The ground inside many CPA firms is beginning to shake as the first wave of over 76 million Baby Boomers (those born from 1946 to 1964) reaches retirement. The result of this quake is an expansion in the generational divide within firms - especially between Baby Boomers and their up-and-coming Generation X (those born from 1965 to 1981) partners, principals and senior managers.
What troubles me is that most firms aren't openly discussing this or encouraging an honest dialogue about the needs of both groups. Instead, we are seeing increasing tension that results in "interesting" maneuvering and an erosion of trust and firm unity.
It makes sense that succession planning places such generational pressure on an organization. After all, succession is all about the "old guard" moving on (sometimes to retirement, sometimes to another role or position) while the "young pups" step up and take on new levels of leadership and responsibility. This transition creates uncertainty and doubt for both parties - about whether the mature leaders will ever cede power, whether the new guard is up for the impending challenges, and what may lie ahead for both groups.
In addition to this unspoken uncertainty, the division between the mature and up-and-coming leader groups is fed by the unexpressed and unresolved selfish interests of both parties. These selfish interests are very real and, when left unresolved and unspoken, cause both groups to manipulate and triangulate to try to get what they want.
So, what are the selfish interests of each group? In general, our selfish interests at work revolve around how much money, time, power, respect, happiness and fulfillment we have. While the specifics and priority will vary by person, the typical succession concerns of the "generation in power" include:
Not having enough money in retirement, which can take the form of fears that: they will retire too soon and should instead continue working to ensure that they keep earning and receiving benefits for as long as possible; they will not receive the value they expect or need for their interests in the firm; and the younger generation won't have the skills to sustain or grow the firm in a way that ensures that retirement payouts will be made in full (especially at those firms with many owners retiring in a tight cluster).
Losing their power to drive firm decisions, which, in turn, could erode their compensation or cause changes in their role or authority that they won't be happy with.
Not being rewarded for their contributions or the sacrifices they have made in the past to get the firm where it is today.
Losing access to long-standing friendships with clients, colleagues, referral sources or others in the community when they no longer show up at meetings, events or in the office.
Losing the sense of meaning or purpose in life that they may garner from their career and position with the firm.
Having to settle for new ways to spend their time that are less interesting than their current work. One partner I coach shared his lack of clarity about how he'd spend his time and be fulfilled by life after retirement, saying he might have to take up "mall walking."
Conversely, "up and comers" may fear:
Not being ready to take on complete leadership responsibility, but not being given the opportunity to learn now so they can be ready in the future.
Not being allowed to actively participate and shape firm decisions about the future, so they are ultimately left saddled with offices that someone else thought were a good idea, service lines that they may not have chosen, partners among their ranks that they may not have admitted, and more.
Having an unrealistic retirement payout or buyout model that cannot be sustained into the future, either based upon valuations that are too high or payout clusters that place too high a cash flow burden on the firm.
Losing access to the critical community connections, technical depth and experience of the mature leaders.
Not having the depth of talent underneath them to provide the right leverage model as experienced leaders begin to retire.
Putting in a lot of time and effort to produce financial results now, only to "line the pockets" of other firm partners and not receive the short-term gain that they feel they deserve today.
In our experience, there are solutions to each of these concerns that often require negotiation and compromise to affect but can leave a team healthier and more unified when reached. Those solutions will not materialize without both generations first engaging in a dialogue that allows the selfish interests and fears of each individual or group to be spoken and considered.
Unfortunately, expressing these feelings requires courage and the willingness to be vulnerable that many firm leadership teams don't support - and therefore never experience. But that doesn't mean that the concerns aren't there, slowly creating factions and driving a wedge between your team members of different generations.
So, what are the selfish interests and succession concerns within your group? Share this article with the rest of your team - both mature and up-and-coming - and consider opening up a dialogue to find out.
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