Succession Planning Beyond The Partnership Ranks

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Nearly every firm management team understands the importance of succession planning for owners, knowing that retirement or unexpected events can deal a significant blow to key client relationships and the firm.

But the same level of planning apparently does not extend beyond the partner group for many firms, as only 18% of respondents in the 2020 IPA Firm Administration Survey reported having a formal succession plan in place for all high-level administrative positions. It’s an odd dichotomy, considering how similarly disruptive a sudden vacancy of a COO or CIO could be, even if they’re not in a client-facing position.

Maintaining continuity and ensuring the firm is prepared to quickly and seamlessly fill key positions in the C-suite was the motivation behind the planning efforts of Great Bend, Kan.-based Adams Brown.

The firm has instituted a formal succession plan for its entire C-suite – including the MP, CIO, CFO and COO – that outlines retirement dates, key business relationships, critical skills of the position and possible successors. The plans are reviewed annually, and include a deep dive into the business contacts, potential successors and present-day actions needed to ensure that solid replacement options are identified as retirement nears or before an emergency arises.

Brian Staats said part of the motivation behind putting such a plan in place was simply a case of practicing what the firm preaches.

“We work with clients on succession plans and feel it’s important to live out what we recommend to clients,” Staats told IPA when he was MP of the firm. “We know the importance of a strong, continuous administrative team. These professionals are the backbone of our operations and allow our client-facing staff to focus on serving clients.”

Looking beyond the firm owners when it comes to succession planning is also par for the course at Metairie, La.-based LaPorte, which has had a formal plan in place for its CEO, CMO and COO positions since 2009, as well as for all service line leaders. While the firm has not had to utilize these plans recently, president and CEO William “Ted” Mason announced in 2020 that he planned to retire the next year, and both his CMO and COO were within five years of retirement.

“We felt like we needed to put these plans in place to make sure we had the talent we needed to perpetuate the firm,” Mason explained. “One of the things we feel strongly about is our ability to remain independent, and in order to do that you have to have a really strong succession pipeline in place to be able to support transition of those positions to others within the organization.”

Mason said the focus is to assess the skill sets that are needed to fill the roles in question, and to determine if someone in the firm may be a good candidate when the time comes, perhaps with some additional training. LaPorte’s succession strategy includes one plan based upon a normal transition into retirement, as well as what Mason calls a “hit-by-the-bus” scenario – an unexpected vacancy. Under the latter provision, the firm’s executive committee can step in on a short-term basis to help handle the workload while looking to fill the role within 120 days – in this case from outside of the organization, if necessary.

While the data may indicate that not all firms are focusing on succession outside of the partner group, both Mason and Staats believed the continuity of high-level administrative positions is just as important for securing the long-term well-being of their firms, knowing what could be lost without planning.

“I think we lose sight as a profession of the historical and institutional knowledge that is wrapped up in some of these C-suite and high-level administrative positions,” Mason said. “When I look around at my peer firms, those high-level positions are normally very long-tenured employees within the organization who have vast institutional knowledge that would be difficult to replace. That’s probably one of the main reasons we feel so strongly about this.”

Staats added, “Without a solid administrative team supporting our infrastructure, we wouldn’t be as successful in going above and beyond for our clients and our team. These succession plans have been an important step in helping Adams Brown achieve some incredible milestones over the past 75 years and position us well for the next 75.”

This article originally appeared in the November 2020 edition of INSIDE Public Accounting. To subscribe to INSIDE Public Accounting Monthly click here.


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