Archive for the ‘Succession Planning’ Category

Tuesday, February 2nd, 2016

Exit Interviews Are Important

IMG_1192Being a consultant to CPA firm management, I hear a lot of stories. If you work in a firm, you can just imagine. Many of them sadden me, yet many also bring me joy. This is a “what was he thinking?” type story.

A firm administrator performed the usual exit interview with a departing employee. The employee was not fired, he left after several years building his career at the firm. Many of the remarks made by the exiting employee, according to the firm administrator, were fairly critical, yet true. When the comments were reported to the partners, one partner stated, “We don’t care what Joe thinks, he never did get with the program.”

Exit interviews can be very beneficial to both the firm and the person departing. Employees leave for a reason. Finding out why can help you plan for changes that need to be made.

  • Employees quit their boss, not their job.
  • Employees leave when they lose confidence in their leaders.
  • Employees leave because of issues with workplace culture.
  • Employees leave because they don’t see opportunity for career advancement and growth in compensation.

The person conducting the interview should be experienced in crucial conversations with employees, follow an established process or checklist. The interview should be conducted in a truly caring and non-threatening manner. Remember, the employee will most likely be dreading the interview and needs to be put at ease.

After you gather information from exit interviews, take the comments seriously and determine what actions need to happen to make your firm a place where talented people want to stay and build their careers.

  • And now, gentlemen, like your manners, I must leave you.
  • Dylan Thomas

Friday, January 15th, 2016

Managers Are Often NOT Doing Manager Work

This is mostly a repeat of a previous post from January 2014. At this time, I feel it is worth repeating!

People with the title of “manager” working inside CPA firms usually are not doing what a “manager” should be doing. Just like many partners, managers get very comfortable actually DOING the work rather than carrying out manager level responsibilities and activities.

Managers play a key role in employee engagement and retention. Remember, people leave bosses not firms.

I once asked a group of CPA firm owners to give me their expectations of a person in the manager role and to keep it very simple. I think the following bullet point job description says it clearly and concisely. How do your managers stack-up?

  • Solid technical skills, with an area of technical expertise that is recognized
  • Good communication skills, both written and verbal
  • The ability to manage and develop team members
  • The ability to manage client relationships
  • The ability to manage multile engagements
  • The ability to manage engagement profitability
  • Executive presence
  • Must be an advocate of the firm
  • Participation in firm marketing activities
  • Participation in personal marketing activities
  • Participation in various firm internal projects
  • Be viewed, by most firm owners, as a candidate for partner status

Addendum for 2016: So many partners declare they have no one who can replace them when they retire. If you want succession to work at your firm you must work with your managers on these key traits. Developing people is a key characteristic of a competent partner.

  • To add value to others, one must first value others.
  • John Maxwell

Tuesday, November 17th, 2015

Cannot Afford To Leave

Today’s post is sort of a follow-on to yesterday’s Sacred Cow post (people who are protected, cannot be fired). There’s probably at least one of those inside your firm, probably more.

What about the people who really don’t want to stay at your firm but, over the years, they have performed adequately (but maybe not) and you have given them annual pay increases and now they make a VERY good salary. They are not passionate about the firm any longer (this could even be partners) and are just “putting in their time”.

EGHQ7ZDZI8I hear it all the time….. “There’s no where else in my area where I can make as much as I do here.” And from the other side, “She’s doing a pretty good job for us and it’s so hard to hire people now.”

Develop a “grow your own” culture where you are continually hiring new college grads and developing them. That way there is always someone who can stretch and fill a spot vacated by a more experienced person. People love challenges and promotions.

Identify your middle stars, people who are not all superstars but they are not falling stars either. Many middle stars are passionate about the firm. Challenge them and help them meet your expectations. If they are unwilling, and too comfortable with status quo, offer them the opportunity to work for another firm.

If you have someone who is working at your firm just because of the money – it’s time to deal with it. Give them a nice severance. Long-term, it’s the right decision.

From the other side, if you are that person, working for an accounting firm although it’s depressing, unchallenging, chaotic and poorly managed, don’t stay just for the money. Life is too short.

  • There's no excuse to be bored. Sad, yes. Angry, yes. Depressed, yes. Crazy, yes. But there's no excuse for boredom, ever.
  • Viggo Mortensen

Wednesday, August 19th, 2015

Put A Lid On It

lidPublic accounting has been long known as a profession where you will work a lot of hours, especially during January through April and during the fall “extension season.”

More and more firms are discovering that all of those long hours are not really necessary. My observation is that the more hours you require, the slower people work.

Studies have found that productivity per hour declines sharply when the workweek exceeds 50 hours and it drops off so much after 55 hours that there’s no point in working any more. People who work as much as 70 hours per week actually get the same amount done as people who work 55 hours. The “extra” hours are wasted.

Reflect back on last “tax” season. How much time was wasted inside your firm? People arrive late because they know they will be staying late. People bring their breakfast with them and spend the first valuable productivity minutes of the day preparing and eating in the lunch room (and chatting with everyone who comes in to get coffee). Non-productive meetings happen during this busy time. The firm provides dinner so everyone will stay longer. Some people stay, just to eat, because they want to be seen.

Why would your younger accountants aspire to be a partner in the firm when they see partners working 60, 70 even 80 hours per week? Partners complain they have no bench-strength. Not a surprise. Times have changed – people work to live…. most do not want to live to work.

Put a cap on hours – no more than 50 to 55 per week. If you get them in during the week – no work on weekends. Some very successful people have proven that shutting down on weekends has immense benefits.

Read more about how successful people spend their weekends via Travis Bradberry on Forbes.

  • I decided to fly through the air and live in the sunlight and enjoy life as much as I could.
  • Evel Knievel

Monday, July 27th, 2015

Three Steps To Valuing Your CPA Practice

Are you facing several partner retirements over the next few years? If not, you would be rather unusual. With the exodus of the baby boomers from the workforce, many CPA firms face the challenge of valuing their practice for those events.

gary-adamson-598x747Last week, I received the latest newsletter from Gary Adamson of Adamson Advisory. In it he describes three steps to valuing your practice. Here are some highlights:

Step One – You need to determine the value of your firm. This is for an internal transition, not a sale or merger. Values are typically higher for an outside deal. There are two pieces to this puzzle – capital and goodwill. Capital is easy so goodwill is where most of the discussion centers. For traditional services, the overall average goodwill value has been about 80% for the last several years. So, don’t always count on one times revenue.

Step Two – This is where you determine how to split up the firm’s goodwill among the owners. You can allocate it based on ownership percentages or books of business (we see this in smaller firms). In larger firms there is a process called average annual volume or AAV.

Step Three – This is the process you utilize to pay out the value to the retiring partner. The majority of firms are paying out the goodwill in the form of deferred compensation. Usually it is over a 7 to 10 year period.

Be sure to read the entire article via Adamson Advisory.

  • Any fool can make a rule.
  • Henry David Thoreau

Wednesday, July 8th, 2015

Buy-In For New Partners

I find that many CPA firm owners/shareholders are still not aware of the current trends relating to new partner buy-in. I won’t repeat the current trend relating to this important topic. I will let my good friends, Marc Rosenberg and Gary Adamson expertly explain it.

Marc, is that you with Rita?Rosenberg just published one of his great Q&A type posts. The title is “Should Billings Originated by Managers Reduce Their Buy-In?” Rosenberg says, “Determining the buy-in by multiplying the firm’s annual billings by an arbitrary ownership percentage is no longer common.


Gary, is that you with Rita?Adamson published an article that elaborates on partner buy-in and more. The title is “Admitting New Partners – Succession Best Practices.” Adamson says, “Not too many years ago it wasn’t unusual for new partners to buy in at valuations that included a large goodwill factor on top of a capital account amount. The large numbers really weren’t affordable and firms figured out creative ways to internally finance them. Another common practice was purchases of partnership interests outside the firm between partners which produced a lot of wheeling and dealing and inconsistencies. The good news is that both of these practices are almost gone.”

As I continue to remind you…. times are changing and firms that wish to remain competitive must keep pace with current trends.

  • Most people don't aim too high and miss, they aim too low and hit.
  • Bob Moawad

Wednesday, June 17th, 2015

CPACA Releases New Succession Survey Findings

I am honored to be a member of the CPA Consultants’ Alliance, a group of management consultants serving the CPA profession. We join together to share trends and practices so that we can better serve our clients: CPA firms, their leaders and their teams.

We are pleased to release the findings of our Succession Survey. Here is our press release and a link to where you can download the article.

CPACA Releases New Succession Survey FindingsFirms struggle most with procrastination and lack of “bench strength” 

Overland Park, KS, June 2015 – The CPA Consultants’ Alliance (CPACA), released the findings from their new succession survey in an article entitled CPA Firms Face Considerable Succession Challenges.  With input from 337 mostly owner and non-equity partner respondents across a cross-section of small, medium and large firms, the survey indicates that firms have considerable challenges with succession.  According to CPACA President and survey chairperson Terry Putney of Transition Advisors, “our profession has a long way to go to get ahead of the considerable wave of retirements facing us.”

Key survey findings conclude that firms:

•       Are procrastinating or are in denial about succession with 26% of respondents citing “other priorities” as the reason succession planning gets short shrift in their firm and 51.7% blaming procrastination or denial.

•       Lack significant “bench strength” to plan transition around, particularly at smaller firms. While 48% of responding partners in firms with 100-plus employees “definitely agree” their firm has adequate talent on hand, over half are not fully confident in their bench strength. Fewer than two-thirds of all responding partners in small firms say they have the right talent to replace retiring owners in the next five years, and one-third are not ready at all.

•       Do not have a systematic way to identify and develop talent into future partners. Just under half of surveyed partners in midsize firms say they do not have a system in place for developing internal talent. 35% of all survey respondents indicate their firms do not have a system in place and are not working on one.

•       Lack plans for client transition.  Only 25% of firms have a client transition plan they are confident will work, although over 40% of those who do not have a plan in place say they are working on one.

•       Are uncertain about their buy/sell arrangements. Nearly 25% of the large firm respondents and 50% of small firm respondents don’t know what their agreement says and more than 75% of all firm respondents lack complete confidence they can handle future partner retirement obligations.

•       See a sale or merger as their most likely succession plan, which was indicated by half of the respondents in firms with less than 10 employees and one in five in firms with 10 to 24 employees.

“This survey’s purpose is to shed light on a topic that is clearly on the back-burner in firms.  By highlighting the challenges and providing suggested solutions, we hope to help firm leaders take steps to plan for and execute transition,” continued Putney.

Download the article at DOWNLOAD SUCCESSION SURVEY.

About The CPA Consultants’ Alliance

The CPACA was formed in 2012 with the purpose of exploring leadership issues facing the public accounting profession and developing and sharing solutions that benefit practitioners. Other insights from the group include the article What Drives Happiness at CPA Firms and the whitepaper CPA Firm Leadership: Communication Drives New Possibilities. The group’s vision is to inspire positive change in the CPA profession by collaboratively establishing tools and content that will educate, motivate and increase the wisdom of current and future leaders.

The CPACA’s members are successful consultants within the CPA profession. Members’ expertise includes CPA firm strategic and succession planning, leadership and management, growth, sales and marketing, information technology, human resources, coaching, mergers and acquisitions, diversity, leadership development and more.

For more information about The CPACA, its members and to stay connected, please:

Visit our Website


  • A society grows great when old men plant trees whose shade they know they shall never sit in.
  • Greek proverb

Tuesday, May 26th, 2015

Firm Of The Future – So Much To Talk About

Today, I am delighted to be heading out to join the CPA Network members for a two-day MAP session to discuss one topic:

Becoming A Firm Of The Future

The CPA Network is a group of practitioners located in Ohio that have joined together to help themselves and each other. These are small firms and sole practitioners who understand the value of sharing and helping each other. They meet three times a year – a full-day tax update session, a full-day A&A update session and TWO full days of MAP (managing an accounting practice). I love the camaraderie of this group and the fact that just because they are small….. it doesn’t mean they are not mighty!

Firm of the Future 2015We are going to explore what “firm of the future” really means to firms like theirs. So much is being written about striving to be a future-ready firm – from the AICPA, state societies, other CPA firm associations, CPA management consultants, M&A brokers and by practitioners themselves.

My opinion is that it is pretty much the same old stuff I have been addressing for years and years! The big issue is – IMPLEMENTATION. That’s the key. Hopefully, we will come away with some definite Action Steps and some accountability to each other, that ACTION will occur.

If you want more information about joining this group just let me know. They welcome new members.

  • The most common way people give up their power is by thinking they don’t have any.
  • Alice Walker

Tuesday, February 24th, 2015

Want A Strong Brand? – Your Culture Drives It

0 Avatar slide for blogLast week I wrote about how your processes and procedures (systems) are driven by your culture. There is another important thing about culture – – it is the engine behind your brand. In fact, I think culture and brand go hand-in-hand for growing CPA firms.

Want to assess your culture? Sit quietly in the next partner or management meeting and just listen. Bring your lunch and sit off to the side alone in the lunch room and just listen (pretend you are reading a book!). The next time your leadership team is discussing an important decision, just listen…. and assess how decisions are made.

As Shawn Parr, in a recent article noted, “A vibrant culture provides a cooperative and collaborative environment for a brand to thrive.” I like his comparison of Zappos (fast-growing, electric culture that’s inclusionary, encouraging and empowering) with American Apparel (a company with a well-documented and highly dysfunctional culture).

I have met so many accounting firms that fit into BOTH categories. I have been so encouraged by some progressive firms that are on the leading edge (not the bleeding edge). Their team members love working for the firm and realize what a great profession they are part of.

On the other hand, I have also talked with many firms that are struggling. Their experienced CPAs hide from confrontation. They love status quo. They wonder why they have turnover.

Building a vibrant and strong firm culture is not easy and it takes time. Leaders must believe the vision and live the values.

Rally your firm leaders and have them to commit to taking the first step. It’s an easy one, beginning this week, every boss (partners and managers) will set a great example! They must acknowledge that they are being watched and that it is their responsibility to earn their employees’ trust.


  • Whoever is careless with the truth in small matters cannot be trusted with important matters.
  • Albert Einstein

Monday, January 26th, 2015

Predictions and Trends For 2015

img_joeCPA management consultant, Joe Tarasco, had his 2015 predictions featured on the Forbes site last week.

Here’s some brief highlights that I definitely agree with:

  • Career development and leadership training will continue to grow as the need for quality professional staff at the managerial and partner levels turns into a crisis mode.
  • Firms will have no choice but to invest heavily in their best and brightest in all stages of their careers in order to remain competitive and develop succession plans.
  • Firms that have grown through the consolidation of aging practices will begin to deal with intensified succession issues. This will fuel more mergers of mega-firms into larger firms.
  • MPs and Ex Committee members will come under more scrutiny by their partners in their ability to lead and manage successfully. Firms will have to make tough business decisions concerning under-performing partners.
  • More firms will need to hire professional COOs from outside the CPA profession to assist them in managing their organization.

For the complete list and more detail read the article here. Congrats to Joe for being featured on the Forbes site!

  • I was not predicting the future, I was trying to prevent it.
  • Ray Bradbury