An Action Plan for Succession

Source: Journal of Accountancy

This article discusses the need for succession planning and the degree to which CPA firms are dealing (or not dealing) with the issue. It includes ideas for creating and implementing the plan such as:

• Forecast the size of the firm in five and 10 years. This helps you determine the talent and kind of leadership that will be needed.
• If the firm is expected to decrease in size, the client acceptance criteria may need to change so you can decide which clients might not be retained. Do you have the right leaders to retain these clients?
• It can take five years to develop a leader.
• Define the roles and responsibilities of:
  • Partner group. They should have responsibility for strategy and policy.
  • Managing partner. Implements strategy and policy and holds partners accountable for their responsibilities. He or she should be selected on the basis of leadership skills, not seniority.
  • Individual partners. They report to the managing partner. Compensation should be based on their contributions to firm strategy.
• Become a training and learning firm. Develop managerial leadership skills, use technology to increase productivity, and invest in marketing.
• Don’t compete for the seasoned professionals. Hire interns now and develop them.
• Update partnership/retirement agreements.

To create an environment that facilitates transition:

• Push work down.
• Don’t work excessive hours.
• Eschew the “eat what you kill” practice.
• Require partners to spend more time managing client relationships and less time processing work.
• Hold partners accountable for following policies and procedures.
• Implement a formal partner-in-training program.

Nurturing firm leaders requires, among other things:

• Coaching by assigned partners.
• Formal training in delegation, supervision, and interpersonal skills.

For the complete article, click here and read “A 2009 Tuneup for Your Firm’s Succession Planning.”

From Journal of Accountancy, American Institute of Certified Public Accountants, http://www.journalofaccountancy.com/Issues/2009/Mar/.