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This chapter is from the book

Expansion

Although growth was welcomed, Leonard Spacek took a conservative approach, resisting the temptation to expand rapidly and rarely acquiring firms or using affiliation agreements to grow, as many of the other accounting firms were doing. He remembered the warnings of his mentor, Arthur Andersen, against this type of growth. Concerned about maintaining quality, he preferred to establish new offices slowly.

Arthur E. Andersen had an established system for training staff to a set of consistent methods. It was an important cornerstone of success in the past, and now Arthur Andersen & Co. turned to that method to guide the development of its international offices. As the firm grew rapidly, it used this system to groom staff and expand local offices all over the world.

Experienced partners were sent to open new offices. Although each office had the flexibility to match services to local markets, responsible partners were guided by a series of methods and standards, with detailed instruction on how to set up and manage the new offices and consolidate their leadership.

As in Arthur E. Andersen’s time, the organization for all new offices was a hierarchy built on expertise[20] with a clear chain of command. The Partner-In-Charge led a team of partners to run their local business operations. Teams provided services, called client engagements, to the client, mostly on site in the field. Managers were on the next level down and were usually responsible for the day-to-day supervision of client engagement teams. Very large engagements would have a number of managers assigned to them. The bulk of the fieldwork was done by the rank-and-file staff who made up the majority of the workforce in the local offices and throughout the firm. Professionals were supported by administrative staff who formed the operational infrastructure of each local office. Administrative and support personnel typically did not generate fees, and it was understood that “If you were bringing revenue in, then you were a real person.”[21]

The local office model used in the U.S. was duplicated all over the world, providing continuity to the local office system. When partners were sent to start new offices, they would first develop recruiting relationships with local universities, using the same college recruitment strategy used in the U.S. Local recruits were then “brought up” in the firm’s culture, where prospective partners were screened, trained, and groomed.

As in the U.S., methods guided the audit process, and professional development ensured conformity to the standards set at Arthur Andersen & Co. Common training provided a way for Andersen recruits to come up to speed on engagements in the U.S. and around the world. Method was the foundation for all training. Staff joked that there was a methodology for everything and that Arthurs were so used to doing things by the book that they even went to the restroom at the same time. Arthur E. Andersen had been convinced that if all staff worked to a method, this would ensure efficient and effective work practices that would consistently deliver high-quality services. As Arthur Andersen & Co. expanded, method became the foundation for growth. There were instructions covering every aspect of work, including the firm’s way to accept an assignment, make a presentation, select staff, and blend with a client culture. There was even advice on how to stretch your personal budget if you did not have much to spend on clothes. Every office included a Methodology Coordinator who was responsible for keeping everyone up to date on the latest methods for doing most tasks. Knowing the method set the standard and helped lower the risk of using inexperienced staff on a client engagement.

Method was always important for accounting and accountants at Arthur Andersen & Co. had always been methodical. Learning the methodologies was an important part of getting a start at Arthur Andersen & Co. and was the bond connecting the local offices to each other. By the late 1960s, Method/1 was introduced to make the firm’s IT design and installation engagements more orderly and easier, and to help manage the large teams that the jobs required. Training programs were guided by another method, Method/E, a combination of theoretical and practical applications in the field of instructional design, coupled with a method to determine training needs and develop instruction to meet them. The Method/E and Method/1 documents each occupied a shelf several feet long.

When personality typing became fashionable, the firm adopted it as a method for staff and clients to interact more efficiently. Staff members had to identify their own personal traits and the traits of others. Style and personality typing became quite popular and, at Andersen gatherings, employees could be overheard telling a friend what their type was or asking new acquaintances for theirs. The most popular system was one called the Myers-Briggs, which identifies four basic personality types.

Method was always important for accounting and accountants at Arthur Andersen & Co. had always been methodical. Learning the methodologies was an important part of getting a start at Arthur Andersen & Co. and was the bond connecting the local offices to each other. By the late 1960s, Method/1 was introduced to make the firm’s IT design and installation engagements more orderly and easier, and to help manage the large teams that the jobs required. Training programs were guided by another method, Method/E, a combination of theoretical and practical applications in the field of instructional design, coupled with a method to determine training needs and develop instruction to meet them. The Method/E and Method/1 documents each occupied a shelf several feet long.

When personality typing became fashionable, the firm adopted it as a method for staff and clients to interact more efficiently. Staff members had to identify their own personal traits and the traits of others. Style and personality typing became quite popular and, at Andersen gatherings, employees could be overheard telling a friend what their type was or asking new acquaintances for theirs. The most popular system was one called the Myers-Briggs, which identifies four basic personality types.

Learning methods in combination with on-the-job training made a powerful combination for ensuring a consistent workforce in all local offices. At the local office, on-the-job training was founded on a model of apprenticeship. Partners played a pivotal role in the apprentice system as firm experts and mentors. Not only did they teach at the training centers but they also acted as role models in local offices. It reinforced their status in the hierarchy. Partners mentored managers and sometimes even staff, especially in smaller offices. Senior partners, who had acquired extensive experience, especially with difficult clients and assignments, regularly provided mentoring to less experienced partners. Managers were expected to follow the partner’s lead, mentoring their staff and so on throughout the hierarchy.

In the first few weeks after hire, new staff from all parts of the world were sent to learn the methods and be given an introduction to the Andersen culture. Everyone was required to attend centralized training. It was the glue that connected each independent office to the others. The classroom provided a safe place to learn what happened on an engagement and what it would be like to be sent to live and work with other team members, sometimes in places far from home. Everyone had a chance to learn how to handle themselves and others during the class activities, tests, team problem solving, role-plays, simulations, and exercises. They also learned how to tolerate each other. People were often reminded that they didn’t need to like each other to work together. On the line, however, successful teams were often people who did get along well. They enjoyed their work and their colleagues’ company.

It was expected that a new staff member would need about four to six years to learn all that was necessary for promotion to manager. It took about 10–12 years to make partner. Selection and promotion processes guaranteed conformity to Arthur Andersen & Co.’s standards, ensuring that everyone in the local office shared the same goals, “spoke the same language,” and had the same work practices. The processes winnowed out those individuals who did not have the appropriate values and behaviors.

When growing a new office, only after a local partner had gone through the professional development process was he ready to take the reins of leadership. It sometimes required a good 15 years to get an Andersen office established in another country. Following the Andersen method and the “grow your own office” model gave numerous partners extensive international experience. One partner, involved in developing a new office in Asia, said the model had given the firm the advantage it needed to become a global. This “grow your own office” method ensured a uniform loyal workforce, too.

Arthur Androids

Andersen’s professional development program was instrumental in maintaining an exceptionally cohesive and homogeneous culture within and across local offices. It produced loyal auditors who were molded to fit into the Andersen culture and adhere to the work standards that Andersen set. Instilling a shared methodology among staff was not intended to make people alike but to ensure consistency across the firm’s global network of offices. Although the system guaranteed that everyone in the local office shared the same goals, “spoke the same language,” and had the same work practices, it just so happened that individuals who were selected to work for the firm did well in a structured system and were suited to following rules and standards. Over time, Andersen’s selection, training, and promotional mechanisms developed a homogenous workforce known as “Arthur Androids.” Clients joked with Andersen staff that they didn’t see how they found their coats because they all looked alike.

In Chicago, the limo drivers who spent their day ferrying Andersen people from O’Hare to the downtown headquarters or the training facility in St. Charles, Illinois called Arthur Andersen staff “Arthurs” to their faces and “Arthur Androids” behind their backs. The drivers liked to brag that they could spot an Andersen fare at the airport. To the practiced eye of a Chicago limo driver, the grooming, clothes, stance, luggage, and briefcase all gave away the identity of an Arthur Android. To the end, the firm continued to turn out a consistent, uniform set of rank-and-file employees who played by the rules and followed orders, regardless of what the orders might be.

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