Five Ways to Put Success into Succession Planning

A robust mentoring program can be critical.

Three climbers helping each other up a hill

By Bill Penczak

Legendary General Electric CEO Jack Welch is reported to have lamented the choice he’d made in his successor, choosing someone based on their personality and ability to navigate the politics of the position instead of someone who could successfully lead the company into a brighter future. Welch was correct. Today, GE is a shell of its former self because of its leadership choice.

MORE: O.D. Lanier: Stepping Into Advisory | Secret to Success? A Growth and Abundance Mindset | Future Firm Growth Requires a Mindshift |The Great Resignation: Five Reasons Accountants Are Quitting | Five Global CPA Leaders: Four Survival Strategies | Planning for Success in 2021 | Do You Have the Guts to Beat the Covid Crisis?
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Welch’s one gaping failure as an otherwise stellar executive started me thinking about the current state of baby boomer-led and owned CPA firms, and how many of them are likely to commit the succession errors of GE. Or worse, do nothing at all in terms of creating and sustaining a CPA firm into its next iteration.

As firms are giddy with the prospect of a new year and with COVID in our rear-view mirrors, here are five considerations for generational succession of a middle market firm:

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From Tax to Transformation

Transformation Talks: Paul Mueller, CPA, took a leap of faith when he left a national accounting firm at the apex of his career to start a new firm serving small- and medium-sized businesses.

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Center for Accounting Transformation
Center for Accounting Transformation

Transformation Talks
With Bill Penczak
Center for Accounting Transformation

Paul Mueller was at a crossroads. As a national manager for the tax group of a large firm, he should have felt like Leonardo DiCaprio, yelling, “I’m the king of the world!” Yet, something just wasn’t right.

MORE: Five Lead Generation Mistakes to Avoid | Five Post-Tax Season Growth Ideas | Five Better Ways to Say No | Are You Solving Your Clients’ Problems? | Five Ways to Grow: Talent New Service Lines | Business Development and Sales Aren’t Scary
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Today, he is the managing director of his own firm, Mueller Pye & Associates, CPA LLC in Loveland, Colo. His is a story of a late-life career transformation.

Takeaways

  • There is life—a really fulfilling one—after a departure from a large national firm into a small firm in rural Colorado.
  • In order to effect transformation either as a firm, or as a professional, it’s important to have a support network you can trust and open up to about your challenges
  • While firms do a great job of advising their clients on succession planning, that’s not always the case for themselves.

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Preparing for the Worst (Thanks to My Wife)

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By Ed Mendlowitz
Call Me Before You Do Anything: The Art of Accounting

One morning my wife and I were having breakfast and she asked me, “What do I do if you and Peter get killed?”

MORE: The 10 Best Movie Accountants | Why Accountants Quit | When Siblings Battle over the Family Business | How Bickering Can Ruin a Family Business | Why Annual Staff Evaluations Fall Short | Why Create an Accounting Firm Business Model? | The Clients that Keep You Awake at Night | Creating a Cross-Selling Culture
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This was a Friday and Peter Weitsen and I were flying together on Sunday to a conference in Palm Springs. My response to these questions was typical: “Don’t bother me. Nothing will happen!”
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What Happens When You DON’T Push Work Down

Pile of documents on desk stack up high waiting to be managed.“Stop defaulting to asking every talented person you have to work more hours doing stuff other people can and should be doing.”

By Tommye Barie
The Succession Insitute

As we said in our previous column, Why You Must Constantly Push Work Down, we are talking about how firms will need to alter their thinking regarding outsourcing, administrative support and the administrative time of partners and managers. We discuss how the lack of delegation impedes competency development, why partners working more hours end up creating a weaker bench, and more.

Outsourcing

In this case, we are talking about outsourcing offshore. For many years, firms turned away from this idea because of the fact that they need to inform their clients that the services they provide were not 100 percent made in America. And most of our firms would say something like, “Our clients won’t tolerate us shipping their data overseas” or “Our clients will leave us if we outsource some of our work to India or China.” Both of those statements continue to be proven wrong every day.
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Why You Must Constantly Push Work Down

Woman in business attire with papers flying around behind her backNew staff won’t work the hours you did. Forget that notion right now.

By Bill Reeb and Dominic Cingoranelli

As we work with firms throughout North America, one of the most constant, critical issues we find is that of staffing gaps. Those gaps are manifested in shortfalls of billable hours, as well as shortages of people, and a lack of critical competencies of people – all at various levels throughout the firm.

MORE ON PERFORMANCE MANAGEMENT: When the Inmates Are Running the Asylum | The Two Most Common Management Styles | Different Roles for Different Partners | How Big ‘Books’ Hurt Firms | Developing a Three-Year Vision [VIDEO] | More Merger Questions Than You Imagined | MPs: How to Elect Them … and Fire Them | Partners as Role Models: The Good, Bad & Ugly
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In these situations, we tend to find that often the partners, and sometimes the managers, are billing too many hours. Meanwhile many staff, especially at the lowest levels within the firm, consistently are missing their billable hour targets.
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Succession Issues Stalling Some M&A

Four businesspeople, left handshakeOwner agreements are seeing updates.

By Terry Putney
Rosenberg MAP Survey

The level of activity we’re seeing in M&A deals is unprecedented.

MORE FROM THE MAP SURVEY: Firms Focus on Profitable Growth, True Leadership | Survey: Many Firms in Transition | Technology Playing Center Stage in CPA Profession
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Many firms in larger markets are often approached directly by firms interested in discussing a merger. The days of discreetly pursuing an affiliation strategy appear to be waning.
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Technology Playing Center Stage in CPA Profession

Woman using midair interfaceAlso: Retirees who want their buyouts had better transition their clients.

By Marc Rosenberg
Rosenberg MAP Survey

Anyone knowledgeable about the state of the CPA firm industry would agree that technology is playing center stage

The potential of blockchain, artificial intelligence and data analytics is set to transform CPA firm technology in the same way that previous blockbuster inventions – PCs, laptops, the Internet and software – did that almost instantly made obsolete the manual work CPAs painstakingly performed for decades.

Every year, the authors of the Rosenberg MAP Survey ask the industry’s top consultants to share their observations of what they are seeing at CPA firms. Specifically, they are asked the following questions: READ MORE →

3 Ways Firms Scare Off Successors

Man in suit pointing thumb downAnd 7 steps to making ownership attractive to new leaders.

By Terrence E. Putney
Bridging the Gap

Buying into a firm as a new owner involves great opportunity, but also significant risk. It is reasonable for ownership candidates to evaluate the potential for professional and financial rewards before taking such a step.

MORE: Sponsorship: Barrier to Exit for Diverse Talent | Use Collaboration Technology to Improve Your Firm | 3 Ways to Keep Your Team Members Connected, Engaged and Energized | Growing, Developing Future Leaders Is a Two-Way Street | A Winning Culture Is an Intentional Culture
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Therefore, firms must be willing to honestly assess the potential risks and benefits for candidates as they seek to attract new partner-owners who can contribute meaningfully to the firm’s continued success.
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