Is It Time to Select Your Firm's Next CEO?

If your firm is like many small and midsize CPA firms, you don’t have a formal strategic plan and you don’t set goals or hold your partners accountable for converting a strategy into real live actions that drive growth and per partner bottom line improvements.

And if your firm is like many others, you don’t set term limits on the CEO’s tenure and you don’t have a “getting hit by a bus” plan B in case your CEO can no longer do the job.

But one day, you and other executive board members come to the realization that you must select a new CEO. You turn to your bench and can’t identify suitable candidates. Now what do you do? Do you select someone who truly isn’t capable of rising to the occasion and let him or her sink or swim? Not very smart as the stakes are high. Do you search for an outsider? This is high risk because outsiders don’t know the firm’s culture and the strengths and weaknesses of the partner group. Do you start looking for a merger—either upward into a larger well-run firm with a deeper bench or do you do a merger of equals or a tuck-in and hopefully find someone who might be untested, but might have the right stuff to lead a larger, more complex organization?

Does the shoe fit? If yes, you are probably selling your partners and staff short and are headed for a train wreck. Step up to the plate and do the right thing when it comes to this important decision. You need to change your paradigm and start your CEO succession plan and process two years or so before you actually need to make the selection.

Here’s an example of a process to follow:

1. Identify Potential Candidates, Process and Timeline
• In anticipation there is a good chance you will need a new CEO in two or three years, identify partners in your firm who might have the potential to become CEO one day. Mentor these people, give them increasingly important responsibilities, let them be responsible for a P&L, and let them develop rising stars. Give them the opportunity to demonstrate if they have the right stuff or not.

• As time approaches, assign responsibility to select the new CEO to the executive board with the understanding that partners at large need to ratify the selection.

• Request partners’ input on required CEO attributes and areas of particular emphasis.

• Create a formal CEO job description based on partner feedback.

• Seek expressions of interest from those who would like to be considered.

• Select final candidates and request their vision statements.

• Get an external evaluation of candidates by outside consultant.

• Seek individual interviews of final candidates by senior partners.

• Have the executive board select CEO and seek ratification by partners at the annual meeting.

• Transition period (about four months).

• Effective date

2. Ranking Key Attributes that Next CEO Should Possess
After compiling a list of key attributes, survey your partners and rank the most important attributes they expect the next CEO to possess. Rank the top five. In addition, if a partner believes that any key attribute is missing from the compilation, indicate that with any other comments that might be helpful.