By John Carpenter
Special to the Tribune
October 1, 2012
He was born in England, spent a significant part of his career in Asia and cut his American corporate teeth in Dallas. But Stephen Chipman, now into his third year as chief executive of Grant Thornton LLP, is thinking a lot about Chicago.
Specifically, he's on a mission to remind Chicagoans that his accounting and professional services firm, founded here by Alexander Grant in 1924, has global reach but strong local roots.
"We're deeply embedded in Chicago," Chipman said during a recent interview in his Loop office. "It started with one guy who had a vision for a firm. And now, in the U.S., we're 6,000 people, 850 of them in the Chicago area. We have 33,000 people around the world, and it all started here. We're really, really proud of that.
"One of my objectives, through my own civic involvement, is to make that better known," he said.
Chipman serves on the board of the Ravinia Festival, as well as the Chicago Council on Global Affairs. He's also active in the Economic Club of Chicago.
Edward Nusbaum (the name as published has been corrected here and in subsequent references in this text), now CEO of Grant Thornton International and Chipman's predecessor as U.S. CEO, admitted in an interview from his office in London that he "could have done a better job" building Grant Thornton's profile in Chicago, something he's happy to see Chipman doing.
Just as Chicago will never be New York and, on its better days, doesn't want to, so Grant Thornton -- No. 6 in a US accounting market dominated by the Big Four of DeLoitte, KPMG, Ernst & Young and PricewaterhouseCoopers, along with fifth-ranked RSM McGladrey -- wants to grow but not change (this sentence as published has been corrected in this text).
"We want to be the leading firm in very well-defined, chosen markets," Chipman told a group of Northern Illinois University accounting students at a recent event in DeKalb.
He described that market as growing companies, often privately owned or part of private equity portfolios, as well as small to mid-size public companies.
Chipman wants to double Grant Thornton's market share within five years, a goal he said can be reached both by attracting new clients and acquiring smaller firms. But he's not looking to become "the next No. 5 in the new Big Five. That's not our strategy. We want to become the best firm, the leading firm in a well-defined part of the marketplace. Think of us as BMW to the Big Three automakers."
David Casper, executive vice president and head of commercial banking for BMO Harris Bank in Chicago, said Chipman has "jumped right into the Chicago civic community in a big way. I think that's important for him and for his firm, given the number of companies that compete in that next-level space."
Indeed, not only does Grant Thornton need to make money in this charged environment, Chipman must also never forget the mantra of large partnerships: Grow or die.
"We have to provide careers for people, and that means getting them into the partnership," he said. "And you can't get them into the partnership if you're not growing."
Proclaiming a bold growth goal is meant to focus his team from top to bottom, he said.
"We knew that we needed to stretch the thinking of our organization, to really get into a mode of building the brand, building a presence in the market, delivering on our promise to our clients," he said.
All these tasks have to be accomplished while managing the fundamentals of the business, with cold eyes on accounting and professional business services firms after failures not foretold by auditors.
Jonathan Weil, an outspoken critic of auditors, says accounting firms haven't been doing a good enough job and should face Securities and Exchange Commission lawsuits over failures in which they may be complicit.
"The financial crisis was in large part about financial institutions' cooked books," Weil said in a Bloomberg column last week. "...The government didn't just bail out the big banks back in 2008 and 2009. It bailed out their accounting firms too."
Chipman was born and raised in Plymouth, a small town known for its naval base on the southwest coast of England. Unlike most young Grant Thornton executives, he was not recruited to the firm, but rather landed there by a stroke of luck. Three months after he joined the largest local firm in Plymouth, in 1981, it was acquired by a larger firm, part of what is now Grant Thornton.
"Suddenly I was with this very large organization, with great training and opportunities for travel. It was one of those little quirks of life," he said. "It was fortuitous, and it was, professionally, the best thing that ever happened to me."
After five years in England, Chipman took his first international posting, moving to Dallas. He made partner and met his wife, who also worked at Grant Thornton.
"He is truly someone I feel I can respect," Kim Chipman said. "And respect is the No. 1 thing for me. ... Solid. I guess that's the one word I'd use for him."
She left the firm when they were married and was earning her MBA when he was asked to move to Asia.
"For me it was just the best possible opportunity," he said. "I was barely 30, had just made partner, and they said: 'Go to Asia and build Asia Pacific.' It was fantastic."
The move to Hong Kong was significant in another way that was not apparent at the time. Chipman said he and his wife both grew up in modest, middle-class homes. Living in Asia, he said, "opened our eyes to the needs in places like China. Our perception was we were normal, just normal middle-class folks. And then you live and work in Asia, seeing real poverty for the first time, and real need. That was a real life-changing event."
When they returned to the United States and once more were living in Texas, the couple decided to adopt first one daughter from China, then a second two years later. The family settled into life in Dallas, when serendipity intervened. Chipman was asked to return to Asia for the firm.
"That was great because we were able to travel around China, and they were able to really connect with their home culture," he said of daughters Samantha, 13, and Emma, 10. "I think it helped to sort of put into perspective their questions about their adoption. It was a wonderful experience."
It was during this second stint in Asia that Chipman was tapped as one of the people being considered for CEO for Grant Thornton's U.S. member firm. As a member of the senior management team, he said he had finally begun to think about the possibility of the top job.
"I am not one of these individuals that has really planned out my career," he said. "I've tended to be sort of a three- or four-year guy, and then I'm ready to do something else. ... But when I was part of the senior leadership team, and I really had a seat at the table with our previous CEO, for the running of the business, I started to think that, well, this could be an interesting job. Maybe I have some of the skills that could be effective in that role."
Chipman had, of course, followed the standard path to corporate leadership. And as the CEO selection process moved along, he burnished his resume with executive training programs at Harvard and Oxford. But when he finally took over for Nusbaum, in January 2010, Chipman said he wasn't ready for the feeling -- literally an "every fiber in your body tingling" -- of being the person in charge.
"By the time it happened, I thought, I've rounded off the edges and I'm feeling pretty good about this," he said. "Then you get in the chair and you realize there isn't anything that really prepares you for the job.
"As I've reflected on it," he continued, "it's that sudden realization that you're looking up and there's no one. Obviously there's a board that is very important and a huge part of the counsel and advice, and I'm certainly responsible to that board. But that whole 'buck stops here' on decisions, that suddenly becomes very real. You've got 6,000 people in the U.S., and they are all looking at you. And they are looking at you for answers. That's a huge responsibility."
The timing of his ascension didn't make it any easier. Accounting tends to lag typical businesses when it comes to ups and downs. So the market turmoil of 2008 was still very much in play when Chipman took over the reins.
"We were absolutely in the teeth of the storm of the impact of the financial crisis," he said.
"It certainly, as I look back on it, was a huge growth moment for me," Chipman said. "I don't think you know your ability to deal with these sorts of things. All the Harvard courses and all the Oxford courses, and the training and all the roles I had, all that stuff is fantastic, and I probably in some form or fashion drew on that. But until you're in the chair, until you're in that moment, you don't know."
One thing he learned was how to deal with the nonstop scrutiny a CEO faces, magnified in the blog and social-media age.
"Every moment of every day, you are being watched. At a time of crisis like that, no matter how bad a day it's been, or how difficult a problem you're grappling with, people don't want to see you looking like the place is falling apart," he said.
Nusbaum had high praise for Chipman's handling of a tough situation.
"It took a lot of fortitude to balance the short-term decisions to cut costs with a long-term vision," he said. "The most important part was Stephen kept people motivated. He's all about keeping people optimistic. At times, as CEO, you have to be a cheerleader even as you're making cuts."
The firm cut jobs early in Chipman's tenure, consolidating some offices and selling others. Spokeswoman Michele Mazur said she could not provide a specific number of jobs lost. She said staffing levels, along with revenues, are now "well above" what they were in 2009.
Things are looking better now. And Chipman said his biggest priority is talent. Globalization and instant communications have neutralized the kind of hard competitive advantages companies used to have, he said. The extra services that a talented, innovative team can offer are what matters.
"The soft stuff is now the hard stuff," Chipman said. "The organizations that collaborate, are agile, have great communications, have people that feel empowered, all of these soft skills, in totality, create competitive advantage."
Not that dealing with the hard side of the business is in the rear-view mirror. In the wake of the Enron-related collapse of Arthur Anderson in 2002, Chipman said he believes the auditing industry did a good job of cleaning up its processes amid new government regulations.
Now, sharp criticisms are being raised again. The industry's defense is to draw a line between what the public expects of auditing firms versus what they actually do.
"There is a huge gap between what we do and what the public at large thinks we do. We audit financial statements to professional standards. Often the public, and the investment public, thinks we are giving a total bill of health ... that our opinion is somehow an overall health check for the organization. That's not what we do."
Still, Chipman said a perception gap means "the industry is always going to be exposed to the next major business failure."
Tom Allen, chairman of the Federal Accounting Standards Advisory Board, agrees there's a perception gap. But he said that's nothing new and doesn't mean firms don't have to give the public better information about businesses, ideally flagging potential problems more quickly.
"The world we live in is a very complicated world," said Allen, also a retired professor of accounting at Weber State University. "I think the auditing profession is having a real hard time saying: 'How can we audit and understand future information?' "
Allen said the key is maintaining and updating professional standards to reflect the ever-changing financial marketplace. "There is always room for improvement."
His words echo Chipman's own about his approach to his wide responsibilities.
"There isn't a day that goes by that I don't learn to be a better CEO," Chipman said.
"To me, it's a work in process, more than any other job I've ever done."
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Title: Chief executive officer, Grant Thornton LLP, the U.S. partner firm of Grant Thornton International
Background: Born and raised in Plymouth, England; has worked for Grant Thornton for 31 years. Prior to taking the top U.S. job, he ran Grant Thornton's China office. He has also worked for the firm in Dallas.
Family: Chipman and his wife, Kim, live in Wilmette with their daughters, Samantha, 13, and Emma, 10.
Interests: Follows global affairs closely and though he travels for work nearly every week of the year, loves traveling with his family. Enjoys American sports and, thanks to years in Texas, is a die-hard Dallas Cowboys and Texas Rangers fan.
Leadership style: "I think leadership is about influence, not authority. In fact, I think leadership is about the ability to influence, with or without authority."
Rallying the troops: Self-described "handwritten note guy" and big believer in recognition. "I am never satisfied that we are doing enough to recognize our people."
Civic involvement: In addition to Chicago causes, he's on the board of the Berkeley, Calif.-based Half the Sky Foundation, a charitable organization that works to improve conditions in Chinese orphanages.
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