Dave Parkinson is the managing director of the Central Illinois Economic Unit for RSM McGladrey, Inc. He's also the central Illinois partner in-charge of the certified public accounting firm of McGladrey & Pullen, LLP.
Parkinson began his career with McGladrey in 1977 and, in 1984, became partner in the CPA firm. Five years later, he was promoted to partner in-charge of central Illinois, where he gained responsibility for strategic planning, implementation of business strategy, integration of leadership positions, and coordination with the firm's national management. Parkinson also serves as coach and mentor to the recently named RSM McGladrey Economic Unit Managing Directors in other regions of the U.S., and he serves on one of the firm's Women's Issues Advisory subcommittees.
He has degrees from Carl Sandberg College and Western Illinois University, received an MBA from the University of Illinois, and received a certificate in International Studies from Bradley University.
Parkinson and his wife, Victoria, have two daughters and seven grandchildren.
Tell about your background, schools attended, family, etc.
I grew up in the Galesburg area and attended Carl Sandberg College while working at a local factory. My original intent was to complete the one-year bookkeeping program. The course work turned out to be quite easy for me, so I changed to the Associate in Arts degree and set my sights on getting a bachelor's degree from Western Illinois University in Macomb.
At Western, I was the organizational finance officer, an office established by the Student Government Association as an independent office to oversee the allocation and spending of student activity funds. I graduated from WIU with high honors in 1977 and was named the Outstanding Senior in the College of Business that year.
I began my career in public accounting in Peoria with McGladrey, Hansen, Dunn & Company and have been a part of that business for the past 26 years as it changed names and expanded throughout the U.S. and internationally.
In 1989, the firm allowed me to enroll in the University of Illinois Executive MBA Program, where I received my MBA in 1991. This was a very rewarding experience and a challenging time because I was named partner in-charge of the Peoria and Galesburg McGladrey offices just as I was starting the MBA program.
After receiving my MBA, I was elected to the McGladrey & Pullen Board of Directors and served a four-year term, ending in fall 1995. This is when the firm added its Champaign and Springfield offices to my responsibilities, forming what we now call the Central Illinois Economic Unit.
I was invited to join the Young President's Organization in 1994. This is an international organization of business presidents under age 50 with a mission to produce better leaders through education and idea exchange. This organization has been an important part of my continuing education for the past nine years.
Who or what influenced you to become an accountant?
The truth is, I sort of fell into it. My interest started when I thought I'd become a bookkeeper. As I competed work at Carl Sandberg College, I became interested in economics, so when I enrolled at WIU, I took economics and accounting to see what I really liked best. The interest in accounting and the independent oversight role really developed at WIU when I was overseeing the student activity funds there. The demand for new accountants was also pretty strong at the time, and the strong prospect of employment tipped the scale for me.
Tell me about the services of RSM McGladrey.
We have a significant business now and are still growing. Our business is organized into a number of companies and a partnership. Our partnership, McGladrey & Pullen, LLP is our U.S. certified public accounting firm and continues to be owned by its CPA partners.
RSM McGladrey, Inc., a business services firm, provides accounting, tax compliance and advisory services, business consulting, and wealth management.
RSM McGladrey and McGladrey & Pullen have an alternative practice structure. Though separate and independent legal entities, the two firms work together to serve clients' business needs.
These businesses serve clients primarily from 100 shared office locations across the U.S. This teamwork of specialists, highly coordinated with our clients' management and boards, is an important aspect of our business and very significant part of our value proposition. Both firms are members of our international firm, RSM International, which is the sixth largest professional service, accounting, and consulting organization in the world, with 22,000 professionals in more than 600 cities in 75 countries. International business is an increasing opportunity and business challenge to many of our small and mid-sized clients.
RSM McGladrey has several business units including: RSM Retirement Resources, which provides retirement plan design, administration, and consulting services; RSM EquiCo, which provides investment banking services for businesses wanting to prepare themselves for sale or for going into the capital markets; and MyBenefitSource (MBS), a firm we're now building to provide payroll and benefit services. These businesses provide our clients important access to specialized services and transition help when growing or selling a business.
The McGladrey Network is also headquartered here in Peoria. This is an affiliation of independent CPA firms, whereby our firms' professionals and specialties support the efforts of 85 local and regional CPA firms in geographies where we don't have RSM McGladrey or McGladrey & Pullen offices. These independent firms, taken collectively, have $550 million in revenues and nearly 5,000 employees. This really begins to show our position in the profession when you add it to the nearly $600 million in combined revenue of RSM McGladrey and McGladrey & Pullen.
How did the expansion of services evolve?
According to Accounting Today, we're the fifth largest accounting and business consulting operation in the U.S. now, and we're the largest firm that focuses nearly all of its attention on the small and mid-size business segment of our economy. The size of our client base provides us with information about common client needs that are critical to helping them grow and prosper. When we understand the needs, we develop services to address them.
What are your responsibilities with RSM McGladrey?
I'm the managing director, responsible for our businesses south of U.S. I-80 in Illinois. Similar to our client chief executives, I'm responsible for managing growth, profitability, client loyalty, employee satisfaction, and balancing all of the business responsibilities to our many stakeholders. I have a CFO, HR director, and marketing manager who report to me, along with functional and industry leaders who are responsible for operations and growth in their areas of specialty. We serve this market with some 200 people assigned to our Champaign, Galesburg, Peoria, and Springfield offices, supplemented by specialists who help our clients and client servers from offices across the U.S.
I served a four-year term on the McGladrey & Pullen Board of Directors and have been significantly involved with forming our business strategies. I've also served on a number of other national committees and task forces, such as marketing and partner compensation. Presently, I'm working with a leadership group focused on issues in our businesses that are particular challenges to women.
As a member of our firmwide management team, I'm responsible for integrating the central Illinois operations with our other businesses, implementing strategy in central Illinois, and contributing to the accountabilities necessary for a professional services firm to operate effectively in the U.S. and internationally.
Has there been a change in the services requested of RSM McGladrey and McGladrey & Pullen over the past couple of years? What's the most common issue/problem about which companies approach you?
Managing small and mid-sized business continues to grow more difficult, and these management teams continue to ask for more help and advice as they seek to grow and prosper. The complexity of growth is a particular trait of this business segment because most job growth in our economy comes from them. Accountants are normally one of the most trusted business advisors to these firms, so the tendency is to ask us for help when challenges come. The increasing complexity of business is causing us to specialize much more than in the past.
We've found that we needed to be experts in business in addition to our accounting specialty, so we began sending managing directors and partners to the University of Chicago for advanced education. This is CEO-level training in strategy, organization development, etc. This education takes our most experienced people and develops them further to understand the interrelationships between strategy, finance, human resources, marketing, sales, and capital formation. As our profession works hard at transparency in financial reporting, deep business skills will be increasingly important.
We also have other programs that develop CFO-type skills such as financing at the University of Minnesota for our senior managers and directors and arrangements with other universities for our people to get advanced degrees in their specialty.
Highly publicized corporate scandals and the roles of accounting firms have increased the responsibilities of auditor, client management, and their boards of directors. With this focus has come the need for advice on how to increase board effectiveness and how to comply with increased regulations such as Sarbanes Oxley.
Management teams increasingly look to our firm for assessments of the effectiveness of their processes-such as their risk management, regulatory compliance, systems security, etc.-to supplement their internal specialists and maybe gain a more objective point of view.
These increasing client needs have caused us to increase specialization and to add people with highly specialized knowledge to our business. For instance, technology has become an integral part of the transaction cycles for many businesses. When this happens, security becomes a bigger issue than just data integrity and disaster recovery. Now clients need to protect themselves from system intrusion from the Internet. Intrusion testing is a specialty we've added to see if hackers could penetrate our clients' systems.
Another example is the growth of our tax practice. As the various levels of government struggle with budget issues, the variety, complexity, interrelationship, compliance, and costs all become more difficult to handle without the help of tax professionals who focus in these particular areas. Now, we have professionals focused on individual taxation, corporate income taxation, estate taxation, and how various states and localities assess taxes. It would be very hard for any person to be a specialist in all these areas at the same time.
Our clients' international business needs have also grown. I think you'd be surprised to discover just how many small and mid-size businesses in central Illinois have international business transactions.
This segment of our economy has built up sizable wealth over the years. Small and mid-size business owners and executives find an increasing need for advisors who can help them with financial planning, estate tax planning and funding, investment portfolio design and oversight, income tax management, and risk management. They've asked us to integrate all the professionals so everything fits together for the benefit of their retirements, families, and charities. Many owners also need help selling their business.
Consulting and accounting firms have been under scrutiny in recent years. How has this affected the operations of RSM McGladrey and McGladrey & Pullen?
The accounting profession certainly came into the spotlight with widely publicized business failures such as Enron, and there are a number of ramifications that affect all firms-not just the ones involved with the failures. This has reinforced our firms' long-held values of independence and quality.
Quality in our profession is hard for outsiders to judge. Most times people see the problems that quality control breakdowns cause at a later time. Since our name hasn't been directly associated with matters that created the scrutiny, our heritage for high quality and reputation has actually been enhanced.
One of the impacts on the profession has been to more clearly separate consulting and advisory services from the auditor role. There have always been certain activities between an audit firm and its clients that would cause the auditor to lack independence. Since the failures, there have been many more added to the prohibited list. The response by many large CPA firms has been to either sell or spin off their consulting operations. McGladrey & Pullen separated its audit business from its consulting practice back in 1999.
What makes RSM McGladrey and McGladrey & Pullen unique among similar firms?
I think there are six major differences: scale, depth, quality control systems, international scope, resources to dedicate to small and mid-size business issues, and the way we serve clients in teams.
In central Illinois, we bring the advantages of scale to this marketplace. We are, by far, the largest firm in the U.S that focuses its resources on the needs of small and mid-sized business and their owners. With nearly $600 million in combined revenues last year, our business is far bigger than our primary competitors. This allows us to quickly digest new laws, regulations, and business events and figure out how to apply them effectively and efficiently to our clients. Our scale also allows us to gain access to alliances, specialties, and prices for our clients that simply wouldn't be available to smaller competitors.
The size of our business also provides us significant depth by industry and service. It would be very difficult for smaller firms to have as many professionals in narrow tax areas such as international tax, research, and experimentation credits; cost segregation; management services such as human resources, business valuations, capital markets, estate planning, or retirement plan design; or as many people concentrating on a certain industry.
Our quality control systems are rigorous, ensuring the work and advice of our professionals is properly supervised and reviewed. Our reputation for high quality supports the results of these systems.
Our international organization is unique when you couple the sheer size and coverage with the resources of our domestic international office. Our clients aren't left to figure out how to access professionals in other countries or deal with the different time zones. We facilitate and manage all of these cross-border challenges so our clients can get the help they need with the least amount of hassle.
The scale I mentioned first also provides us with far more resources to focus on the needs of small and mid-size business. We can and do make material investments in designing ways to help clients and focus nearly all our resources on this segment of our economy.
Finally, our approach to serving clients in teams sets us apart. Having all of these professionals is a very good thing for our clients. The team can help clients in a far more efficient and effective way than any one individual could. Keeping team communication to a level of excellence and keeping them all coordinated is a real challenge, but it's a challenge we've been perfecting for a number of years.
How has the changing global economy affected business in central Illinois?
I believe the most public example is the continuing growth of Caterpillar products around the world. We're indeed fortunate to have such a successful company headquartered here that competes on a global basis.
We also have many smaller companies that either supply components to products headed for international markets, import materials or products for sale in this country, or further manufacture them for resale in another part of the world. So all the economic factors and laws that either helps U.S. business compete with those outside our borders or work against them have a significant impact in central Illinois.
Lower labor costs in some international markets certainly have made it difficult for some manufacturers to keep their employment here. A recent example was the decision to close the Maytag plant in Galesburg.
The attractiveness of the U.S. consumer also makes us a good area for foreign investment. Over the years, we've seen more investment here from both Europe and Asia, and with a reasonable exchange rate, this investment is even more likely.
Central Illinois is moving from a manufacturing-based economy to a more service-based economy. How has this affected our region?
Well we've certainly seen the more unsettling events resulting in fewer manufacturing jobs. Many labor-intensive processes have either moved to another country or have been replaced as more technology has been utilized. However, we remain strong in the manufacturing sector in that there are many small and mid-size firms in this region producing high-quality, value-added products and components. What's changed is these firms are creating highly skilled manufacturing jobs that are strikingly similar to those in the service industries.
Our significant employment in health care, education, financial services, the public sector, and the technical professions have provided service sector jobs and have made our region less dependent on economic cycles.
Health care costs are a major concern for business. How are you advising small and mid-sized businesses?
Unfortunately, we have to expect these services to cost more, so they need to plan for it. These plans include building it into pricing and profit decisions, along with designing the employee benefit programs necessary to compete for the talent they need. If their competition is local or domestic, their competitors are likely to all be in the same boat, and their prices will all have to rise to accommodate the rising cost. If their competition is international, they may have to find other costs to reduce to remain competitive.
Business managers and their employees may also need to form more of an alliance to manage the demand side of healthcare costs. This includes education about how to use health care services in the most appropriate ways, how to stay healthy, and how to get the services people need while avoiding unnecessary costs. Some businesses can study utilization trends, impact administration costs, and make plan design changes to help slow the cost increases.
What are major pitfalls for new start-up businesses?
I'd say the biggest one is an incomplete business plan that likely made little use of good business advisors. Plans need to be based on solid market insight and be considered in light of the many things that may not turn out the way you'd hoped. If the plan is based on a hopeful set of assumptions, they may be underestimating capital needs and run out of money before the ideas can get adequate testing.
The other major pitfall is having too much attention on creativity and ideas, thereby short changing discipline on solid business fundamentals.
What, if any, misperceptions regarding RSM McGladrey would you like to address?
We've expanded so rapidly that many people still think of us as a "regional" business and don't know us as having the deep specialties required to serve businesses ranging from small and mid-sized ones to those traded on the public market. Some may remember us for our more localized roots, rather than for having the resources of one of the largest firms in the U.S. and the ability to also serve across international borders as a key member of RSM International, ranked as the sixth largest firm internationally.
Our business in central Illinois offers large firm, value-added resources at very competitive prices, along with the attention of local professionals.
How do you foresee RSM McGladrey and McGladrey & Pullen changing over the next five to 10 years? What industry trends may prompt change?
Both firms will continue to grow, add employees, and be important contributors to the communities where we live. This will be the result of the increasing needs from our clients in our many areas of business advisory and tax consulting.
McGladrey & Pullen will provide more clients with audit and assurance services as business suppliers of capital demand more from the financial reporting oversight function. We'll have more interaction with client boards and audit committees, and we'll be helping them increase their effectiveness on a more regular basis. We'll maintain our quality systems and rise to the challenges of increased professional regulation expected of a firm with our stature in the profession.
Our clients also will be increasing their individual liquidity as they transition their businesses and wealth to the next generation. These macro events will make RSM McGladrey's business/management transition services and wealth management specialties a much larger part of our business.
We'll be an even larger business, yet our culture will retain the values we've lived for many years-namely integrity, excellence, teamwork, client focus, and respect. IBI