Snyder's challenge: Reinvigorating Michigan

Governor brings a CPA’s management perspective to the public sector.

BY KEN TYSIAC
December 1, 2012

When Rick Snyder saw the cover of the first comprehensive annual financial report for Michigan produced on his watch as the state’s governor, he smiled and reacted with feigned horror.

“So what am I?” he asked State Budget Director John Nixon. “Chicken feed?”

The report mentioned Nixon’s CPA credential, but not Snyder’s.

While he was mostly having fun at the expense of his skillful budget director, the episode illustrates how important the CPA credential is to Snyder, who is using the skills he honed in public accounting, business and industry, and venture capital to attempt to improve a state that had been challenged by debt, a loss of manufacturing jobs, and recession.

Snyder, a Republican, is the only current governor who holds a CPA credential, and one of just three CPAs ever to serve as a governor of a U.S. state, according to research conducted by the Michigan Association of CPAs. Virtually every aspect of his approach to running the state reflects the background he developed as a CPA whose career path includes time as a Coopers & Lybrand partner, president and COO of Gateway Computers during a period of rapid expansion for the company, and cofounder of a venture capital firm.

“We need more CPAs in the whole public sector,” Snyder said, “because the background and experience is exactly what we need in terms of people that are problem-solvers.”

Snyder got to know and respect the profession through an uncle, Robert Reames, a CPA who served as president of the Michigan Association of CPAs. Snyder made partner at Coopers & Lybrand, and he helped oversee Gateway’s expansion from a company with fewer than 800 employees to 10,000. A lifelong desire to make a widespread impact by helping people led him to campaign for governor. He ran as “One Tough Nerd” and won 58% of the vote in 2010.

Michigan has shown progress in several important metrics since Snyder was elected in November 2010 and the state’s unemployment rate was 11.6%, but it hasn’t always been an easy road. Since March 2011, his approval rating has risen 14 percentage points to 47% (compared with 37% who disapproved) as of November, according to survey research firm Public Policy Polling. Meanwhile, Michigan’s economy—which was showing some signs of improvement when Snyder took office—has continued its upward swing. As of September, unemployment in the state had dropped to 9.3% (from a high of 14.2% in August 2009), and Public Policy Polling data showed in November that Snyder would lead a generic Democratic opponent 47% to 41% in a reelection bid.

Rick Snyder, CPAWhen Snyder and his family decided he should enter public service, they committed to spending 10 years in that phase of his career. They figured it would take two years of campaigning to make a name for himself as a political newcomer. He hopes to be reelected in 2014 and serve another four-year term, and he wants the final act of his career to consist of giving back to the profession by teaching college-level accounting.

“I’m simply here to help people,” Snyder said. “And … longer term, after I’m done with this, I want to continue to help people on a smaller scale, so that’s why teaching is on my agenda.”

During an interview with the JofA, Snyder shared his thoughts on subjects such as change management, planning, and benchmarking.

On change management: “This is something I learned at Gateway, and it really got reinforced. I call it ‘managing to the reasonable range.’ And the challenge is, when you have a very active, change-oriented environment, you can fall into a couple traps at the extremes. One trap is the model of bureaucracy, where you have so many prescriptive rules and things like that, that nothing gets done.

“So you try to avoid that, but then you go to this other side to say, if you don’t have any rules or regulations or a framework for making decisions, you have chaos. That’s not a good answer. If I’m helping lead an organization that has dramatic change going on, I’m not here to micromanage it. I’m here to make sure we’re moving upward and to the right in the reasonable range. I’m trying to avoid bureaucracy on one hand and chaos on the other hand, and let different groups go at different paces, but sort of try to compact it so they’re all within the same reasonable range of activities so they can all work well together. So you want to make sure you don’t get outliers going too far afield, but again, if you have people that want to take initiative, show initiative, be more innovative, let them go. And don’t wait for everyone to be in lock step. That’s a mistake.”

On planning: “I don’t do traditional planning. That’s antiquated, where basically you get everyone together and you do a plan that may take a year or two to come together and you come out with some nice, glossy report. That’s the old world. And what do I mean by that? The world is … becoming more global, very quickly, and the velocity of change is only increasing. Those are two variables, I have high confidence, that they’re happening and they’re not going away.

“The planning model I work under, I call it, ‘Vision, Engage, Adjust, Attack.’ So I come up with a vision. You put a vision in place. And then you engage. You go. Don’t wait around for all the glossies. Just start learning what’s really going on. Because again, in the old model, it would have moved by the time you get around to doing something. So engage. And then after you’ve engaged for some period, stop and adjust. Now that you really have the facts and you can make better decisions based on common sense, now you adjust what you’re doing, and then you attack because you actually know what you’re doing and why. And go for it. Fulfill that vision and get the job done.”

On talent management: “We have a broken system in our country about connecting young people, or people looking for a new profession, with careers. There’s a disconnect between our educational system and the private sector, which is where the jobs are. So I’m going back to simple economics. We’re going to build a system here in Michigan where we actually build up supply and demand in a more thoughtful way. And it’s not about government hiring everyone. That would be truly scary. It’s about us playing a convener/clearinghouse role to bring the private sector together with the educational community in a thoughtful way so that we all win together.”

On leadership: “We were broken badly enough, both as a state and as a government, that we needed dramatic action, and reinvention with more and better jobs, a focus on our kids, customer service government, with relentless positive action. So it was a very clear mandate. And I won big in the general election. What happened next was, as soon as I started talking about what we were really going to do, my approval rating went way down. And that’s human nature.

“Everybody likes change until it shows up and affects you. Anytime you sit down with someone and say you want to change something, they’ll say, ‘That’s a great idea, a wonderful idea.’ And then you’ll say, ‘Now we have to make some sacrifices. We all have to work together and deal with these things.’ And it’s like, ‘Well, that was a really good idea until you brought me into the equation.’ So actually I went very downhill in my approval ratings.

“We did the work, and I was doing what I said we were going to do. This isn’t rocket science. So we simply followed through. And what people found was, it was working. Now we’re just getting back to the place where people have confidence that we made the right decision originally, and you just have to go through the normal human nature cycle to get there. But you have to stay consistent. You can’t second-guess. You have to stay on the course and path.”

On budgeting in difficult times: “You always step back and say, ‘How do you do this in a thoughtful fashion, that isn’t just about cutting costs?’ The goal is not to cut costs, nor to cut jobs. And again, you have to think about the people aspect of these things, because you’re talking about people’s livelihoods, their families. And … long term in business, your greatest asset is your people, so you want to make sure you’re managing that appropriately. So a lot of this is not just thinking about the short-term actions you’re taking, but what are the long-term consequences? And then doing it in a very thoughtful, caring way.

“And you want to get the long-term success. Not just survival, but the long-term success.”

On transparency: “Transparency is really important. The easiest way to view it, in my view, is, isn’t it better for people to have the facts? Particularly if you’re going through difficult times, people will make up answers. And they’ll work on rumor. They’ll work on everything else, and that’s not a good basis. That’s where you get into trouble and have a lot of problems and difficulties. Usually when people have common facts, the next step is common-sense solutions.

“Because, usually when you look at it, there aren’t 18 different choices. It’s usually pretty clear what you need to do. So I actually leverage transparency as a strategic advantage in terms of getting numbers out there, getting information out there. In the public sector, it’s even easier, because it should all be public anyway. But when I was in business, I very much encouraged people to be open about what the financials are. Don’t hide them away from the people you’re working with. Share them, because then they feel like they can make an impact and make a positive difference in showing results.”

On benchmarking: “My view is, if you’re going to do something, you need to be able to measure it. And you need benchmarks to do that. And that goes back to the human nature things. When you first talk about measurements, a lot of people don’t like that idea. Because human nature is, ‘I don’t want to be graded because I’m just going to get into trouble.’ Well, that’s backwards. So I always try to communicate to people that the reason to measure is so you can celebrate success. How do you know you’re doing well if you don’t measure it? So transparency and measurement go hand in hand.”

On accounting education: “Too often when young people take an accounting class, they say, ‘Well, I have to take accounting.’ I went the other direction and viewed it as a great opportunity. I viewed accounting as the language of business. So as people look to learn a foreign language, Spanish, French, or whatever, because they want to go to that country or be fluent in that area, I viewed learning accounting as, if you’re going into the private sector, if you’re going into business, you should be as fluent as possible, and the best way to do that is to be successful in as many accounting classes as you can take.”

On objectivity and staying positive: “I was hired to solve problems and to use common sense to do that, and to solve one problem after another and be relentless in the solutions. And that’s the same philosophy as being a CPA, in the sense that you’re not there to pick a fight with anyone. You’re not there to blame someone. Here’s a problem. Here are the facts. Here’s common sense. Here’s a solution, and let’s move forward and get something done.”

On the federal government’s fiscal problems: “Washington is a mess. And what are their biggest challenges? They haven’t done a budget, let alone balance a budget. They’re not paying down long-term debt. They need to do tax reform. And the list could go on. Regulatory reform. So you just set that as your course and say it’s what people would describe as a real mess. Now if you go back to 2010 in Michigan, we were a real mess.

“So what did we go do? We balanced our budget … [with] a very thoughtful, better way of doing budgeting, not just for the short term but the long term. We started paying down long-term liabilities. We [reformed] a tax system that was the worst in the country—the Michigan business tax was the dumbest tax in the country. So we replaced it with a simple, fair, and efficient corporate net income tax of 6%. And we’ve been doing regulatory reform and all these other things. It’s all doable. We’ve done this much in a year and a half. There’s a lot more to do. So again, I’m not complacent or content with it. But why can’t Washington do the same thing by using those same basic principles? Let’s get it done, because it’s holding us all back.”

On running for public office as a CPA: “Campaigning is really hard, and it’s an acquired skill. I was not good when I first started. To be blunt, I had to learn a lot. But a lot of it is just getting out there and doing it. It would be much like if you’re in a public accounting firm and you had the question of doing business development. There are some CPAs that will get out there and do client development and work on those things, and others that just never want to do that. Well, if you have that inclination to do client development or you’ve been good at it, you’ve already started on the path to have the fundamentals to get out and do the public part of this position. And what I tell people is, the more you do it, the better you get at it. So it’s just like riding a bike.”

Ken Tysiac is a JofA senior editor. To comment on this article or to suggest an idea for another article, contact him at ktysiac@aicpa.org or 919-402-2112.

Click here to see video of Michigan Gov. Rick Snyder, CPA, describing his management strategies.

PHOTOS COURTESY OF THE OFFICE OF GOV. RICK SNYDER

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