Leadership in the New Normal 1 CCH User Conference - 2010 November 9, 2010 Orlando, Florida Presented by: Tom Hood, CPA.CITP CEO Maryland Association of CPAs Business Learning Institute
Nov 16, 2014
Leadership in the New Normal
1
CCH User Conference - 2010November 9, 2010Orlando, Florida
Presented by:
Tom Hood, CPA.CITPCEO
Maryland Association of CPAsBusiness Learning Institute
What is the # 1 reason leaders (and their organizations) fail?
2
The recession is over? Many of our CPAs are continuing to see rough seas ahead
3
CPAs and businesses are
feeling overwhelmed by the rapid
and turbulent pace of change
You would like to be ahead of the waves instead of being crushed by
them
Photo: Pratt’s surfing page
Today we will show you how you can survive and even thrive these waves of change
Our agenda
• What do we see?– Economy – Regulations & Standards– Globalization– Technology– Workforce & demographics
• What does it mean to lead in turbulent times?
Ever feel like you need an evacuation route?
“But a time of turbulence is also one of great opportunity for those who can understand, accept and exploit the new realities. It is above all a time of opportunity for leadership.”
- Peter Drucker, Managing in Turbulent Times
A useful framework for dealing with change – strategic thinking using our i2a –
Insights to Action SystemMaking sense of
a changing & complex world
How is the world
changing?
What does it mean to us?
What possibilities do we see?
What direction should we go?
Who do we need to inspire to help us get
there?
Report from the future…
Re-Set, Re-Think, Re-ImagineAnticipation of a very large business model change amidst rapid change – Steve King
There are two recessions – the obvious one and the not so obvious, the end of the industrial age where perfecting the model was the key. The new model will be completely different. – Seth Godin
#4 Rethinking the Business Model (25) from AICPA MFG
The Economy
Where have the jobs gone – 8,000,000 down
Source: Small Business Labs blog – Fidelity.com
Are we in the “Loch Ness Monster” Economy?
“Characterized by a series of dips superimposed on a slow underlying economy thru 2020” - Business Redefined by Ernst & Young
Regulations & Standards
The Federal Issues• FTC Red Flags rule – privacy
& identity theft• Tax Preparer Registration &
PTIN issue• Patient Protection Act &
1099’s• Sub S. Employment Tax
Issue• H.R.5297 - Small Business
Jobs and Credit Act of 2010
Massive legislation in a very short timePatient Protection Act Dodd-Frank Wall Street
Reform & Consumer Financial Protection Act
Small Business Tax Relief Act
The CPA profession is part of the bigger infrastructurethat supports the US free market system. Like the pipes under
urban streets, it is often invisible until it breaks.
A useful framework to understand the CPA profession
Federal & State Laws & Regulations – SEC, DOL, Treasury, GAO, PCAOB
CPA Profession Standards – AICPA & FASB, GASB, FASAB, IASB
State CPA Statutes (Law)State Boards of Accountancy issue licenses and regulate CPAs
The (infra) Structure of the CPA Profession
Recent example – The Dodd – Frank Wall Street Reform and Consumer Financial Protection Act of 2010
Crisis hits news
Bureau of Consumer Financial Protection
848 pages!
533 regulations60 studies94 reports
HR 4173
TX
WA
OR
CA
NV
ID
MTND
SDWY
UTCO
AZ NM
HI
OK
KS
NE
MN
IA
MO
AR
LA
MS AL *GA
FL
WI
IL
MI
IN
KY
TN
SC
NC
VA
OH
NY
ME
CT RI
*MA
AK
WVNJDE
DC
MD
*PA
CPA Mobility Enacted 46
CPA Mobility Enacted Only for Other Mobility States – GA, PA, MA
*
In Process
Awaiting Governor Signature - 1
NH
CPA Mobility Legislation Pending - 2
VT
PR
GU
U.S. VIRGIN ISLANDS
21
• Collaborative effort with AICPA – CPA/SEA – NASBA & State CPA Societies
• 47 states passed legislation in three (3) years
• Maryland enacted it in 2008
What did we do when you were forced to have a license in every state you file
taxes in?
It’s 7:00 am at a town hall meeting in Aberdeen when the AICPA alert comes in…
More than 100 MACPA members call our senators and we defeat the amendment!
Protecting by advocating for members (CPAs) = real results!
Retained independent structure of financial accounting standards (FASB)
Modified provision to audit broker-dealers (PCAOB)
Exempted CPAs from CFPA registration due to existing licensing and oversight
Stopped excessive liability exposure for auditors (aiding & abetting)
Commented on SOX 404(b) exemptions
Working together with the AICPA and many State CPA Societies achieved these:
Professional Standards are also rapidly changing
SECFASB
FASBPCFRC
IASBIFRS & SME
PCAOB AICPAASB, ARSC, PRB
IAASB
AICPAPEEC
AICPAPEEC
IFAC
Public Company Private Company Int’l Company
FinancialReporting
Audit /Attest PerformanceStandards
Code of Conduct
Another way to look at standards & oversight
State Oversight & Enforcement of CPA LicenseCPALicensure
Six Ways Convergence is happening1. FASB – IASB Convergence Project2. SEC IFRS – The Long and winding roadmap3. Private Company Standards4. AICPA Auditing Standards Board ASB Clarity
project5. AICPA Professional Ethics Executive
Committee – convergence6. Green / Sustainability reporting
Globalization
As the globe shrinks,
opportunities grow for
CPAs
5 Forces of Globalization
1. Growth of consumers in emerging economies2. Technologies that empower consumers &
communities3. Increase in labor productivity in developed markets4. Shift of economic activity between and within
regions5. Increasingly global markets for labor & talent
Growth is projected to come from overseas for the next five years while the
US remains flat
Priority #1 Exports by Small to Medium Enterprises (SME’s)
• 33 % shipments overseas by UPS
• 25% of small practices had international clients
• US targets 100% increase in exports by SMEs
Technology• Cloud• Mobile• Location-based /
Augmented Reality• Security / Privacy• Social Media• XBRL
Are you on Facebook?
It’s the power of the network
Social media = social capitalreal world examples
8,181 VIEWSAUCKLAND, NZ
15 MINS
The IRS is on Twitter are you?
The AICPA is on Twitter are you?
CCH is on social media
Workforce & Demographics
25%Of your high potential
employees will leave as soon as they can!
5 Generations in the workforce
Live First, Work Second
Digital Natives
Workforce & Demographics – Are you ready for the shift change?
Email Generation
Facebook Generation
These guys are retiring
These are making the purchasing
decisions
These are the new workers
Shift Change !
22% thru 2018Top 10 Careers / Jobs
Growth in demand for accounting & auditing according to BLS
Bright spot?
What today’s workers want
Think A M P• Autonomy• Mastery• Purpose
• Engage your top performers• Coach tomorrow’s leaders• Manage your Millennials
The CPA Profession
Flat is the new growth3% average growthSome declinesCompetition is increasing
Accounting Firms Most Trusted Advisors
• Generally speaking, how believable do you normally find statements made by someone who works for one of these organizations or groups
• “Echo Boomers” (18-34) rated accounting firms highest– 74%67%
62%
55%51% 49% 47%
36%
Acctg FirmsBanksInvestment FirmsHealth Ins. Co.Mortgage CompaniesGov't regulatorsCredit Card Co.
Source: Harris Poll, May 18
CPAs most profitable small businesses
Top 10 Issues Facing CPAs1. Economic Outlook 2. Tax 3. Business Operations 4. Implementation and Execution
of Plans 5. New Business Development 6. Personal/Professional
Development 7. Management and Leadership 8. Financial Regulatory Reform 9. Access to Financing and Credit 10 New Accounting Standards,
IFRSSource: CPA Trendlines for AICPA Feb, 2010
Top Ten Issues for MFG1. Regulatory/Legislative (56)2. Private Company Leadership (47)3. Capital Markets Awareness / Recognition (34)4. Rethinking Business Model (25)5. Protect Audit/CPA Franchise (20)6. Risk Management (Audit efficiencies) (20)7. Leadership Development / Succession
Planning (19)8. Global / International (Clients / IFRS /
Branding) (17)9. Leveraging Technology & Social Media (17)10. MFG Issues specific forums / focus groups (8)
50
Grant Thornton report outlines 8 key areas for CFOs to focus on
1. Developing soft skills2. Understanding and applying international accounting standards3. Understanding complex accounting & auditing standards4. Adapting to an evolving regulatory framework 5. Addressing new external reporting needs6. Understanding ERP or IT systems & XBRL7. Employing quantitative risk management techniques8. Possessing specialized industry knowledge & company's non-financial business drivers
What is leadership and why is it important?
Photo: Pratt’s surfing page
“You can’t stop the waves, but you can learn to surf”- Jon Kabat-Zinn
Leadership is DEAD• Democratic• Expertise• Attention• Diverse
Source: Emmanuel Gobillot, Leadershift
Leadership is still about…
• Engagement• Alignment• Accountability• Commitment
“First I get all of my men facing the same direction.”- Napoleon
Soft is HardHard is Soft- Tom Peters “In Search of Excellence”
Leadership is still the same since “In Search of Excellence” in 1982
How is leadership changing?
“What got you here won’t get you there.” – Emmanuel Gobillot - Leadershift
From: Command & Control
To: Connect & Collaborate
Turbulent times require new skills and new thinking
Source: Chief Learning Officer magazine
Five Qualities of Extraordinary Leaders
1. Sight - Ability to see emerging patterns and shift perspective when necessary
2. Insight - Ability to learn faster than the rate of change in your industry
3. Create - Ability to think strategically and creatively to gain insights that create new opportunities
4. Communicate - Ability to collaborate inside and outside your organization and to build and sustain social networks of people engaged in the work
5. Inspire – Ability to mobilize support and engage others to join you in ACTION
LC
Our research shows three major skills
1. Strengths-based leadership
2. Strategic thinking3. Network leadership
Individual & Organizational
Making sense of a changing &
complex world…
What are our high leverage
opportunities?What
possibilities do we see?
Who do we need to inspire to help us get
there?
What direction should we go?
How is the world
changing?
What does it mean to us?
Technical Skills
What
Soft Skills
How
Organization Strategy & Purpose
Why
Another way to think about leadership in the new normal
The Tortoise was right
Sometimes you have to go slow to go fast
Elvis was wrong!
What we need is a little more
conversation!
Leadership based on positivity, that seeks to build on individual and organizational strengths and
collaborates to continuously learn. It is constantly considering the context and asking powerful questions, learning, reflecting, and creating
pathways to the future.
Strengths-Based LeadershipSelf-awareness in the moment
Wanted – people who can cross boundaries
Leadership = Multiplication•15 X – ROI strategy as process & alignment
•8 X – Strengths•6 X – Trust & Engagement•3 X - Positivity
Does it really work?Four Examples
Service Profit Chain
AICPA Major Firms
Toolkit & Practice
• Create a Positive Work Environment
• Engage people through facilitation techniques
• Ask powerful questions• Communicate to Inspire
Leadership defined
The four most important words for organizations
are, “what do you think?”
- Tom Peters
The only question for leaders
Have I made you feel stronger and more capable?
Source: Emmanuel Gobillot - LeaderShift
Tom Hood, CPA.CITPCEO
Maryland Association of CPAsBusiness Learning Institute
(443) 632-2301E-mail [email protected]
Web http://www.macpa.orgBlog http://www.cpasuccess.com
CONNECT – PROTECT - ACHIEVE