strategic IQ:
a. Does everyone on your team have a written copy of your firm’s strategic plan?
b. Do they understand it? Were they involved in developing it?
c. Has that plan been broken down into specific activities that have strategic significance for every role in the firm?
d. Has each team member been made aware of how their role impacts the goals of the firm and why it should matter to them?
e. Is there a feedback mechanism in place to monitor those specific activities on an individual and team basis?
When employees have a clear understanding of where the firm is headed and how they personally impact that outcome with line of sight feedback, you find a much greater level of engagement. For example, recently a partner shared a story of a situation where a young staff person went out on a client call with her. During the visit, the client pointed out an error in the statements that the partner found both embarrassing and frustrating. Especially, since on the way back to the office, the young staff accountant acknowledged that he knew the error was there before the client meeting.
Rather than blow up, the partner explained the significance of the client in the overall growth strategy of the firm and the importance of quality work product in that relationship. To the client, that staff person was faceless and nameless until that day. Likewise, that client was faceless and nameless to that young staff person. Being face to face with the client, the young accountant felt the sting of the embarrassment almost as much as the partner because he had received line of sight feedback about his performance. He said, “I will never let that happen again.” Bottom line: If you want your people to act more like owners, work on growing their understanding of ownership priorities and principles they can easily translate into their daily work flow.
2) Emotional Intelligence is a measure of our ability to manage our emotions and recognize them in others to achieve better outcomes.
We often referred to these as people skills. The partner described in the previous scenario demonstrated a high level of EI with her ability to take an otherwise negative situation and turn it into a teaching moment for her staffer. She also raised the Emotional Intelligence of the staffer by helping him develop greater empathy for the client who was frustrated by the error and her own embarrassment as the partner delivering the work. The good news is that we all can learn how to improve our EI. Unlike our IQ, which is pretty much set at birth, our Emotional Quotient is a skill that can be learned and improved upon.
A study at a large public accounting firm revealed that partners “with significant strengths in self-management contributed 78 percent more incremental profit than partners who did not have these skills." While that was only one of the EQ components enumerated, those partners with strong social skills had added 110 percent more to profit than those with only self-management skills. “Conversely, CPAs with only significant analytical reasoning skills contributed just 50 percent more incremental profit," according to the study.
The study confirms that partners with high social skills trump those with high analytical skills and bring more profit to the firm. Even more relevant is that studies now indicate that leaders and managers with high EQ are better equipped to lead their firms through times of turmoil, and change the exact environment in which most firms and their clients now find themselves. The business leaders who will successfully lead us from the recession to long-term prosperity are those with a high EQ.
3) Increasing the effectiveness of internal processes and systems always has been a hallmark of the accounting profession.
They were the first profession to have a computer on their desks and now many have multiple screens to simplify retrieval and transfer of information from one source to another. Technology upgrades come naturally to the profession. However, even in the most sophisticated technology-driven environments, one of the No. 1 reasons employees become disengaged in the workplace is the feeling that they are undertrained. Many cite the thorough indoctrination they get when they join a firm as being adequate, but then the ongoing training becomes almost exclusively focused on technical skills, leaving behind a trail of unanswered questions, work-arounds, and making do with what they have already learned.
You say, “But, wait. We spend a fortune on training!” If that is the case, then why do so many employees still hold the lingering feeling that they are in over their head and not trained sufficiently? And as long as they have that perception, you can bet they are not fully engaged at the level required to stimulate firm growth. It may be that they are actually doing a better job than they realize. It may be that they are moving faster along the learning curve than managers are keeping up with. Whatever the reason, when employees feel like they don’t have what they need to do their very best, you can be sure that they are not.
Just remember, even if someone’s work product is satisfactory doesn’t mean that they are fully engaged. Smart firms don’t just measure how much training people are getting, they include some very subjective measures to determine each individual’s feelings of adequacy and comfort in their role at the firm. Then, they set a course to support and provide feedback to each person as they progress through their career.
Now back to my granddaughter…
Before the trip to the sonogram clinic, my son-in-law’s level of connection to his daughter was primarily through the physical changes of his wife. It wasn’t until he got his first real look at her face during the 3D sonogram that he became connected with the little person growing inside his wife. Equally telling was his reaction to the experience. He said he felt a much greater commitment to everything around him (his wife, his work, his family, his community) once he had experienced that line of sight responsibility for his child. He went from “A-ha, she’s real!” to “I will need to step up my game.”
Firms that push firm growth through sales and marketing but don’t put an equal emphasis on growing their people are going to find their one-dimensional approach will fail to engage everyone in taking responsibility for the firm’s growth goals. Oh, you’ll get the rainmakers on board – they are easy because they love to go out and sell. But remember the vast majority of accountants don’t consider themselves rainmakers and only after they are fully engaged will they step up their game and feel confident enough to sell themselves and the firm.
Here are the 3 dimensions of firm growth that make for a winning strategy:
- Individuals must have a clear understanding of where the firm is headed, the key strategies underlying firm goals, and how they fit into that picture (including clear expectations and feedback about performance). Gone are the days of hiring someone, sticking them in a corner, and holding off on the discussion about his or her future until it arrives.
- Individuals with low EI are coached to improve their skills. And those who lack EI and are unwilling to grow in this area (including grumpy partners) are invited to get off the bus. Gone are the days of promoting partners strictly for their technical skills. They must have an equal measure of people skills or it sends the wrong message to everyone else in the firm.
- We need to stop looking solely at how much training people are getting as means of determining competency. We must measure and respond to individual feelings of inadequacy; feelings that may stem from how they are being managed, trained, and or an insensitive comment from a low EI partner or manager. If you are one of those partners who say “Just suck it up, we did!” I recommend you stop by Greyhound to pick up a current bus schedule.
Bottom line: As long as people don’t feel like they aren’t getting what they need to succeed, the firm won’t either.
About the author:
Edi Osborne has been providing the profession with out-of-the-box insights for more than 20 years. She is the driving force behind The Passionate Accountant, and CEO of Carmel Valley, CA-based Mentor Plus. She welcomes your comments and queries at email@example.com.For a free EI assessment contact firstname.lastname@example.org.
You may like these other stories...
For the first time in the five-year history of Vault.com’s rankings of the top 50 accounting firms to work for in North America, a firm has held the top spot as best accounting employer for two consecutive years....
With tomorrow being Tax Day, you might see some procrastinators at your office filling out forms, printing out paperwork, or getting last-minute tax advice from their accountant so they can meet the IRS’s filing...
You can read volumes on how to manage an accounting practice. But if you want the quick version, just read the following four points. Everything else is just commentary. (These points come out of the 1997 book, The...
Upcoming CPE Webinars
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.