Practice Profile: Triple threat
As a wave of baby boomer retirements spurs many CPA firms to install new leaders, PKF Texas is also in the process of executing its succession plan. But unlike many practices that will anoint a new managing partner or president, the Houston-based firm has appointed three leaders, in a move it believes will prove three heads of the firm to be better than one.
PKF Texas saw the opportunity to elevate a trio of C-suite leaders upon the retirement of founding shareholder Kenneth Guidry at the beginning of 2020, during the mandatory buyout period. With the retirement of Guidry will come the end of a traditional president’s role that he, and many of his peers, had occupied, according to Byron Hebert, chief growth officer and practice leader for entrepreneurial advisory services, who is one member of the new C-suite trio of firm leaders.
“He ran the firm — the firm was his only client,” Hebert explained. “He did everything — oversee marketing, accounting, the operations for the firm — he had a management committee he consulted with, but for the most part he was in charge of, responsible for, all those areas. With his retirement coming about, we took the opportunity to step back and look at how we wanted to manage the firm going forward, what talents people had in what position. This was the best alternative going forward for us at this time.”
Joining Hebert in leading the firm will be chief culture officer and audit director Sonia Freeman, and chief financial officer Frank Landreneau, who is also director of international tax. While they officially took over in January 2019, the transition began in January 2018.
Hebert praises Landreneau’s accounting and international tax experience and explains that Freeman has been with the firm since she graduated college, and is therefore very attuned to its culture, making her ideal for the CCO position. Hebert, meanwhile, has been with PKF Texas for 15 years, and is one of the oldest members of the shareholder group, with deep connections in the Houston business community.
“From the growth standpoint, I lead the consulting area of the firm,” he explained. “The firm is moving more and more into the consulting area.”
The firm had a formal nomination and election process for the three positions, which each have term limits. The CFO position has a three-year term limit while the chief culture and growth officers are four-year terms. The limits are meant to streamline the firm’s succession plan and democratize leadership opportunities, but they will also help leaders stay tapped into their clients and practices.
“We all have client-managed revenues, and we all like working with clients and keeping our accounting and consulting skills sharp,” Hebert said. “We have structured these roles to allow us the time to work waith our clients and teams. [These titles] required us to break that role up to be able to handle the client load and also lead the firm. We wanted to be able to have these roles, and move people in and out of them, and have terms on them. Whenever we are at the end of the term, if we want to go back to client work, and someone else can move up to give younger shareholders management experience, then everyone wins.”
This clearer pathway to partner not only helps with recruitment, but in retaining and motivating more experienced hires, as Jen Lemanski, senior manager of practice growth, reported. “As a senior manager — once you are getting into the upper levels of your career — it shows the path,” she said. “If you are more culture-oriented, [you can be] talking to Sonia, and envision that kind of thing happening, or for the senior managers under [Hebert’s] wing. From my perspective, as a senior manager, you see the C-suite, and [if you’re] really technically driven, or into numbers, you’re talking with Frank about being CFO.”
PKF Texas’ new leadership structure follows other changes within the firm, including an evolution of its consulting arm.
“We used to consider the outsourced controller and CFO work we did for clients as off-season work for years and years,” Hebert said. “In the last seven to eight years, it’s become a faster-growing area of the firm.”
PKF Texas is also working in fraud, forensics and litigation support, Hebert added, while seeking to expand its cybersecurity services.
The firm’s increasing emphasis on consulting services — which follows that of the profession as a whole — has also led to new internal developments, such as developing a rainmaker sales program for directors and senior managers.
Hebert credits the new management structure with helping him balance this focus on his consulting team with leading the growth of the firm. It has also helped Landreneau and Freeman excel in their areas of expertise. “Frank spends a lot of time on analytics and getting monthly internal financial statement preparation streamlined, and he spent significant time on the budget so it’s more accurate,” he said. “There’s more focus for Sonia pertaining to the culture of the firm … . We’ve always had a good culture and been a ‘Best Place to Work.’ She’s focused on developing programs for helping people guide and navigate their careers… to step up in the development of soft skills, to navigate your career with ongoing training through the various stages of the career map, and a recruiting program that’s already in place.”
Transitioning to the new structure was not without complications, however. “The challenge in the beginning was, because it was so new, when it comes to a decision, we had to work out who was making the decision, and whose lane these issues fall into sometimes — there was a whole lot more communication required,” Hebert said.
The extra year of prep time before Hebert, Landreneau and Freeman officially assumed their positions earlier this year proved critical.
“The first year, we spent time on what we were going to do when this issue comes up, how do we handle this issue. We worked out the communication of who is responsible for this — does it fall into growth, culture? Growth and culture are so closely aligned and dependent, so Sonia and I got on the same page, and are singing from the same sheet of music now,” Hebert said. “It took a little extra time in the beginning to get it worked out, but once we got it worked out, the communication flowed a lot smoother.”
In addition to the creation of the three C-Suite positions, the firm also enhanced the role of the board chair, also previously fulfilled by Guidry. The firm’s board of directors develops the firm’s strategy and holds the C-Suite accountable for the execution of the strategy. The board chair, currently tax director Gary Voth, is elected by the shareholders and also has a four-year term, serving as the liaison between the board and management
As PKF Texas continues to grow, the firm has witnessed new “super-regional” firms move into the Southwest, where the firm ranked No. 9 on Accounting Today’s 2019 Regional Leaders list, with $26.30 million in revenue.
“It’s an interesting challenge for us, with the Big Four and super-regionals,” Lemanski shared. “There’s a lot of M&A activity, people that want a Houston office, consolidations of bigger firms buying up shops. We made the commitment through the new leadership structure to remain an independent firm, to serve the middle market. [The C-suite] shared that with us in a town hall, the state of the firm, and ever since, we started talking about a new leadership structure.”
Based on this environment, PKF Texas could easily have the option to “sell or merge really quickly,” Hebert added. “We made the decision to remain independent — gamble on the idea of a local firm that appeals to local businesses, people we’ve known a long time. We’ve had growth every year, and several new shareholders over the past few years. The growth is fairly significant.”
The firm has made a few small acquisitions over the years. Hebert wouldn’t rule out other such strategic acquisitions in the future.
“We’ve looked at and talked to a lot of firms. It’s a pretty tight market, and we’re not opposed to other markets in Dallas or San Antonio,” he said. In terms of organic growth, the firm expects to expand its valuation and nonprofit services in the near future, partially as a result of the client advisory dinners the firm regularly hosts with clients to gauge areas of need.
For now, the firm expects the unique management structure to repeat the success PKF Texas has had with other, more agile and progressive strategies.
At a glance
Firm PKF Texas
Leadership team Chief growth officer Byron Hebert; chief culture officer Sonia Freeman; and chief financial officer Frank Landreneau
No. of directors/staff 19/160
Year founded 1992