CPA Succession Planning

Succession management at CPA firms is not an isolated issue; developing a succession plan requires an examination of the entire business strategy of the firm. Consequently, succession can become an important catalyst that compels firms to finally make changes that previously never got beyond being topics for discussion at planning meetings.

Succession, more than any other issue, can be the catalyst for the owners in a CPA firm to reach a consensus. Addressing succession is compelling because the senior owners understand that the time is drawing near for them to let go of the firm’s reins, and yet they simultaneously want to reduce their risk of non-payment of the retirement benefits. The younger owners are ready to take over the firm, but often recognize that they lack important skills and experience needed to ensure a successful transition. Therefore, all parties involved are almost certainly more open to change than at any time in the past. But most important, given the looming transition to the next generation of leaders, all the owners are likely willing to give up some privileges and powers in exchange for things that are becoming more important in light of this changing environment.

Some of the many issues that are open for change are:

• Who is going to take over the firm, and what skills do they need to develop?
• How can the firm’s decision-making process be established to ensure a viable and enduring chain of command?
• What processes are needed to ensure the consistency of operations between leadership groups?
• What systems should be adopted to reward and promote the behaviors the firm desires?
• How will everyone in the firm be held accountable for his or her actions and inactions?
• How do we leverage both our people with extraordinary marketing/business development capability, as well as those with a similar level of technical competence, to be of maximum benefit to the firm?
• What are the roles, responsibilities, and expectations of owners, managers, and staff?
• How can the firm make the transition from operating like a group of individuals to a group supporting one firm (i.e., putting the firm first)?
• How can the firm’s clients be transitioned, what is the order of the transition, and when do we start the transition process?
• What and when should the firm communicate about the transition plan to both employees and clients?
• What roles, responsibilities, and expectations as well as corresponding benefits and privileges have been identified for the retiring owners?

By addressing each of the preceding questions, you have traveled a long way down the road to developing your CPA firm’s succession plan. In drafting the plan, do not get caught up writing a novel when a series of outline notes will most likely do just as well.

In our work with CPA firms in this area, the central issue is about putting processes in place so that they run their firms like a business! Succession is easy when your firm is built around principles such as:

• Building a solid infrastructure focused on developing people on every level,
• Holding everyone (including partners) accountable to achieving the firm’s strategy,
• Compensating everyone for their current performance rather than through an entitlement process,
• Identifying the role people play so that they know exactly what is expected of them,
• Putting decision-making authority in place so that the managing partner can hold partners and staff accountable to their personal goals and firm objectives,
• Developing a system that ensures clients are properly transitioned as part of the retirement process and benefit earned calculation,
• Creating a right-side up Pyramid so that work leverage is foundational to the client management process, and much more

As you might know from reading our books on Succession (Securing the Future: Building a Succession Plan for your Firm and Securing the Future: Taking Succession to the Next Level), we review a number of processes and issues that need to be addressed in order to make succession easy. The great news is that the steps a firm takes to formalize its leadership succession process are fundamental to making the firm better, faster and stronger. At Succession Institute, LLC we help firms navigate through this process.  We work side by side with them to help them through the often difficult implementation process involved in succession management.