17
Sustaining Leadership: The Ultimate Succession Plan

“It’s important to figure out the short- and long-term view of succession. The person who could run the firm tomorrow might not fit the pattern you need 10 years from now.”

~ TONY ARGIZ

When most accountants think about succession planning, the CEO’s or managing partner’s role immediately comes to mind. However, when done appropriately, the succession plan should include key positions beyond those of upper leadership. Yet, many firms have not done a great job in building the bench strength of leaders at all levels. Then, when faced with a vacancy at the top, there is little selection to turn to for help. When firms neglect building tomorrow’s leaders for many years, those firms get sold for a small price. Not only do the owners lose capital, but the employees and clients get bounced around and lose.

In this chapter, I’ll provide some guidance on building an ongoing succession process that leads to an enduring accounting firm: one that remains independent or one that merges on its own terms. Sustainability and succession are natural by-products in the well-led firms. Succession is not accomplished well as a spreadsheet exercise, which is the way some consultants approach the subject. In this chapter, I’ll profile two leaders who’ve been very proactive in succession: (1) Kris McMasters, CEO of the national accounting firm CliftonLarsonAllen LLP in Milwaukee, WI, who led the succession planning team at Clifton Gunderson LLP, only to learn that she was the ultimate choice of her partners, and (2) David Deeter, founding partner of the top-100 firm Frazier & Deeter, LLC, in Atlanta, GA, who led the succession of his firm to a new highly respected CEO and leader.

We will cover the training and experience that succeeding leaders should have, along with a process for identifying and growing your next generation of leaders. Sustainability is the result of a firm that has achieved synergy and alignment through all the other aspects of the matters we’ve discussed in chapters 1–16. The main thing I want to help you avoid is the dilemma that one of our clients encountered a few years ago when out of 30 partners, there was only one who could succeed the managing partner. I will challenge you to build bench strength in all aspects of leadership in this chapter.

Consultant Jay Nisberg says

Why do we think all this merger mania is taking place right now? It’s probably because leadership takes them to a plateau. Now what? Developing a sound succession planning program is essential to a firm’s success, regardless of size. Although many larger accounting firms may have some succession planning processes in place, small firms are often guilty of overlooking the subject entirely.

It is easy to understand how a lack of attention to succession planning can happen. The task of cultivating the next generation of leaders is often an additional duty, rather than a primary performance indicator. If you don’t do it this year, nothing happens—until you reach a tipping point when it’s too late!

Ken Baggett, co-managing partner of the national firm CohnReznick LLP, believes in creating young leaders. “I’m a real big believer in pushing leadership down to as far as you can to as young as you can because exposure early will create much greater long term success.” This is how he forms the firm’s future partners, which ensures lasting success. Every year, each staff member fills out a report card that assesses what the firm is doing well, where it can improve, and what the firm’s goals should be.

I’ve had a number of firms approach us about opportunities to merge in. One particular firm was north of $50 million, so it’s definitely good size firm. And I said, “What’s your biggest problem?”

They said “We don’t have any future leaders.”

I thought to myself, “Well, I know your problem; you did not give partners the opportunity to fail.” If you’re going to wait for the opportunity for them to succeed, you will be waiting forever. You have to be prepared. As we were meeting with this firm, I brought 2 of our leaders: one was 41 and the other 45. They participated in the meeting and had great questions.

Later, the managing partner asked me, “How many did you say you have?:

I said, “I’ve got a bunch.”

And he said, “That’s our dream.”

In our firm, I want to know why people in their 30s aren’t going into leadership roles.

This type of leadership development requires much time and effort and the focused attention of the top leader. In larger firms, the task of developing this type of program is sometimes assigned to the HR department. However, HR team members are not always trained for the issues surrounding extensive succession planning and leader development. HR managers may be able to coordinate basic duties and ensure that development efforts are not merely tossed aside in lieu of more pressing issues, but a responsibility of this magnitude should not be placed solely on the HR department. This is a vital CEO role, as Ken Baggett explains. In all firms, the responsibility of assuring an adequate bench of leader and manager candidates should be job one of senior leadership.

Bill Hermann, former managing partner of the megaregional firm Plante & Moran, PLLC, in Southfield, MI, was a very successful managing and leading partner, but he chose to step down at the end of his second term in order to help build and mentor the next generation of leadership. Although Hermann remains an active partner in the firm today, he devotes his time to coaching and mentoring other leaders in the firm. In his role as CEO, his executive duties often interfered with the mentoring needed for the firm’s future leaders. Gordon Krater, managing partner of the megaregional firm Plante & Moran, PLLC, says, “Bill Hermann was a very good managing partner. So, for him to step away when he still had one term he could have served was really walking his talk. I mean, the proof was in his actions. He had identified a number of us who he had trained, given us experiences, and given us feedback to grow.”

Succession planning is defined as any process that is designed to ensure a continued pool of qualified candidates, thereby providing provisions to continue effective organizational performance. The issue of building layers of qualified leadership candidates has not been given the focused attention or dedicated resources required to prepare firms for long-term success. Traditionally, the replacement method was used to fill vacancies in leadership. Emphasis was placed only on replacement as an answer to vacancies created by a tragedy, such as death, or a decision to leave for another position. This has been a very passive way to handle the crucial leadership challenge of succession.

The replacement method has been utilized for decades, with a relative degree of success, because

1. typical career paths were rigidly determined (two years to senior, three years to supervisor, and so on), and few employees deviated from the normal routes.

2. technical changes were not as rapid and were more easily anticipated.

3. HR departments of large firms employed staff members who were dedicated to people development.

4. there were fewer mergers, and firms were more stable.

Despite some level of past success, the accounting environment is rapidly changing, and new alternatives to staffing contingencies and leadership development must be considered.

Developing authentic succession planning programs is increasingly important. Many firms have a spreadsheet and have identified successors, but they fail to invest time and money in the up-and-coming leaders, so they’ll be prepared to lead when the time comes. Authentic plans must have a budget for training, experience, and mastery. Although the traditional replacement method and succession planning procedures overlap, there are some major differences between the two. In times of unexpected situations, there is a true need to sustain firm control quickly. This need has been demonstrated by untimely illnesses and unfortunate accidents, such as a CEO’s heart attack, stroke, or death. This type of loss creates a need for replacement processes as an aspect of risk management leadership.

Succession planning is different from replacement planning because it focuses on forecasting firmwide needs. It is not based upon reactions to unforeseen events. It is based upon proactively securing the human resources needed to ensure the continuity and prosperity of the firm. Talent is observed and cultivated from within the firm. Each individual is groomed for his or her future role through calculated development activities. This is why succession planning has been compared to a relay race. In fact, some refer to the process as relay planning. Each individual in the race is equally qualified and prepared to carry the baton to the finish line. Succession planning deals with passing on responsibility, rather than merely filling a vacancy.

Developing Your Leaders From Within

Over the last few years, most accounting firms have become intensely aware of the need to develop leadership talent from within their firms. A recent study by the AICPA’s Private Companies Practice Section (PCPS) ranked the top 10 issues of highest concern for owners of these firms. Succession planning was listed as the third highest concern for firms with 21 or more professionals.

When thinking about succession of the leading partner, you will want to think both short and long term. Think short term in the event of an illness or accident of the present leader. What would you do tomorrow if your leader could not function? A person who fills this role might be more dominating and directive. In chapter 16, “Synergy and Alignment: One Plus One Equals Three,” I discussed the various roles of team development. If something were to happen to your leader today, you are right back to the first phase of leading a team, and in that role, a directive leader may be very effective. After the September 11 attacks, Mayor Rudy Guiliani of New York was a very effective leader because he took charge and communicated. After Hurricane Katrina, Mayor Ray Nagin of New Orleans was a consensus builder, and he came off looking like a buffoon.

Tony Argiz, founder, CEO, and managing partner of the megaregional firm Morrison, Brown, Argiz & Farra, LLP, in Miami, FL, says, “As a leader, I think it’s important on a day-to-day basis to figure out the short- and long-term view of succession. What happens if something occurs tomorrow? That same person who you think could run the firm tomorrow in case of an accident might not necessarily fit the pattern that you need at the firm 10 or 11years from now.”

That long-term leader may be a younger person in your firm who is still in development but can operate a team over the long haul through the storming and norming phases to get to the performing phase. A very directive leader may get you from the reforming phase to the performing phase very quickly, but in the long term, such a leader will cause turnover of other leaders and drastic changes that hurt the firm. A disaster plan that appoints a leader for two years in the event of an emergency is helpful, so long as you hold a selection or election within approximately two years after the emergency to make certain that you have the right leader for the firm.

Approaches to Succession Planning

A variety of approaches can be utilized to successfully implement a succession planning program for an accounting firm. The approach of choice depends on the size and overall strategic plan of the firm. Some of the most common approaches are the following:

1. Top-down approach. Led by the CEO and other senior firm leaders.

2. Bottom-up approach. A comprehensive, firmwide leadership development program starting at the beginning of an accountant’s career.

3. Futuring approach. Scanning the business environment for coming changes, matching talent with expected labor needs.

4. Targeting approach. Focused on solving specific problems for a particular time.

These approaches are described in more detail in the following sections.

Top Down

Usually, the first approach to succession planning, particularly for a smaller firm, should be a top-down approach. The top leader of the firm, along with any other owners, wants to develop a short-term and long-term succession development plan. The short-term plan should lay out the firm’s philosophy on the top role of the firm. Is the role one that rotates periodically, or is it a role that demands a different skill set and is more permanent?

Bob Hottman, CEO of the top-100 firm Ehrhardt Keefe Steiner & Hottman PC (EKS&H) in Denver, CO, says, “Our CEO is not a transitional role that you’re going to have for 2 to 3 to 5 to 7 or 10 years even. It is a career shift to being our leader, and your client is now the firm. As a result of that, you’ll give up your existing external client relationships and focus all your attention on the firm.”

Many smaller firms perceive a great deal of risk in this decision. There is a risk that the CEO may not be the best leader. There are risks to the elected leader that his fellow owners may toss him aside, and he’ll be without the safety net of a client base. However, there will be very little growth without taking some risk.

Senior leader engagement is vital in the succession planning process. Many CEOs will not view their positions as permanent. They will recognize that the long-term success of the firm depends not only on their accomplishments but also on those of their successor. Current leaders must emphasize the need to develop future talent at all levels of the firm. The current executive should be involved in the development of the succession program, so that it meets the firm’s mission and vision.

In Jim Collins’s book, Good to Great: Why Some Companies Make the Leap…and Others Don’t, he discusses a level 5 leader. He found that the leaders who are the most effective are those who possess a dogged determination to win, along with a unique humility. One of the most interesting aspects of his study was that none of the level 5 leaders were the rock star leaders who write the books and give the seminars, but their companies achieved extraordinary results both during the term of their leadership and for 15 years after they left. In other words, these level 5 leaders developed a sustainable form of leadership. Bill Hubly, founder and managing principal of the local firm Corbett, Duncan & Hubly, PC, in Itasca, IL, says. “Being a level 5 leader means that you’re willing, at some point, to say the firm’s in better hands with someone else at the helm. The same is true with our practice areas. I think a practice leader has 10 years or so to serve. We’ve got to identify successors now. We’re not going to wait until they have 2 years to go and say, ‘Who is the next person?’”

Although initial efforts to develop a succession planning program target upper-level leaders and partners, you also need to phase into other levels within the firm. In fact, some experts believe that bottom-up succession planning is far more effective than top-down methods. The bottom-up method does not put top-level partners as the first priority; the focus is on the identification of all key positions, not just those in the upper levels.

Practically speaking, because most succession planning programs are based on the topdown method, it is believed that the bottom-up approach is good for the firm that has identified the next top leader.

Bottom Up

The retention rate in accounting firms is sometimes low because of the changing expectations of the young professional. Given several years of training and experience on technical subjects only, the young accountant gets bored, loses engagement, and looks for greener pastures. Introducing leadership development earlier in their career is a way to keep bright people growing and learning.

Some accounting firms are not placing enough emphasis on cultivating the next generation of leaders that will be required to sustain competitive advantage and business continuity. The accounting environment has historically promoted employees into leadership roles without thoroughly evaluating the leadership capabilities of these individuals. Many have been promoted based upon their longevity with the firm or technical prowess, rather than leadership skills. Possessing a technical skill oftentimes has been the basic reason for promotion; however, technical skill rarely will translate into leadership ability.

Succession planning and leadership development at all levels isn’t just something that’s good for the firm—it’s a necessity for people who want to advance. Rick Anderson, CEO of the multiregional firm Moss Adams LLP in Seattle, WA, says

In all aspects of our business, leadership succession and development is crucial. It takes place when the senior trains a staff member to take her role. It takes place when the senior manager, who is responsible for many engagements at once, can train another to succeed him. It occurs at the office and industry niche level. And it happens at my level. It is just an incredibly important role. Before you can take on the next role, you have to train somebody to take on the role that you want to exit. If you want to do something different tomorrow, you have to have trained somebody to do what you did today.

At our firm level, our executive committee has a process where every year, the COO and myself do a report to the executive committee on all major leadership roles in the firm, such as office managing partner, industry group leaders, and key administrative office positions. We identify people who would be logical candidates for positions and whether they are ready today, or are they likely to be ready in a couple of years.

If a firm and its leaders deal with all of these things, they’re going to be pretty successful.

Often, talented individuals drown in their new roles largely due to the lack of leadership training. Conversely, many internally qualified employees are overlooked for promotional opportunities because top leaders can be unaware of the firmwide talent. Externally recruited leaders are often hired to fill the leadership vacancies. This sometimes causes aspiring leadership candidates to become disgruntled and eventually leave the firm. We have had a number of clients whose senior manager group broke off and formed their own firm because these talented people did not have opportunity at their mother firm.

Bob Hottman adds

For many of our leadership roles, we put people into all sorts of positions to see how they handle themselves. To see how they react. See if they overreact, underreact. See how they handle people. See how they handle stress. See how they calm down and are steady. We think an important aspect of being a leader is not being hot and cold but being able to be steady and making decisions. Making decisions for the long haul, not for the short haul.

Demands on the recruitment and retention of skilled accounting professionals are increasing, and more emphasis is being placed on leadership development and succession planning. As the war for top talent continues to intensify, accounting firms are being forced to evaluate ways to scan the environment for the next generation of leaders and to develop succession planning programs that ensure the continuity of long-term success.

Futuring

Firm initiatives for the development of future leaders should outline talent recruitment (David Deeter calls this a strategic strike), retention, leadership development, and succession planning programs to increase firmwide performance and accountability. Although finding and retaining the next tier of qualified accounting leaders is a critical key to success, the efforts are futile if the development of these leaders is ignored, and they are inadequately prepared for their new roles. Neglecting the resolution of skill gaps can disrupt the leadership transition for even the most aspiring leadership candidate.

Gary Shamis, founder and CEO of the top-100 multioffice firm SS&G Financial Services, Inc., in Cleveland, OH, says

We’ve developed some succession tools internally for all levels of leadership. I basically studied all our offices, how many partners are in each office, their ages, how many years they were from retirement, and so on. Then, we studied the group just below the partners and tried to figure out how many people really had the opportunity to move forward. It was very interesting because what I found was that in three of the four offices, we’re in pretty good shape. But in one office, we really need to build some bench strength.

To avoid a shortage of bench strength, it is imperative that accounting leaders appropriately survey their talent roster and plan for continuity in their leadership. Scanning the environment for the next generation of leaders is prudent for any firm, and developing an effective succession program is a key to corporate longevity. However, with the current war for the best talent, it is more than just practical for accounting firms—it is an issue of survival.

Terry Snyder, president of the accounting firm alliance PKF North America in Lawrence, GA, says, “We’re going to lose good people, so we’ve always got to be recruiting. We’ve always got to be filling up the channels, and we’ve always got to have capable leadership people in place, so that when something comes up we’ve got the people to fill those voids.”

Scott Dietzen, managing partner, Northwest Region, of the national accounting firm CliftonLarsonAllen LLP in Spokane, WA, shares

For example, our director of tax is Chris Hesse. He is a very, very valuable and talented individual, and we could just see this big void if something happened to Chris. So, 2 years ago, I asked him to put in his scorecard that he would work with the COOs, and they would select 8–10 people. Once a month, Chris would hold a video conference with a set agenda of how we would begin to develop tax expertise in this group. We would start with people in the 2–5 year experience range. And so, for the last 2 years, every month they have a call about current events and tax and how they do certain projects. They also lead meetings and come up with agenda items and think about tax processes and tax software. So, we have a pool of people who have an extensive tax knowledge, knowing that they’ll benefit our firm, but maybe, 1 or 2 people will rise up to the level of being a director.

The AICPA’s PCPS has developed an extensive array of resources in its Human Capital Center to help CPA firms of all sizes address this critical issue.

Targeting Approach

Selecting the appropriate individuals for leadership positions is paramount to a firm’s success. Erroneously placing the wrong person in a leadership role can result in problems that create turnover in team members and poor client service. These problems can range from lack of employee morale to financial losses. The demand for qualified and skilled leaders far outweighs the supply.

Other industries outside of accounting are intensifying their efforts to attract new leaders. This creates a mobile workforce that can find multiple positions in multiple industries. This mobile workforce makes it even more challenging to retain the talented individuals in accounting leadership roles. However, despite the challenge, the effort must be made in order for accounting firms to succeed in this consumer-driven market. By combining sound succession planning procedures and effective leadership development activities, accounting firms can create a long-term process that will provide them with boundless leadership talent. This strategic initiative is necessary to diminish the ill effects of a shrinking workforce.

Charly Weinstein, CEO of the megaregional firm EisnerAmper LLP in New York City, NY, has devoted himself to developing the next leadership team. He shares, “Since I became CEO, we’ve transitioned all of our major division’s leadership. So, we have that next core of leaders identified, and hopefully, the young leaders behind them are beginning to develop, as well, because it’s a continuous process.

A leader trains, challenges, empowers, and holds people accountable, and each person is different. Charly says

What I do is assign projects or difficult issues to our partners who are moving up the leadership ranks to see how they perform. I am particularly interested in how they are getting things done through other people. I’m there if they need me for guidance. But I stay out of the way and let people make mistakes or succeed. I want to know how they are leading and learning. This is the ticket for the next step up the leadership ladder.

The business environment in accounting firms is more unstable today because of changes in hierarchical frameworks and the increase in competitive forces. Accounting leaders must think more strategically in terms of their talent roster. A firm’s abilities to master the abundant upcoming labor challenges may make the difference between overall firm success and failure.

Krista McMasters shares

Entrepreneurs who start accounting firms get to a $5–$10 million plateau and have difficulty breaking through to the next level. At that point, it’s a different ball game. You have to add a lot of resources. You’re going to be competing in a different way than you were before. You’re going to have to lead the people who are involved in that size of the firm. You can’t always lead from a consensus-building way. You have to lead with influence, persuasion, trust, and vision. We see firms that we’ve acquired that have gotten to a point where it’s going to be tough for them to take it to the next level.

Therefore, in order to attract a next-generation leader to your firm, it may be necessary to reach outside your firm, as Bob Bunting, former CEO of the megaregional firm Moss Adams LLP in Seattle, WA, did (with his recruitment of 23 leaders) or David Deeter does (with his strategic strike approach). Sometimes, though, the quest for a savior causes firms to overlook talented individuals already within the firm. These talented individuals often have successfully maneuvered through years of firm politics and culture. With the appropriate training, cultivating leaders from within a firm can provide the most effective leadership candidates. This training should encompass both an efficient succession plan and subsequent leadership development activities. Accounting firms should attempt to use internal employees who are knowledgeable in their particular fields. This utilizes the leadership candidates who have practical application skills and provides a sense of connectivity with employees across the firm.

Succession Planning Versus the Traditional Replacement Method

The traditional method of learning one’s technical specialty and then somehow becoming a senior, manager, or partner is not a reliable method for producing leaders. Most firms need a more deliberate way to improve the leadership skills of seniors, supervisors, managers, and owners. A formal leadership development program can be implemented in large or small firms alike. Although an investment is required, a development program is a wise use of resources for a number of reasons: well-led firms tend to attract the best professionals, produce loyal team members, incur less unwanted turnover, build loyal customers, and yield impressive financial returns. Current leaders must weigh the small annual investment against the enormous costs associated with less skilled professionals, higher turnover, and the low firm sales price that results when retiring founders haven’t built succession of leadership at all levels.

Some of the changes that make the traditional and passive replacement method obsolete for today’s firms include the following:

▴ Skilled accountants have many choices.

▴ Technology and competition are changing faster than ever before.

▴ Senior leaders are meeting increased demands. This makes it difficult to dedicate the time and effort required to develop the next level of leaders.

▴ Employee loyalty is a relic of the past.

Long-term business success depends on competitively retaining intellectual capital across the firm: the foundation of effective succession planning programs. Even though studies indicate that leaders cultivated and promoted internally produce significantly better performance than their externally recruited counterparts, little emphasis has been placed on leadership grooming. Making this issue even more significant are the research projects that indicate firms that place a heavy emphasis on leadership development experience considerably higher financial returns than firms that do not.

Potential Labor Crisis

Unfortunately, accounting firms continue to overestimate their potential skilled workforce. This is a dangerous business strategy in lieu of the changes in the workforce. Past decades provided sufficient labor pools without fail, but the workforce of today is much more limited, and the aging partner group is poised to create even larger labor shortages. The number of retiring partners will drastically increase in the next few years, causing a further labor crisis in upper leadership.

Challenges of Implementation

Although succession planning is vital for long-term firm success, most firms do not know where to begin in terms of implementing a program. In chapter 7, “Teaching, Coaching, and Mentoring: Multiplying Your Leadership,” I laid out several approaches to leadership development, so that the process of selecting new leaders becomes easier. Issues surrounding successful leadership development are abundant. There are problems associated with transitioning from the passive replacement method to a new, more active succession process. Furthermore, controversy often emerges about whether leaders are born with the required skills or if the skills can be attained.

As the accounting environment continues to change, sensible accounting firms will look beyond their current tier of leadership. A healthy supply of accounting leaders will be required. Successful firms will create succession planning systems that will continuously provide qualified leadership candidates. Considering the replacement of key personnel only as a means to prepare for an unexpected death, for example, will simply not be sufficient. There are other reasons for replacing leaders than just an untimely demise. Some leaders leave because they are ready to retire, pursue different career opportunities, or are politically dismissed. Developing a full understanding of all these issues is paramount in effectively implementing a succession program.

Let me be very clear about the argument that leadership can’t be taught but must be “born.” That’s wrong! Decades of research and practice show that leadership can be taught. We’ve trained hundreds of leaders in accounting firms ourselves, and many quotes throughout this book give examples of leadership lessons learned. The reason that leadership isn’t often taught is because few firms set up effective mentorship and training programs to do so.

Leadership training should be implemented, and potential leadership candidates must be shown how common weaknesses on the business side affect the client-care side. It is important to clarify the correlation between the two sides. In a service-oriented industry such as accounting, many employees and leaders are driven primarily by the client-service side. You can demonstrate that great client service leads to business success. Leadership candidates must be held accountable for both overall business results and the quality of client service.

Virtually every accounting firm will feel the need to build bench strength and widen its pool of qualified leadership candidates. Regardless of size or market dominance, most firms are headed into a talent war. The victors of the war for top talent will emerge with proactive strategies to address the following areas:

▴ A focus on future leadership needs and available career opportunities

▴ Integration of HR departments with senior leaders

▴ Sound retention policies of potential leadership candidates

▴ Flexible work environments designed to maintain aging workers with high potential

▴ Increased awareness of succession planning and leadership development programs

Addressing these issues will provide solid groundwork for developing practical succession planning and leadership development procedures. Attention should be placed on capturing the intellectual capital existent in the firm and developing diverse groups of leadership candidates. Firms continue to be driven to cultivate individuals with specialized skills and solid leadership competencies. Early identification and development of these high-potential employees is vital to business success in all accounting firms.

Some people seem to be born with natural leadership talents. Of course, they may have been trained by their experiences at earlier ages. Left undeveloped, natural leaders will never reach their potential, and those with lesser natural talents can develop into very good leaders if they really want to succeed. Everyone I interviewed for this book agreed that leadership skills can be learned. However, simply learning incidentally on the job is too haphazard a way to ensure the development of great leadership.

Bob Hottman shares his experiences, “Over the last 10 years, I think I’ve grown a thousand times in my leadership skills. It is such a never-ending process to learn about leadership that you never know everything that’s out there. I’ve learned that treating people fairly is always critical in everything that you do.”

Why Succession Plans Fail

Des Dearlove and Stuart Crainer, authors of the Financial Times Handbook of Management, suggest that most bungled successions can be traced to five failings:

1. Many incumbents are simply reluctant to give up power, hanging on too long. This can also be manifested in trying to foist like-minded successors on their firms.

2. When choosing new leaders, people often choose a safe replacement, rather than someone who will challenge the status quo, question the directors’ roles, and so on.

3. Some candidates have such a force of personality that the selection group often fails to define, or adhere to, an objective set of selection criteria.

4. Many selection groups rely too much on seniority. They don’t look beyond the most visible senior management candidates and, therefore, fail to identify strong potentials from the next generation of executives.

5. Finally, short-term concerns, such as clients or owners, are allowed to dictate the succession timetable. In combination with the many other nonobjective forces, such as egos, corporate politics, and greed, you have a recipe for trouble.

Your Leadership Development Program

An effective leadership development program requires six basic steps that should be led by one of the responsible owners. Each step answers a basic question for the firm and participants:

1. What does it take to be a good leader at each level in our firm?

2. How do I stack up as a leader right now?

3. What training, actions, and results should I take to become a better leader?

4. How can my service line or niche group be part of the process?

5. Is there a clear leadership succession plan for a variety of positions in the firm?

6. How can I join the leadership development program?

Overall Approach

An effective leadership development program requires careful selection of high-potential participants, proper funding, and dedicated leadership. Firms can utilize the resources of their alliance, the AICPA, or others, whereas some very large firms may develop their own University for Leaders along the lines of best-practice programs like those at GE, Federal Express, EisnerAmper LLP, and Clifton Gunderson LLP.

In addition to skills training, certain symbolic aspects of leadership need attention. People must be visibly rewarded through recognition and compensation for behaving in accord with published leadership competencies. The partners must not tolerate poor leaders. Dramatic acts demonstrate real versus espoused values around leadership. So, poor leadership students should be removed from any development program quickly, and senior partners who do not operate within the core values of the firm must change their ways or leave the firm.

Jim DeMartini, managing partner of Seiler LLP in Redwood City, CA, says

We have a very deliberate succession plan that we started working on 3 years ago. We’ve looked at every partner who is going to retire in the next decade. Not unlike a lot of accounting firms, we have a lot of partners here in their mid-50s. We are taking a hard look at who’s on the bench to fill those roles, and where do we need to bring in talent from outside our organization. This includes a very thorough analysis of the specific skill sets we need to add.

Next, give future leaders challenging opportunities during the program and early in their careers. The GE program admits 100 new people each year into its Entry-Level Leadership Program (ELLP). These people should have enough responsibility to make an impact and enough leeway to make mistakes. The wise leadership team tries to accelerate its mistakes, thereby increasing its learning. Mistakes must be tolerated, provided that they are in service to the firm. Young leaders receive targeted training and development based on individual needs, such as provided by GE’s ELLP.

At Plante & Moran, PLLC, more mature leaders receive broadening experiences and educational opportunities through an advanced leadership development program. Bill Hermann says, “We identified a pool of people and knew we had to get them exposure to different situations. They needed to be exposed to certain partners and have the right kinds of experiences.” Finally, the firm should reward the developers and mentors of the next generation of leaders.

Beyond this general approach, a leadership development program involves the six major steps described in the next few sections.

Define the Leadership Competencies for Each Level

What does it take to be a good leader in our accounting firm? Defining the leadership competencies that correlate with effectiveness tells us what leadership skills should be built into a leadership development program. Most firms should begin by using generic leadership competencies found in other programs, such as the Market Facing Leadership Academy or the AICPA Human Capital Center. Once operating under generic terms for a period, you may want to tailor the program to fit the uniqueness of your firm. Don’t wait to start until you have everything exactly right. If you invest a great deal of time building the perfect set of competencies, you may tend to bog down and miss years of effective leader development time. The competency set should vary by level: senior, supervisor, manager, or owner.

When selecting people, you want to find a good match between immediate and future role demands and the applicant’s personality. GE’s Jack Welch used his four “E” method, and you should attempt to get something this simple. The four “Es” that Jack used were as follows:

1. Do they have the energy to play in a global environment?

2. Do they energize others? It doesn’t do you much good to be a whirling dervish if you don’t end up exciting other people.

3. Do they have edge? Do they have the ability to say yes or no, not maybe? Do they make the calls?

4. The fourth “E” is execute. Do they deliver?

Admittedly, developing your list is easier said than done. The following list of traits is what I would use as a starting point for selection criteria.

1. Desire. Wants to lead, wants to get things done through other people, wants to have an impact. If the candidate doesn’t want to do these things, you are wasting your time trying to fix someone.

2. Purposeful. Wants to achieve something.

3. Confident. Believes that he or she can make a difference.

4. Centered. Has sufficient impulse control; stays focused under pressure.

5. Energy. Has physical stamina to work long hours.

6. Intelligence. Possesses at least average or slightly above average general intelligence.

Bob Bunting says

We are actively engaged in succession planning all the time. Part of the planning that takes place at the departmental levels is literally looking at succession in each department. So, it’s not just who is running that department today, but who are the folks in line who can step up and lead that department in the future. Who is the next person in line who can be there to run the health care area. So, we are trying to build a concept of continuous succession everywhere, so there is a smooth transition at any point in time. When you start talking about the overall firm, what we have done is something that we have talked a little bit before. We have consciously created leadership opportunities for a lot of people.

We have leaders in each of the offices, we have leaders in each of our industry segments, we have leaders in each of our service lines, we have leaders in each of our shared services area, and we are working with all of those people all the time to develop them and, frankly, to see who steps up.

Assess Potential Candidates

Next, you’ll want to assess the potential candidates. The use of an objective tool such as a standardized test, 360 degree survey, or formal interview might be useful in assessing the best people to join the program. Usually, you would like to have more candidates than you have positions in the program. This will help create a backlog of aspiring candidates for next year. A crucial but often overlooked step is to promptly notify each of the applicants whether they have been accepted or declined.

Measure Leadership Styles

Now we have a gap—what do we want between what do we have. Ask yourself, What training, actions, and results must I achieve in order to become a better leader? Articulate and write down valid and reliable ways of measuring current leadership styles tied to the competency criteria. Using a 360-degree leadership survey and performance appraisals are good sources of data. These data provide information to assist everyone in creating action plans and expected outcomes.

Utilizing the material in this book, students can first evaluate themselves and where they stack up relative to self-knowledge, trustworthiness, preparation, critical thinking, and selfdiscipline. From there, each person can begin developing a leadership action plan.

Refer to Your Developmental Process

Provide developmental activities by asking, How can my service line or industry niche group be part of the developmental process? As much as possible, leadership development should occur on the job, not away from the job. Leaders get things done through others; leadership is essentially a transaction between a leader and followers. It makes sense to create developmental programs that attend to the transactional context within which the leader resides. Team-based leadership development reflects modern thinking about leadership. This model downplays the ancient understanding of leadership as dominance of one over many. We step away from teaching leaders how to make decisions by themselves and move them toward developing the capacity of people to maintain themselves within a social setting and achieve group goals.

Ken Baggett says

We have a leadership camp, which I actually borrowed from Bob Bunting in Moss Adams. When I took over as CEO, I stipulated term limits for everyone. We needed term limits as managing partner, term limits on the operating committee, and term limits as an office managing partner because I felt that if you did not have a defined term in office, there is no goal line.

I selected my “fab five”—five people who I felt have the ability to become managing partner. I have started spending a little extra time with those five. I have taken them to client conferences, industry conferences, and so on because they need to be exposed outside the four walls of Reznick. They need to experience what other firms are doing.

Group-based development is a practical, experiential method of learning. By working on issues within groups, it is practical and immediately applied within the leader’s setting. For instance, he or she does not deal with difficult people in the abstract but with a specific difficult member of his or her current team.

The following are some examples of the many methods for teaching the classes and following through with the development plans:

1. Participating in leadership development projects with goals related to the participant’s specific skill needs

2. Engaging in case analyses with other participants

3. Job rotation through other departments or on staff exchange programs

4. Receiving special assignments that require high levels of interpersonal interaction

5. Shadowing senior leaders

Build the Next Generation of Leaders

Are there clear leadership succession plans for a variety of positions in the firm? In a sense, leader development and succession planning are synonymous. The leader development program should fit within the firm’s strategic goals. The succession plan ensures that an adequate supply of capable leaders is available to carry out strategic intent in the firm for the next 10 years. The succession planning process has several steps designed to develop leadership talent. These steps involve the following:

1. Assessment of program applicants’ leadership potential and skills

2. Appraisal of leadership behavior from formal appraisal systems and surveys that answer the question, in the aggregate, How well led is this firm

3. Determination of future management and leadership needs through forecasting and strategic planning

4. Definition of leadership requirements in the near future expressed in qualitative terms for various levels in the firm

5. Creation of a measurement system for summarizing progress and overall leadership readiness

6. Act to meet the immediate needs for leaders

Prepare a Nomination and Application Process for the Program

What is the process for joining the leadership program?

We have found it helpful for the owner group to actively select a group of people who they believe will be successful in the program. Either through a formal or informal nomination process, potential candidates should be encouraged to apply for the program. A formal process would publish a list, or a letter would be sent to the candidates. An informal process might simply have owners mention to selected people, “I think you should take advantage of our leader development program because you are what we are looking for in future leaders.”

Carl George, former managing partner of the national firm Clifton Gunderson LLP, says, “I think leadership is rare, and I think it’s about people. Leadership is about taking people from point A to point B. So, I don’t think there’s a difference in leading an accounting firm or any other group; it’s the same.”

As most of our interviews concluded, leadership skills are more developed and learned than they are natural. They’re developed both by training and experience. Carl went on to share

Curt Mingle believed that we were going to have a shortage of leadership in the profession, not just CG but the profession. He believed that we should be a leader in developing leaders. We decided that it needed to be multifaceted. It wasn’t just going to be book learning. We needed some on-the-job training. We got people involved in a group called MFR (Managing for Results), and today, we have people involved in Rainmaker. We made sure that they went to MAP (Management of Accounting Practices) conferences.

At Clifton Gunderson LLP, the leaders always had projects to work on. Carl tells, “I remember one of the projects was the case for part-time partners. Back then, in fact, it was written up in the Journal of Accountancy. Back then, to be a part-time partner, you were kind of a weirdo. We were thinking, ‘Wait a minute, it’s a talent; if we can get half the talent, it’s better than none of that talent.’”

At Clifton Gunderson LLP, the leadership training was not only on-the-job training; the developing leaders also had to attend a board meeting. It was a two-year program, and the participants met two or three times per year. They wouldn’t go to restaurants; they’d be in a room eating pizza and listening to tapes and have many activities and homework at night.

Carl continues, “We had an industrial psychologist, Dr. Ron Winkler, who developed a profile questionnaire and so on. There were three of us: Curt; myself; and another management team member, Joe Lhotka. We all had different perspectives on leadership, and we didn’t leave out the historical part, either. We thought it was important to remember the legacy.”

Next, it would be good to advertise the program with e-mails, posters, or memos or in staff meetings. The advertising should answer some of the basic questions that applicants need to know, such as the following:

▴ Expectations of the program should be spelled out. How many days of class, how much time between classes performing extra work, additional hours needed, readings required, and so on should all be spelled out.

▴ Qualifications for the program, such as length of service, roles in the firm, educational requirements for entering, and so on, must be clear.

▴ The outcomes of the program should be clear in terms of leadership opportunities in the firm.

▴ Any follow-up commitments that participants must make to stay with the firm or pay any of the costs or any other follow up that may be expected, if any.

Developing leaders requires considerable effort and expense. Measuring overall success allows you to make the program more effective and efficient. You must evaluate the program, and to do this, you must have clear goals. Once clear goals have been articulated, you evaluate the program at five levels: reaction (level 1), knowledge and skill transfer (level 2), on-site behavioral change (level 3), business impact (level 4), and monetary return on investment (level 5).

Evaluation begins at the very beginning of the program design, not at the end. Generally, each succeeding level of evaluation increases rigor and cost. It is financially prudent, therefore, to consider the program’s success criteria. For example, if success is primarily measured by satisfied participants who assert their intention to apply what they have learned, a level 1 evaluation suffices. Conversely, if the program must pay its way to stay alive, you should determine return on investment by tabulating and subtracting program costs from bottom-line indicators, such as revenue enhancement or cost savings.

Terry Snyder says

I have a very good friend. Mike Hebert was the coach of the University of Illinois women’s volleyball team and is one of the leading women’s volleyball coaches in the U.S. A few years ago, he had done an amazing job of recruiting but was having a really bad year. And I said, “So, Mike, what’s wrong?”

He said, “Terry, this team’s a victim of the kind of people like me. We now train these people. These women play volleyball year round, and they’ve got great abilities. But what we haven’t learned to measure and haven’t learned to develop is that internal piece yet.”

He cited a young lady. When he was recruiting her, he observed her walking down the hallway, and people were around her, looking at her with respect. He could see it in their eyes. When she played volleyball here at U of I, and it came time for that final point, he said, “People turned and looked at her for that thing.”

He said, “I can train them to have great volleyball skills, but I can’t train that part of it.” He said that has to be part of them, and I’ve always remembered that.

Selecting Partner Leaders

Promoting from manager to partner is a huge leap for most people. It means that the person is going from an employee to a business owner. The biggest mistake that partners make is not preparing managers (employees) for the step up in their leadership role. The role of a business owner changes significantly in the following ways:

1. The owner’s income is at risk depending on the profits of the business, whereas the salary of employees is set and has very little risk.

2. The owners are expected to maintain client loyalty, whereas employees are expected to maintain client satisfaction.

3. The owners are expected to attract significant new business, whereas employees participate in some business development activities.

4. The owners are expected to recruit, develop, and retain staff members through mentoring and coaching, whereas employees are expected to do so in a more limited manner.

5. The owners are expected to produce a profit from the work of the employees, whereas the employee is to meet budgets for billable hours and so on.

6. The owners become business leaders, whereas employees can remain in management roles.

Although in the past, accounting firms have promoted people to partner without requiring them to act like owners, that rarely is the case anymore. As a partner group, you must regularly assess your expectations of your fellow owners and ensure that there is a process in place for aspiring managers to grow into owners and leaders.

Phil Holthouse, founder and managing partner of the top-100 multioffice firm Holthouse, Carlin & Van Trigt LLP in Los Angeles, CA, says

We have about eight criteria for the admission of a new partner: someone who we trust, someone who’s not going to get the firm in trouble. Those are usually the first two. Then, after that, it becomes either being able to manage a client practice effectively and profitably or contribute in some other significant way to the firm. Those are our core principles that we work with.

Rename Your Next CEO as the Leading Partner

Naturally, you can tell from reading this book that I’d like to name the CEO the leading partner of the firm, rather than the managing partner. There are major differences in leading and managing. A leading partner is going to take the firm somewhere, whereas a managing partner may be content to maintain the status quo. In some firms, the CEO or managing partner is really a coordinating partner. Dan Schreiber, managing partner of the local firm JGD & Associates LLP in San Diego, CA, shares

Leading and managing is what I like to call the “too many cooks in the kitchen” syndrome. You know, everybody wants to be involved, and it can be very challenging to keep all the owners happy. In our firm, although I am a managing partner, in a lot of ways, it tends to be more of an administrator role. I tend to manage everything but the other partners. With the partners, I’m just trying to gather agreement on key issues. Whereas with most of the clients we work on, there’s a formal structure where there is a CEO and a formal chain of command.

Usually, the coordinating partner’s role is to coordinate all the administrative tasks that the other partners don’t want to do. And of course, in many firms, the managing partner or coordinating partner does not lead the other partners.

Depending upon the size of your firm and the depth of your talent, selecting the next leading partner might be a difficult task. Many, many partners just want to serve their clients and leave the leading and managing to others. Some firms have concluded that the accounting partners should focus all their attention on serving clients, so these firms hire professional managers to take care of recruiting, HR, technology, and so on.

Choosing the Lead Partner

A number of firms have term limits, and some have mandatory retirement ages. Each firm seems to be different in these regards.

Jim Metzler, vice president of the AICPA, says,

So many firms have managing partners for life, and some of those conflict items are things I spoke about before. I believe term limits are the only way to go; the term has to be long enough, but no more partner for life. That’s old school stuff. Let me put it this way: not term limits in years. The leading partner can rerun for election, but you have to do a good job. Not a rotation but, rather, an election is what I’m trying to say.

Carl George shares, “With my successor, we developed a process. I told the board I wanted to step down at the age of 62, which is what I did in 2009. So, when I was at 59, we developed a very intricate succession planning process.” Carl and his partners talked with other firms, and they found that several baby boomer CEOs have been retiring: Bob Bunting; Darold Rath of Eide Bailly LLP; and Bill Hermann, for example. They decided to prepare a dual-purpose plan. One is a disaster plan, and the second is a process that is a more formal long-term solution.

Once Carl had his plan written, he communicated with all the firm’s partners. After all the partners knew of the plan, he set about identifying potential candidates, including anybody who wanted to volunteer. Using an industrial psychologist, Carl set forth a series of the attributes of the next CEO and how those might be different than in the past. The psychologist held 2-hour meetings with everybody in the firm who was in a leadership position, including board members. In addition to those one-on-one meetings, he developed a questionnaire that he sent out to another 25–50 partners to complete.

Carl says, “He initially developed this attribute model, which is an incredible piece of work. It was well worth the money to develop this attribute model based on what the partners think.” After all this synthesis, the team derived five primary dimensions for the new CEO: leadership, culture, vision and strategy, business execution, and people.

Carl shares, “The process began with a large number, and we narrowed it down to 10. Then, we narrowed it to 5 and then down to 3 or 4. All the ones we considered are all still here. It’s a little different because they are partners, and they have significant responsibilities. I have seen other firms where ones who weren’t chosen CEO left the firm, and I think that is a travesty.”

Finally, through the process, Krista McMasters was chosen as the next CEO of the firm. CliftonLarsonAllen LLP is the largest firm in the history of the profession to have a female CEO. Carl concluded, “An overwhelming sentiment of the partners said, ‘Great choice; proud of the firm for doing it.’ All kinds of accolades for Kris, the task force, and the board for choosing her.”

When selecting a leading partner, a firm would be wise to use the chapters in this book as a guide. Is this person one who has experience with your firm, clients, and market? Does this person fulfill the personal expectations of self-knowledge (see chapter 2, “Self-Knowledge: The Inner Accelerator); trustworthiness (see chapter 3, “Trust: The Leadership Imperative”); devoting time to critical thinking (see chapter 4, “Critical Thinking: Creating Your Future”); investing time in preparation (chapter 5, “Preparation: Ready for Seizing Opportunity”); and selfdiscipline (see chapter 6, “Self-Discipline: Be the Master, Not the Victim”)? These would be the key qualities that I would look for. Think about the level 5 leader discussed in Jim Collins’s book Good to Great: Why Some Companies Make the Leap…and Others Don’t. Does the person bring a nonanxious presence to the leadership role, with strong determination and humility?

How does your leading partner candidate relate to the other partners? Is he or she a coach or mentor (see chapter 7) or let others find their own way? Is he or she willing to hold people accountable in a manner that gets results (see chapter 8, “Accountability: Trust but Verify”)? Is this candidate willing to challenge the people to grow (see chapter 9, “Challenging Personal Growth: Leading the Whole Person”) or a conflict avoider? Is he or she willing to delegate or empower others to lead their portions of the firm (see chapter 10, “Empowerment: The Secret to Exponential Growth”) or a micromanager?

Krista McMasters says

For our CEO succession plan, we put together a detailed plan for the selection process of our next CEO. I was very involved in that because of my responsibility in charge of Priority-One. Honestly, it didn’t occur to me that the next CEO would be me. That was not even in my thought process. The key thing we wanted was to make sure that we had input from many key people throughout the firm.

If you select a leading partner with the personal qualifications previously described, who also has a strong vision of where the firm should be going, you have a superstar. If the person has all these personal qualities but doesn’t have the vision, a facilitator or the other partners can help with crafting a vision. Getting behind a person who has a vision but is not trustworthy, however, will not work.

A terrific way to gauge your candidates is to put them in a variety of positions of leadership, both large and small, and evaluate the preceding attributes. Sam Coulter, founder and president of the local firm Coulter & Justus, P.C., in Knoxville, TN, says

Ron Justus and I are permanent members of our executive committee. To build leadership, we’ve had everyone rotate through it. Different partners served two-year rotating terms, and every year, we have a new member. The idea was to let everybody have an opportunity to see what the management committee does. A lot of problems come before us that are not black and white. This gives us the opportunity to have conversations around tough issues and build our leaders for the future.

More of Choosing a Leader

When it was time for Clarence Asbury, founder of McKonly & Asbury LLP in Harrisburg, PA, to consider retirement, he implemented a similar process to Clifton Gunderson LLP’s, albeit on a much smaller scale. Terry Harris, managing partner of McKonly & Asbury LLP, says

I understood how important measured growth was to the success of our growing practice. It was also about this time that Clarence Asbury and I began to have discussions about leadership succession. In the years that followed, until I became comanaging partner with Clarence in 2003, I began a process of self-discovery to explore whether I could, in fact, become the future managing partner of McKonly & Asbury. During this period, I used the services of a professional coach to help me understand my leadership style and how my style interacted with other partners in the firm. I also sought the affirmation of others inside and outside the firm of my leadership abilities.

Identifying a successor is the legacy of a managing partner. Clarence and Terry were partners for over 20 years. Terry shares

One thing that I remember as a young accountant with the firm in my early 20s, was being asked by Clarence if I would like to lead a new niche area of our firm focused on the affordable housing industry. I was not a very good leader then. Through that experience, I learned to develop a leadership style that empowered others and focused not on process but on outcomes to have success.

The affordable housing niche grew to become one of the largest practice areas, and today, this niche differentiates the firm from others.

Clarence began the process of succession approximately seven years prior to his planned retirement. At that time, approximately two-thirds of McKonley & Asbury LLP’s client base was served by Clarence and Terry. Together, they established a transition date for Clarence’s retirement and, over the next seven years, worked toward that date. One of the main aspects of the succession plan was the transition of Clarence’s and Terry’s clients to other leaders in the firm. Terry shares

Two years prior to Clarence’s two-year transition into retirement, I became a comanaging partner with Clarence, and we collectively shifted client service responsibilities to other partners while maintaining relationships with our key accounts. We retained 95 percent of our clients through this significant transition, to the credit of both Clarence and other leaders in the firm who assumed enhanced roles serving these clients.

Even though it was over one decade away, Terry immediately began to think about his successor. Terry says, “I listened closely to other leaders in our firm, worked with outside consultants, and utilized 360 evaluations for our partner group. Through this input, it became clear who would be the best person to be my successor and lead our firm into the future. It was not only my choice but the feedback from the remaining partners that provided clarity.” Because that identification had been done almost seven years before Terry planned transition, it gives everyone time to work on firm leadership matters, gaining input and support for the direction of the firm and investing the time, so that Terry’s successor is experienced in the leadership necessary to sustain the firm.

This is a great process for many firms to follow; however, other firms have a selection of choices for leading partner. Several years ago, when Jack Welch was CEO of GE, he made it known that there were three top candidates to take over his role as CEO. He created a selection process and literally pitted each one of the candidates against each other. Jack created a leadership legacy at GE with his famous leadership training school, writings on leadership, and emphasis on leadership development. However, when Jeffrey Immelt was finally selected as Jack’s successor, the other two candidates left. To me, this final act of Jack Welch undermined his many years of leadership development. When he left the company, three-fourths of the leadership team was gone, including Jack. I’ve often wondered how that lost leadership talent has affected the operating results of GE this last decade.

Jim DeMartini, managing partner of the top-100 firm Seiler LLP in Redwood City, CA, says, “I’m not a huge Jack Welch fan in terms of some of his leadership ideas. I think it is a mistake to create war in your firm to pick your successor. I mean, the collateral damage there goes well beyond the two people who leave.”

The best process is to adhere to a civil manner in order to retain your leadership talent at the top of your firm, so that your long-term success and synergy can be continued. Rick Anderson shares, “When I was selected as chief executive officer, the process took about six months. The really neat thing that happened is that all the people who were being considered are still with the firm today, leading key areas of Moss Adams.”

Neal Spencer, former CEO of the megaregional firm BKD, LLP, in Springfield, MO, echoes Rick’s theme at BKD, LLP

The last time we elected a chief executive officer was four years ago. We asked partners for their input on who the next CEO should be, and about 15–20 names surfaced around the firm. The management committee narrowed the list to 5 individuals. Within 90 days, that list was whittled to 2, and then, it took 4 months for me to be selected as the CEO.

What is so special to me is all the other major candidates are still at BKD today. They all hold very important positions. The firm didn’t pit us against each other, and I think we actually grew closer, even though we were vying for the top leadership position. I would not have wanted the candidates to leave because they didn’t get the job. I think the beauty of BKD is our success in the way we approach running our firm. None of these five candidates, in my mind, could have left BKD and have the same success that they are enjoying today. So, maybe that’s the beauty of BKD. We were able to retain these people because, regardless of the positions they hold, they recognize that BKD is a special organization, and the role they have still carries a lot of influence.

Can a Leader Serve Clients?

One of the major decisions you must make in the selection of a leading partner is the time commitment. As Michael Gerber’s book The E-Myth asks, Is your leader working in the firm or on it? On the one hand, leading the firm requires a different skill set from functioning as a line partner in an accounting firm. To do it well, the leader must give up a significant portion, or perhaps all, of his or her clients. Bob Hottman says, “I have one client, and it is my firm: EKS&H.” To me, for a firm that is rising above the $5 million per year revenue level with 40 or more employees, a full-time leading partner like Bob is the right call.

For a firm with revenue below $5 million per year, it makes sense for the leading partner to allocate a portion of his or her year to leading the firm. The more aggressively the firm wants to grow, the more time should be allocated to leading. Then, you have the question of giving up clients, and such a leading partner could have the following concerns:

▴ If I fail at leading, what will be my lifeline back into the firm, or will I have to leave?

▴ What will happen to my income if I’m not able to pull it off?

Quite frankly, you can’t keep one foot on the dock and one foot on the boat to lead a firm through the choppy waters of an economy. The leading partner needs to have confidence that he or she can lead, along with a prudent compensation bridge if things change.

Conclusion

Finally, you have traveled a leadership road map with me that will guide you to build and improve people at all levels of your firm. I hope that you take away the priority that I’ve placed on the five roles of a leader: self, staff, strategy, systems, and synergy. As a process thinker, I’ve tried to help you build a logical method to lead and build leaders within an organization. My wish is that you will be able to use these concepts to be the master of your destiny, rather than the victim of circumstances, and that you will commit to raising the lid on your own leadership and that of your entire team.