Professional Leadership and Oligarchy: The Case of the ICAEW
Noguchi, Masayoshi, Edwards, John Richard, Accounting Historians Journal
Abstract: This paper examines the difficulty, of achieving representative and effective governance of a professional body. The collective studied for this purpose is the Institute of Chartered Accountants in England and Wales (formed 1880) which, throughout its existence, has possessed the largest membership among British accounting associations. Drawing on the political theory of organization, we will explain why, despite a series of measures taken to make the constitution of its Council more representative between formation date and 1970, the failure of the 1970 scheme for integrating the entire U.K. accountancy profession remained attributable to the "detachment of office bearers from their constituents" [Shackleton and Walker, 2001, p. 277]. We also trace the failure of attempts to restore the Council's authority over a period approaching four decades since that "disaster" occurred [Accountancy, September 1970, p. 637].
Voluntary associations in common with organizational entities in general have at the apex of their administrative structure a body charged with the responsibility of leadership. In the case of professional associations, such leadership has as a central motivation the pursuit of the professional project on behalf of its members. However, Macdonald [1995, pp. 57-58, 204-205] explains how the membership of a professional body can constrain the capacity of its leadership to mobilize economic, social, political, and organizational resources in pursuit of a professional project. Using the Institute of Chartered Accountants in England and Wales (ICAEW) for this case study, we find no shortage of examples of this happening in the last ten years or so. For example, the Council's 2001 proposal to restructure the ICAEW'S traditional district society system was overtly challenged and contended in a poll [Accountancy, August 2001, p. 12]. Council's plans in1996 and 1999 to introduce electives (optional papers) into the ICAEW's final examinations met strong opposition and were rejected by the membership [Accountancy, February 1996, p. 11; July 1999, p. 6]. Indeed, members have been proactive as well as reactive in challenging the authority of Council. Initiatives taken in 1996 and 1998, designed to achieve direct election of the ICAEW president by the membership rather than by the Council, although defeated in a poll, have been judged to effect a diminution of its credibility [Accountancy, February 1996, p. 12; July 1998, p. 20].
Momentous events that further highlight the persistent lack of authority on the part of the Council are the series of failed merger initiatives, including a number in the recent past, where the aspirations of the ICAEW's leadership were thwarted by the membership. The fragmented organizational structure of the U.K. accountancy profession can be traced to the diverse nature of the work undertaken by British accountants in the second half of the 19th century [Edwards and Walker, 2007]. Merger initiatives have been intended to reduce the plethora of societies which, for example, totaled at least 17 in the early 1930s [Stacey, 1954, p. 138] and, as a result, produce the advantages associated with a more unified accountancy profession [Shackleton and Walker, 2001, p. 166; Council Minutes Book Y, p. 148]. There have of course been important instances of successful mergers which include amalgamation of the five societies formed in English cities (Liverpool, London, Manchester, and Sheffield) during the 1870s to create the ICAEW in 1880; combination of the three city-based (Aberdeen, Edinburgh, and Glasgow) societies formed in Scotland in the 19th century to create the Institute of Chartered Accountants of Scotland (ICAS) in 1951; and the merger of the London Association of Accountants and the Corporation of Accountants in Scotland to form, in 1939, what is today known as the Association of Chartered Certified Accountants [Edwards, 2003]. The only other major reorganization of the British accounting profession occurred in 1957 when the second largest accountancy body in Britain, the Society of Incorporated Accountants and Auditors, was dissolved with its members joining one or other of the then three chartered bodies. …