Recently, the buzz around governance has grown louder, becoming a focal point for CPA firms striving to align their mission, vision, and strategy with their structural makeup.

But what is ‘governance’ in the world of business? It’s the rules or policies we use to direct the decisions of an organization.

It seems today, many firm leaders are almost obsessed with governance from the standpoint of what their model says they must do. And while this is understandable, I feel that it is somewhat misplaced. How operating agreements stipulate elections does not necessarily directly correlate to how you need to govern yourselves and run the firm. There isn’t a one-size-fits-all approach to governance, and it should evolve as your firm – and the profession – evolves. Connecting governance to the size of your firm, the number of partners, geographic locations, your M&A appetite, the multi-gen partner room, etc., should be the driver in our governance.

This does not mean firms should change their governance model just for the sake of change. Nor does it mean you should change often. If we change too much, we leave people feeling dizzy. However, that is not the problem of the accounting profession. In fact, it’s the opposite. For fear of change, we let things become stagnate for far too long. Firms must find the ability to adapt to the expectations and needs of the organization as they evolve.

Why is the governance conversation coming up so frequently?

Recently, advisory projects related to governance have been a significant focus for me. The disruptive elements facing our profession have caused leaders to ask a simple question: Does our governance structure support our vision and strategy? I commend this question and the focus.  While many governance elements are and should be unique for each firm, I find the following principles to be necessary for all firms to consider.

Agility and Resilience: In a rapidly changing business landscape, the ability to quickly adapt and recover from setbacks is crucial. Governance structures should facilitate, not hinder, this agility and resilience, enabling organizations to navigate through uncertainty with confidence.

Empower Leaders: Leaders should be empowered to act decisively and engage at the appropriate levels. Too often, talented leaders are tied up in unnecessary governance roles because of an unwillingness or fear of change.

Efficiency and Effectiveness: The true test of a governance structure is its ability to support the organization’s strategic objectives without holding us back from making decisions. This is particularly important in areas such as M&A. We need to be able to move with speed and flexibility for certain opportunities, so is your governance structure supporting that or holding you back?

Trust and Confidence: A governance model that reflects the organization’s mission, vision, and values builds trust and confidence among partners and future leaders. There’s nothing worse than telling our people we are about change and preparing for the future but being stuck in a governance structure that is 25+ years old.

As organizations navigate the complexities of today’s business world, the conversation around governance is not just timely but essential. By focusing on agility, empowerment, efficiency, and trust, firms can develop governance structures that not only meet the demands of the present but are also resilient and adaptable enough to face future challenges.

Governance is not merely about adhering to a set of rules or policies; it’s about ensuring these guidelines support the organization’s strategic objectives, empower its leaders, and foster an environment of trust and confidence among its members.

Embracing a dynamic approach to governance can pave the way for a successful future. And it’s not just for small or mid-sized firms. Firms of all sizes benefit by embracing a dynamic governance structure. If you’re ready to prepare your firm for the future, contact me today. I’d love the opportunity to help your firm embrace this change.