One of the most challenging problems of leading a CPA firm in this very competitive environment is the ability to implement succession strategies and initiatives with a “sense of urgency.”
In order to establish a sense of urgency, firm leaders must recognize the necessity to implement strategic goals and objectives that will continuously take the firm to higher levels of success, and achieve timely and appropriate succession plans. Progressive type leaders create a sense of urgency about what is important to the future success of the firm and their partners. When leaders fail to manage with a sense of urgency then complacency, entitlement and comfort-zoners dominate the firm’s culture. In fact, implementing progressive business decisions and strategic implementation without a sense of urgency is one of the primary causes for the fast paced consolidation in the public accounting industry.
Many of the succession planning issues that should be addressed are deeply rooted in the following:
- Difficulty in attracting and retaining quality professionals
- Inability to improve the profitability and quality of the client base
- Lack of sufficient revenue growth, other than through minimal increases in billing rates
- Ineffective marketing plans and lack of business development partners
- Inadequate formal career development programs for the staff and younger partners
- Primarily a generalist firm and the absence of high-demand niches, specialty services, and formal integrated advisory services
- A partner compensation system that is not aligned to the goals and objectives of the firm
- Minimal partner accountability for performance and profitability
- Leadership issues at various levels within the firm
Many of the CPA firms that we speak to throughout the country wish to remain independent, but few of them have implemented formal plans to ensure their legacy. Succession planning is not a program that should take place a few years before client service partners and/or leaders are about to retire. It should be an ongoing daily occurrence that takes into account partner governance and compensation, marketing, recruiting at all levels, and human resource management. Succession planning needs to start at the top with a true sense of urgency. Holding partners accountable for implementing the firm’s succession plan, and compensating them accordingly, is key to the success of the plan.
The accounting profession is consolidating at a rapid pace, and it appears that this trend will continue for the foreseeable future due to a lack of urgency on behalf of firm partners to address the deeply rooted difficult issues and make the necessary changes and investments to overcome these obstacles to avoid an upward merger and be a future ready firm. The time to act is now.
“It is not the strongest of the species that survive, not the most intelligent, but the ones most responsive to change.” —Charles Darwin