A 2009 Tuneup for Your Firm's Succession Planning

Does your firm need a succession planning tuneup? A strategic plan that effectively includes succession planning is critical to every firm's success.  Host a partner brainstorming retreat to ponder key questions surrounding your firm's plan and identify a course of action that will be supported by all. * Make long-term plans for the firm. Firm expansion will require human capital and leadership to support growth. Re-evaluate client acceptance and retention policies. Consider that the future health of your firm depends on how you develop young leaders who are capable of protecting and maintaining valuable client relationships when partners retire.  Establish partner group accountability through clearly defined roles and responsibilities, and your compensation plan. Help owners develop an inherent understanding of their job expectations and how their roles relate to others. Don't wait for the senior owner to leave to develop a firm strategy.  Nurture future leaders. Leverage your practice for posterity by developing talented professionals who will contribute to the longevity of the business after you are gone. Failing to invest in this area will reduce the value of your practice. Remember that you are selling a residual revenue stream, and the easier it is for existing partners or another firm to continue without you, the more value you have to offer.  Update partner retirement agreements. Of responding firms surveyed in The 2008 PCPS Succession Survey, a large number of partner retirements are anticipated in the next five years, emphasizing the need for formalized partner agreements.  Establish a clearly defined compensation plan that supports your firm's strategic and succession goals. A compensation plan should be performance-based, flexible and provide incentives that will motivate staff to become potential future leaders.  The pending retirement of the baby boomer generation and the unrelenting challenge of finding and keeping talented staff can have grave consequences for firms that fail to develop a succession strategy. With the AICPA's 2008 PCPS Succession Survey showing that only 35% of multiowner firms had a written succession plan, now is the time to examine the state of your firm's succession strategy. Succession planning is not limited to a single course of action. It involves evaluating different aspects of the firm and identifying systems, processes and policies that need improvement in order to position your firm for succession regardless of your exit strategy Options for succession include selling or merging the firm, internal transition, practice continuation with other firms, or turning out the lights when it's time to retire. Even firms that have a plan in place, however, sometimes neglect to update it to reflect changes affecting their business. Some firm owners who are looking to sell in the foreseeable future are finding that their practice is not as saleable as they'd hoped it would be. If your firm's plan is not all that it could be, The 2008 PCPS Succession Survey (http://pcps.aicpa.org/Resources/ Succession+Planning) provides valuable insights into the state of succession planning among firms today. Consider the following information to help determine if your firm's succession plan needs a tuneup.  As noted, little more than one-third of multiowner firms have a written succession plan. But that's actually an increase from 25% the last time the PCPS conducted a similar survey in 2004. More firms are aware of the need to plan, but have not yet accomplished the goal. Strategic planning is critical to every firm's future success, and succession planning is a key component of any strategic plan. As a starting point, conduct a partner brainstorming meeting or retreat to consider some of the following key questions. …

Field of study: Business