Troy Waugh
Troy Waugh

Leading vs. Managing

Why you need both.

November 3, 2011
by Troy Waugh, CPA

Both leadership and management are crucial to the success of a business. However, leadership is different than management in many profound ways and it is very easy to get confused about the subject. In this [article], I’ll cover some of the differences. In my experience, rarely can you find both extraordinary leadership and management qualities in one individual.

Management is more about efficiency, whereas leadership is more about effectiveness. Nothing will increase your effectiveness as much as raising your leadership ability. When you focus on your leadership ability, you encourage others in your organization to do the same. The result is that the effectiveness of your entire firm improves.

Leadership is not management, technical ability or a title. Colin Powell, former U.S. secretary of defense said, “Leadership is the art of accomplishing more than the science of management says is possible. Leadership is both art and science. Some people have natural leadership characteristics. Others have learned to lead.”

According to Mike Cain, founder and co-managing partner of the top-50 firm Lattimore Black Morgan & Cain, PC (LBMC), in Nashville, TN, “Leading and managing a business are clearly different. They’re different skill sets and they’re both incredibly important. I think leadership has you looking down the road, trying to anticipate where things are going, what the trends are, where you ought to be positioned in the future.”

You Need Both

David Deeter, founder of the top-100 firm Frazier & Deeter, LLC, in Atlanta, GA, says, “We have a chief operating officer and I would see this person as the leading manager. In addition, we have a controller and other positions who do a lot of management. But a firm needs a leading partner to help set the direction and tone of the firm. A leading partner keeps us focused on our future, our vision. He helps us maintain a sense of mission and values.

Managing is more systems; it’s organization charts. A great leader surrounds himself with great managers. Because, often, some of the best leaders aren’t necessarily great managers themselves, just like a great pitcher may not be a great hitter.

Sometimes, a solid manager will become the managing partner, president or CEO of an accounting firm. This person may have solid management credentials, skills, education and experience, but somehow, the competition grows much faster and the well-managed firm remains somewhat status quo. Such a firm may be well-managed but under-led.

Growth is often a solid indicator of the skill set of the leader. If you are assigned responsibility for five clients and five years later, the business from those clients is diminished, you might be a good manager but a poor leader. A good leader will grow the client relationships and replace the ones that go away.

On the other hand, you may see a high-growth firm led by a visionary leader who is crumbling from within. Such a firm may have strong leadership but poor management. Great leaders will make room for solid managers who can build and maintain infrastructure; otherwise, their dreams will be dashed.

Keith Farlinger, CEO of the national firm BDO Canada LLP in Toronto, Canada, distinguishes between leadership and management. “What we’ve done over the last two or three years is to start to lead from national office. You need to work on developing that vision from a national point of view and we’ve been very aggressive in bringing in resources to help us reach that vision.”

Leadership is more about doing the right things, whereas management is about doing things right. The leader must select the right goals from competing priorities and say no to others. Leaders are always looking at the relative importance of doing certain things, whereas the manager’s primary job is to accomplish the high-priority goals efficiently.

New Skills

For accountants, leadership is very different than their craft. The accounting profession attracts a thoughtful, deliberate sort of person. Most accounting problems take thought, study, contemplation and a deliberate approach to solutions; however, this is not so for leadership.

Leadership requires in-the-moment decision making and action. As Carlos Ghosn, CEO of Nissan, says, “You learn to be a leader by acting, by doing.” Steven Covey, author of The 7 Habits of Highly Effective People, said, “Gandhi demonstrated great leadership time and again, simply by going and doing what had to be done. His methods were simple and uncomplicated.”

Leader Profile: Bob Bunting, former CEO of the mega-regional firm Moss Adams LLP in Seattle, WA

Robert L. Bunting was very shy and quite humble as a youngster. He was elected president of his high school student body but never viewed himself a leader. Bob taught accounting labs and majored in accounting at the University of Idaho, so he wouldn’t have to go into sales or marketing. He wanted to be the best he could be from a knowledge application point of view. When he joined Price Waterhouse in 1968, he began to learn that leadership comes in many styles. His first mentor was a “techno-geek” and a leader in that people sought him out for his knowledge base —
an instant connection for young Bob Bunting trying to find his way.

Bob says, “Hunter Jones, a PW partner, taught me that I could be a very substantial professional, that I could be technically very smart and I could distinguish myself by having a grasp of a unique knowledge base,” he says. “And basically be the only game in town or the best game in town in a particular area of knowledge.”

When Bob began his public accounting career, he viewed each of his superiors as someone who could teach him valuable skills. It was this thirst for knowledge, his honesty and his humility that helped him rise to the status of CEO of Moss Adams LLP.

From 1982-2004, Bob was president and chairman and still is an active partner of Moss Adams LLP. He is a past president of the Washington Society of CPAs and has served on the boards of the Catherine Holmes Wilkins Foundation, United Way and Historic Seattle.

Over a long and successful career in the accounting profession, Bob is no stranger to awards and accolades. He’s been tapped for numerous prestigious positions, including chairman of the AICPA and president of the International Federation of Accountants. He was named to the Steering Committee of the International Integrated Reporting Committee, established to help drive forward the creation of a globally accepted framework for accounting for sustainability. In addition, several times, he’s been named one of Accounting Today magazine’s 100 Most Influential People.
INSIDE Public Accounting has three times named Bob as one of the five peers who accounting professionals most admire. Bob was one of the recipients of the AICPA’s Gold Medal Award for Distinguished Service, the highest award granted by the AICPA. Bob served as chair of the AICPA Board of Directors in 2004-05 and is presently president of the International Federation of Accountants.

After all the other accomplishments, what makes the peer selection stand out? No suggested list of people is presented to the voters beforehand. They’re simply asked to write down names of whoever comes to mind. Three hundred eighty-five firms participated in the survey.

Chris Allegretti, CEO of the regional firm Hill, Barth & King, LLC (HBK), in Boardman,
OH, says:

I owe a great debt to Bob Bunting. When I became CEO of our firm, I reached out to talk with Bob and he invited me to come to Seattle and meet with him. He invested an entire day with me and listened intently to my biggest perceived problems. He has met with me frequently as he has traveled to the east coast and he always returns my calls. He really challenged me to develop a compelling vision of where I wanted to take the firm. He carefully explained how to create a powerful set of core values and beliefs under which we operate. When I asked Bob how I could pay for his service and advice, he simple told me, “Pay it forward. Help another new managing partner and you will repay me.” His humility and wonderful advice really encouraged me.

This article has been excerpted from Leading an Accounting Firm: The Pyramid of Success. The publication is available on CPA2Biz.

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Troy Waugh, CPA, MBA, is the author of three books and one of the 100 most influential people in the accounting profession for eight years in a row by Accounting Today magazine. He is a leading consultant to the accounting industry.