The easiest way for us to think about the succession crisis is to characterize it as the struggle to get the next generation of accountants to do the things that retiring accountants do. When we think about it this way, we fall easily into making lists of tasks to help them do that. We plan to train them in leadership, communications, business development skills and technical training.

But the real test of the viability of our succession plans has less to do with getting the next generation to do what we did, and more to do with positioning them to accomplish what we accomplished. They are not identical standards. The growth and profitability that we experienced prior to the Great Recession were funded by what seemed to be an inexhaustible supply of cheap, generally skilled labor. In the future, growth and profitability will be created and sustained by our ability to produce outcomes in the economy through the management of value, despite the loss of our labor leverage. In view of that reality, before any list-making or training occurs at all, we'll all need to first take a serious look at our firms' value-creation potential in the coming decades.



The post-Great Recession economic environment now demands that we all produce far more value using far fewer people. Persistently weak employment data confirms that we are now producing as many widgets as we possibly can with the fewest possible people -- whether those widgets are tax returns, audits, surgeries or light bulbs.

Unfortunately, the production of more widgets with less labor doesn't actually create more value - just more widgets, but with fewer people able to afford them. So the strategy of reducing labor costs -- as necessary as it was -- did nothing to create the growth that we have all relied upon historically to provide us with buyers for our practices and firms. Unfortunately, the second piece of the productivity puzzle -- delivering our widgets more valuably -- will not be solved quite so easily and will only occur gradually over the coming decades. Whether your firm is just you, a few practitioners, a bustling enterprise of several hundred people or even an international firm, an assessment of your firm's current value-creation capabilities -- and a deliberate, realistic plan to grow them over the next decade -- will determine your succession plan.



Below is a good template for evaluating your firm's value-creation horizon. All three attributes need to be not only evaluated currently, but benchmarked for future performance. Before you do anything else, you'll first need to evaluate your social contract, your adaptation to allocative efficiency, and your projected clinical position.

• Evaluating your social contract. One definition of a social contract is an agreement to engage in transactions motivated by a higher purpose than that of the transactions themselves. A simple example is the practice of medicine's promise to continually improve public health. Not only is a transaction entered into for the immediate purpose of helping the patient, but it can also be characterized as one small component of a greater societal goal.

It's no secret that the mission of accounting, rooted in the protection of the public's financial best interests, has lost its mojo during the past few decades. There was a time when the measurement of earnings, financial position and fund flows was a critical component of the decision-support function in the world economy. That time is in decline and it is being eclipsed by a new standard of protection that is founded in relevance, transparency and choices. Your firm's "reason for being" had better have a strong foundation in this reality, or your practitioners will continue to depart your firm for the promise of a more meaningful future elsewhere.

• Evaluating your adaptation to allocative efficiency. This macro-economic term refers to the tendency of the economy to remove resources from where they are not creating value and to redeploy those resources where they do create value.

We all know that tax returns, audits and financial statements need to be prepared - lots of them. But the sad reality is that if the production of those important tasks prevents us from providing decision-support services during our busy seasons, we will continue to lose ground in the battle for real productivity. The economy will no longer wait for us to be done with busy season.

So assessing your firm's revenue base by its contribution to the decision-support function in your clients' businesses will tell you what progress you are making at adapting to the economy's allocation of resources. Absent a plan to "follow the money," you should expect continued commoditization of your offerings and a resulting struggle to find buyers for your firm, internally or externally.

• Evaluating your clinical position. Today when we think about cultural fit in merger talks (if we are honest about it), we concern ourselves mostly with the new partner-political order. Can all partners agree on what they value? Or, more directly, how will they value themselves with respect to one another?

As the economy continues to apply pressure to our profession to create value, true culture will take care of itself. There will only be one option. We will all be lined up at the same value-management gate ready to work together to serve the decision-support function in the world economy. Because of this reality, your real job today is not so much about finding potential merger partners that share your unique values, but rather to begin envisioning and planning for where your firm's resources fit in a wider, more diverse universe of clinical services that is already taking shape.



Tax and audit shops, larger outcome-oriented regional firms and eventually even the international firms will be populated with some combination of procedural and integration specialists working together to manage the production of value in the economy. And we will need lots of the aforementioned training -- leadership, communications and business development -- as we develop our successors. But the beginning of your succession planning needs to start with an honest evaluation and plan to address the business fundamentals associated with the new economy.

Your compelling, socially directed growth imperative is the foundation of value management in the future -- as well as your retirement plan. So, before you worry about leadership training for your troops, make sure you know where you're leading them. Give them a clear message to deliver to the market place. And as you train them in business development, it is crucial first that they learn why it is so important to the world economy that they produce far more value using far fewer people.

Paul Fisher, CPA, is a reformed tax partner and author of Beyond the Days of the Giants -- Solving the Crisis of Growth and Succession in Today's CPA Firms, due out in October. Reach him at This article originally appeared in Footnote, a publication of the Minnesota Society of CPAs.

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