Only 20 percent of all CPA firms make it to the second generation. Why? In short, firms suck at succession planning:
- Partners often lack mentoring skills;
- There is very little accountability for mentoring;
- Partners fail to give mentoring the same high-level focus as their client activities;
- Firms have inadequate leadership development and mentoring programs; and,
- Partners’ affluence makes them feel that failure at leadership development will not jeopardize their livelihood.
I’ve developed my own list of the most common, frustrating and nearly insolvable situations. Here’s one that’s on my short list:
A multi-partner firm (usually five to 10 partners) has two distinct groups of partners: the drivers (usually the senior partners) and the newer partners (who struggle mightily to earn the confidence and trust of the senior partners and perform at their level). Resentment builds on both sides. The senior partners grow increasingly frustrated at the newer partners’ perceived inability to “be like me,” and gradually lose confidence in them. The newer partners experience this tension and become disenchanted when the senior partners don’t give them any love.
The worst consequence, which I see often, is the senior partners’ gradual refusal to delegate work to the newer partners because they don’t trust them to do the work properly, timely, and in a way that pleases the clients. It’s no surprise that this creates a dilly of a succession planning conundrum.
The senior partners are the culprits here. Why? Either the firm’s bar for promotion to partner was too low, or the partners failed to passionately and energetically focus on mentoring and leadership development. Tim Christen, the highly respected managing partner of Baker Tilly and incoming chairman of the American Institute of CPAs, says it well: “The most important thing you can do for your own success is make the people below you successful.”
THE LESSON TO LEARN
To avoid the awful lose-lose scenario described above, here’s what I suggest:
1. Make it crystal clear what it takes to make partner. Keep the bar high. Use the non-equity partner position as a partner-in-training program. It shouldn’t be automatic that non-equity partners get promoted to equity.
2. Create a firmwide leadership development program.
3. Train mentors how to mentor.
4. Evaluate partners on more than just classic production metrics, but on the extent that people advanced in the firm under their tutelage. Partners cannot “opt out” of this.
5. The partner comp system must have a significant factor for success at helping staff learn and grow. You get what you measure.
A classic line from the cartoon Pogo is: “We’ve seen the enemy and the enemy is us.” Partners, if you are disappointed in the leadership and business development skills of your younger personnel, you have only to look in the mirror. It would be nice if we could “will” the firm to develop leaders. It would be nice if every young person could find it within themselves to develop into leaders. But these things rarely happen. It’s up to the partners to make it happen. Turn yourselves into leadership enablers instead of complainers.
Marc Rosenberg, CPA, is president of the Rosenberg Associates, a management consultant to CPA firms, and the author of the Monograph series. Reach him at (847) 251-7100 or email@example.com.