P. 94 Case 3.

Moss and McAdams Accounting Firm

Take notes

1. Background of Bruce Palmer

Bruce Palmer had worked for Moss and McAdams (M&M) for six years and was just
promoted to account manager. His first assignment was to lead an audit of
Johnsonville Trucks. He was quite pleased with the five accountants who had been
assigned to his team, especially Zeke Olds. Olds was an Army vet who returned to
school to get a double major in accounting and computer sciences. He was on top
of the latest developments in financial information systems and had a reputation
for coming up with innovative solutions to problems.

Bruce Palmer -
Account Manager

Accountant 5 -
Accountant 1 Accountant 2 Accountant 3 Accountant 4
Zeke Olds

Figure 1: Organization team structure for an audit project of Johnsonville Trucks

M&M was a well-established regional accounting firm with 160 employees located
across six offices in Minnesota and Wisconsin. The main office, where Palmer worked,
was in Green Bay, Wisconsin. In fact, one of the founding members, Seth Moss, played
briefly for the hometown NFL Packers during the late 1950s. M&M’s primary services
were corporate audits and tax preparation. Over the last two years the partners
decided to move more aggressively into the consulting business. M&M projected that
consulting would represent 40 percent of their growth over the next five years.

M&M operated within a matrix structure (Chapter 3-Organization). As new clients were
recruited, a manager was assigned to the account. A manager might be assigned to
several accounts, depending on the size and scope of the work. This was especially
true in the case of tax preparation projects, where it was not uncommon for a manager
to be assigned to 8 to 12 clients. Likewise, senior and staff accountants were assigned
to multiple account teams. Ruby Sands was the office manager responsible for
assigning personnel to different accounts at the Green Bay office. She did her best to
assign staff to multiple projects under the same manager. This wasn’t always possible,
and sometimes accountants had to work on projects led by different managers.

M&M, like most accounting firms, had a tiered promotion system. New CPAs
entered as junior or staff accountants. Within two years, their performance was
reviewed and they were either asked to leave or promoted to senior accountant.
Sometime during their fifth or sixth year, a decision was made to promote them to
account manager. Finally, after 10 to 12 years with the firm, the manager was
considered for promotion to partner. This was a very competitive position. During the
last five years, only 20 percent of account managers at M&M had been promoted to
partner. However, once a partner, they were virtually guaranteed the position for life and
enjoyed significant increases in salary, benefits, and prestige. M&M had a reputation for
being a resultsdriven organization; partner promotions were based on meeting
deadlines, retaining clients, and generating revenue. The promotion team based its
decision on the relative performance of the account manager in comparison to
his or her cohorts.
One week into the Johnsonville audit, Palmer received a call from Sands to visit her
office. There he was introduced to Ken Crosby, who recently joined M&M after working
nine years for a Big 5 accounting firm. Crosby was recruited to manage special
consulting projects. Sands reported that Crosby had just secured a major consulting
project with Springfield Metals. This was a major coup for the firm: M&M had competed
against two Big 5 accounting firms for the project. Sands went on to explain that she
was working with Crosby to put together his team. Crosby insisted that Zeke Olds be
assigned to his team. Sands told him that this would be impossible because Olds
was already assigned to work on the Johnsonville audit. Crosby persisted, arguing
that Olds’s expertise was essential to the Springfield project. Sands decided to work
out a compromise and have Olds split time across both projects.

At this time Crosby turned to Palmer and said, “I believe in keeping things simple. Why
don’t we agree that Olds works for me in the mornings and you in the afternoons.
I’m sure we can work out any problems that come up. After all, we both work for the
same firm.”

SIX WEEKS LATER

Palmer could scream whenever he remembered Crosby’s words, “After all, we both
work for the same firm.” The first sign of trouble came during the first week of the new
arrangement when Crosby called, begging to have Olds work all of Thursday on his
project. They were conducting an extensive client visit, and Olds was critical to the
assessment. After Palmer reluctantly agreed, Crosby said he owed him one. The next
week when Palmer called Crosby to request that he return the favor, Crosby flatly
refused and said any other time but not this week. Palmer tried again a week later and
got the same response.

At first Olds showed up promptly at 1:00 p.m. at Palmer’s office to work on the audit.
Soon it became a habit to show up 30 to 60 minutes late. There was always a good
reason. He was in a meeting in Springfield and couldn’t just leave, or an urgent task
took longer than planned. One time it was because Crosby took his entire team out to
lunch at the new Thai restaurant—Olds was over an hour late because of slow service.
In the beginning Olds would usually make up the time by working after hours, but
Palmer could tell from conversations he overheard that this was creating tension at
home.

What probably bothered Palmer the most were the e-mails and telephone calls Olds
received from Crosby and his team members during the afternoons when he was
supposed to be working for Palmer. A couple of times Palmer could have sworn that
Olds was working on Crosby’s project in his (Palmer’s) office.

Palmer met with Crosby to talk about the problem and voice his complaints. Crosby
acted surprised and even a little bit hurt. He promised things would change, but the
pattern continued. Palmer was becoming paranoid about Crosby. He knew that Crosby
played golf with Olds on the weekends and could just imagine him badmouthing the
Johnsonville project and pointing out how boring auditing work was. The sad fact was
that there probably was some truth to what he was saying. The Johnsonville project was
getting bogged down, and the team was slipping behind schedule. One of the
contributing factors was Olds’s performance. His work was not up to its usual standards.
Palmer approached Olds about this, and Olds became defensive. Olds later apologized
and confided that he found it difficult switching his thinking from consulting to
auditing and then back to consulting. He promised to do better, and there was a
slight improvement in his performance.

The last straw came when Olds asked to leave work early on Friday so that he could
take his wife and kids to a Milwaukee Brewers baseball game. It turned out Springfield
Metals had given Crosby their corporate tickets, and he decided to treat his team with
box seats right behind the Brewers dugout. Palmer hated to do it, but he had to refuse
the request. He felt guilty when he overheard Olds explaining to his son on the
telephone why they couldn’t go to the game.

Palmer finally decided to pick up the phone and request an urgent meeting with Sands
to resolve the problem. He got up enough nerve and put in the call only to be told that
Sands wouldn’t be back in the office until next week. As he put the receiver down, he
thought maybe things would get better.
TWO WEEKS LATER

Sands showed up unexpectedly at Palmer’s office and said they needed to talk about
Olds. Palmer was delighted, thinking that now he could tell her what had been going on.
But before he had a chance to speak, Sands told him that Olds had come to see her
yesterday. She told him that Olds confessed that he was having a hard time working on
both Crosby’s and Palmer’s projects. He was having difficulty concentrating on the
auditing work in the afternoon because he was thinking about some of the consulting
issues that had emerged during the morning. He was putting in extra hours to try to
meet both of the projects’ deadlines, and this was creating problems at home. The
bottom line was that he was stressed out and couldn’t deal with the situation. He asked
that he be assigned full-time to Crosby’s project. Sands went on to say that Olds didn’t
blame Palmer, in fact he had a lot of nice things to say about him. He just enjoyed the
consulting work more and found it more challenging. Sands concluded by saying, “I told
him I understood, and I would talk to you about the situation and see what could be
done. Frankly, I think we should pull him from your project and have him work full-time
on Crosby’s project. What do you think?”

1. If you were Palmer at the end of the case, how would you respond?

2. What, if anything, could Palmer have done to avoid losing Olds?

3. What advantages and disadvantages of a matrix type organization are apparent from
this case?

4. What could the management at M&M do to more effectively manage situations like
this?