3 leadership styles ideal for CPA firms
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3 leadership styles ideal for CPA firms

24 days ago · 3 min read · AICPA Insights Blog

Leadership training for all staff levels has profound value beyond motivating co-workers and leading projects. Investing in leadership training has a strong return on investment.

On a broader business scale, over 80% of organizations believe in the value of leadership training for employees at every level — however, just 5% of businesses are doing it, according to Zippia.

Beyond setting up the firm for success, leadership training can help staff members hone their strengths, address their weaknesses and teach them leadership styles to strive toward.

Numerous leadership styles have been extensively studied, and while one may be more effective, each has its benefits and challenges.

Transactional, transformational and laissez-faire are the three most prevalent leadership styles within public accounting firms, according to a study published in the Journal of Accounting, Ethics & Public Policy. Effective leadership within a firm isn’t about subscribing and adhering to a specific leadership style, but instead having each individual balance their unique leadership traits and adapt their actions.

Transactional leaders: Orderly and efficient

Transactional leaders thrive in an environment built on order, efficiency and structure. These results-driven leaders measure the results of their subordinates by the preexisting merit structure within a firm.

Effective transactional leadership depends on self-motivated staffers who work well in structured settings and fully understand the scope of their jobs. These leaders are often found in traditional management-style roles and expect their subordinates to get their jobs done, without going far beyond expectations. Transactional leaders micromanage outcomes. According to the research, this is one of the most common leadership styles within public accounting firms.

An advantage of transactional leaders is fast completion of short-term goals, and these leaders are most commonly found in large corporations or the military. But, in these environments, it’s hard for creativity to flourish and personal initiative is not rewarded.

Two familiar transactional leaders include late Green Bay Packers coach Vince Lombardi and billionaire Bill Gates.

Transformational leaders: Creative and mission-driven

Transformational leadership is just like it sounds — the leader sets out to positively transform people to inspire them to become leaders. Transformational leaders are passionate and energetic individuals who want every group member to succeed.

Leaders who follow this style help colleagues connect their sense of self to the firm’s mission. These leaders are role models and help colleagues match their strengths and weaknesses with the right tasks. Unlike transactional leaders, these leaders thrive in gray areas and in unpredictable work environments. Creativity and innovation are in abundance.

Although this style is often regarded as a very effective leadership style, it may not be the best in every situation. In some cases, firms may need greater direction, control and oversight to ensure progress — what transactional leaders can provide.

Three familiar transformational leaders are former U.S. president Barack Obama, billionaire media executive Oprah Winfrey and the late former South African president Nelson Mandela. Within firms, transformational leaders express enthusiasm for the completion of projects and include staff in important decision-making. A more collaborative working environment will result.

Laissez-faire leaders: Trusting and hands-off

When translated from French, “laissez-faire” means “let you do.” This is the idea that leaders are less involved.

In terms of leadership styles, laissez-faire leaders don’t micromanage, don’t get overly involved in certain matters and often don’t offer much guidance. They trust their staff members to use their resources to meet their goals. Laissez-faire leaders are very hands-off but get involved or take responsibility when needed.

For this style to be effective, laissez-faire leaders should remain available to their staff members for feedback and consultation. Experts within their fields can thrive under laissez-faire leaders because they’re given trust and the space to do their jobs. Within CPA firms, these leaders trust their staff members to get their jobs done, but there may not be much coaching or mentoring.

A major pitfall to laissez-faire leaders is too much passivity and avoidance of taking charge. Some may try to shirk responsibility and accountability entirely. The most effective laissez-faire leaders regularly check in with staff, establish clearly defined group roles, ensure staff have what they need to be successful and give consistent feedback.

Billionaire Warren Buffett and the late Queen Victoria are two leaders who employed laissez-faire attitudes and only intervened when necessary.

Don’t conform but balance leadership styles

As leaders are established within a firm, the end goal is not about conforming to one leadership style or copying one style that may be the most effective. The goal should instead be for nascent leaders to understand their leadership traits and to find the balance between their dominant and less-dominant management skills.

Great leaders display honesty, trustworthiness, accountability, empathy, and many other traits — and these can be found in leaders of any style. Great public accounting firm leaders have a blend of traits and adapt their leadership style to fit within the needs of their staff and their firm. With a dynamic leadership style encompassing many traits and facets, leaders can be resilient in a fluid and complex business environment.

Now is the time to nurture leadership traits within your staff and cultivate future leaders. With AICPA & CIMA Learning & Development subscription plans, teams of different sizes can upskill through on-demand learning that covers a wide range of competencies — digital, people, technical, business and leadership skills.

Level up your leaders from good to great — and invest in staff development. Access our L&D subscription plans as you prepare to guide new leaders and usher in leadership transformation at your firm.

Beth Roessner, M.A.

Beth Roessner is a senior content writer at AICPA & CIMA, together as the Association of International Certified Professional Accountants.

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