Filling your shoes
managing partner is almost like starting a
business over, like selling a business and
hoping it survives.”
BY DANIELLE LEE
Succession planning requires creating
your own successors
CULTURE
Talent and skill level alone are not enough for
most employees to climb the hierarchy into
a high-potential position.
“People rarely fail because they don’t have
the talent,” said Gary Hourihan, chairman of
consulting firm Korn/Ferry Internation-
al’s Leadership and Talent Consulting
Group in Irvine, Calif. “They tend to fail
because they don’t have the key behavioral
characteristics and they don’t fit in with
the culture.”
Management should promote
the positive elements of this
culture in order to retain
future leaders long
before the grooming
process begins.
“What hap-
pens in our pro-
fession is that we
have not self-advo-
cated in the best fashion,”
maintained Philip Whitman,
president of Whitman Business Advisors in
New York. “We haven’t shed the glamorous
light on our profession that really exists.”
“The environment for younger staff is to
see busy, crazy partners running around, and
they say, this is not something I want to sign
up for,” added Whitman. “They get off the
merry-go-round a little too soon.”
Those staff who do remain on board should
be able to “solve complex problems and
make decisions quickly enough,” said Hour-
ihan. “Research suggests that as you move
up the hierarchy that becomes more and
more important.”
These behavioral elements are a critical
part of the overall succession plan.
“You should evaluate the senior manage-
ment team and pit successors against those
characteristics,” Hourihan added. “It allows
you to see where you have holes in the suc-
cession plan process.”
Retaining high-potential staff should al-
ways involve annual reviews and proper
compensation. “The annual expectation [for
future leaders] should be supported by roles
and responsibilities,” said Reeb. “This needs
to be backed up with compensation that you
stick to that rewards those people who are ac-
complishing the firm’s strategy and punish-
ing those people who decide to go rogue.”
Ron Ashkenas, a senior partner at man-
agement-focused Schaffer Consulting in
New York, agreed that keeping potential
successors means cutting those on your staff
who underperform. “You need serious per-
formance management that takes the bot-
tom performers out every year,” Ashkenas
said. “People don’t want to stay in a firm side
by side with someone that doesn’t work very
hard but gets the same performance rating
and sticks around.”
The first step for a CPA firm looking to im-
prove its succession plan is to make sure that
it actually has one.
They’re all too often absent at account-
ing firms. “Most firms don’t have any plan,”
maintained Robert Fligel, president of New
York-based CPA growth and succession con-
sultancy RF Resources. “Even to do a memo
would be a major accomplishment.”
Statistics bear that out, as just 35 percent
of multi-owner firms and 9 percent of sole
proprietors had a written succession plan in
place, according to the most recent succes-
sion survey conducted by the PCPS Section
of the American Institute of CPAs.
In a 2010 WealthStar Alliance survey of
accounting firm partners, 94 percent of respondents said succession planning was important or very important, but just 31 percent
reported having a succession plan in place.
The survey also found that 55 percent of
firms plan to make a transition in management or ownership within five years, and 87
percent expect to in the next 10, making the
issue especially urgent.
Starting small is not a bad idea, as Tim Michel, principal of Akron, Ohio-based Michel
Consulting Group, learned when he was a
managing partner at New Philadelphia,
Ohio-headquartered Rea & Associates — as
long as you start early.
He polled the partners to determine when
they thought they would retire, and found “a
significant percentage” was planning to leave
in the next three to five years.
According to Michel, this would be the
time to put the wheels in motion. “The
more time you take, the better,” he said.
“Some firms have in their agreement that
you have to give notification within one to
two years of retirement. But that’s not enough
time to transition a relationship [with the
retiree’s clients].”
Instead, Michel recommends a five-year
transition period to properly acquaint clients
with partner successors.
ENGAGEMENT
It is critical, then, to engage younger staff, first
to retain them, and then to prepare them for
a leadership trajectory.
The firm’s succession plan should accomplish this when set up in a cascade formation,
said Ashkenas, with every manager responsible for the development of those below them,
and partners making reviews at every level a
priority from the top down.
“For every partner, part of the job is know-
ing they have a successor,” Fligel said. “They
should all be grooming somebody.”
This model will also “push work down, get
younger people involved with clients and
get them to take important leadership roles
with the clients,” said Michel, who used this
strategy at Rea & Associates. “It’s more of a
team approach, pushing the work down, giv-
ing responsibility, and it brought them along
quicker so they felt more comfortable and
capable working with the clients.”
Part of this team concept requires employ-
ees to work against their ingrained career
philosophy. “The problem is, most people
know how to develop themselves,” said Reeb.
“That strength comes from decades of mak-
ing themselves better, faster and stronger
than everyone else.”
Leaders should direct this energy into
mentor relationships, continued Reeb. “If you
learn to make five other people better every
year, you have an incredible ability to grow
and expand and be more profitable,” he said.
“But it is a different culture to do that. The
stronger the individual, the weaker the firm
— but it doesn’t have to be that way.”
Instead, leadership development should
be a priority, and it should be understood
that it’s worth the obvious risks.
“The best mark of a really good leader is
that his or her people are highly desired by
others,” said Ashkenas. “A lot of times, leaders don’t want their people to be snatched
up by other people, but it is a mark of accomplishment to develop them to make them
attractive.”
