24th December 2014
All over the world, the imminent retirement of the baby boomer generation is posing challenges for accounting firms. This was the finding of the 2014 Global Succession Survey from the Global Accounting Alliance, which noted a consistent absence of planning among firms of all types.
In the main, accounting firms are not planning for succession; they are instead hoping that partners or owners can “slow down”.
Just three per cent of the sole proprietors and 31 per cent of multi-owner firms currently have a succession plan in place.
This is not just a problem for the succession itself, but also impacts retention of the best staff. The survey showed that firms have employees interested in becoming owners who are not getting the training they need. For example, half (49 per cent) of multi-owner firms have not offered leadership training.
“When the time really comes for the owner to step away from the practice, rather than build a robust succession plan to transfer what usually is an owner’s largest single financial asset (their ownership in the firm) to the next generation of leaders, it appears that their real succession strategy is simply to sell or merge their practice,” said the GAA.
It seems there has been little progress in the last couple of years. A 2012 PCPS Succession Survey from the American Institute of CPAs showed fewer than half of multi-partner practices have succession plans ready. This report suggested firms look at taking three years to implement the type of changes required to ensure the seamless transition of clients and staff.
But as the GAA points out, there is still a lot of work to be done to prepare firms around the globe for succession.
The good news is that succession management is achievable. “It just requires specific focus and some time to put it in place. While there is still time to get this done, there isn’t any time left to waste,” the GAA report concluded. Is your firm ready?