Why Your Firm Needs a Succession Plan, and What It Should Contain
Whether you’re an accountant or lawyer or architect or any other professional service provider, you and your firm have succession planning needs that are unique. You can’t follow the same formula used by, for example, manufacturing companies and retailers. In those types of businesses, everyone has his or her own role, but no one employee “owns” a slice of the customer base. All work together to support all products and all buyers.
You and your partners, on the other hand, provide services to your own group of clients, both individuals and companies with whom you have developed trusted relationships over many years.
In the professional service industry, effective succession planning takes years rather than months. So, if your firm hasn’t yet devised a plan, the time to start one is now. You must be prepared for the unexpected, like the death of a partner, a falling-out among principals, or the sudden departure of a key rainmaker who walks out the door with his or her own clients.
What to Include:
The knowledge and skills of the firm’s partners and employees are the product you’re selling to your clients, and when a key player is planning to leave, you must have ways to maintain the firm’s viability. You must find ways to instill the same levels of confidence in your abilities that clients had before the departure. Therefore, succession planning can take years in service-centric practices. It involves much more than just rearranging the organizational chart and working out the financials.
Here are some of the questions your firm will need to answer during the planning period:
- Do you have an official business development program? If not, create one. There needs to be a formal, ongoing effort to bring in new clients, using everyone’s contacts and knowledge as springboards for attracting prospects. Consider offering an incentive program for future leaders of the firm to develop their own book of business.
- What about client retention after the departure of a principal? How will you encourage existing clients to stay with the firm after he or she has left? This will be less problematic if partners are encouraged from the start to stress the strength of your organization as a whole. They should emphasize in client conversations that your firm consists of the people it does because you have shared values and a similar work ethic, i.e. “a good bench.”
- Who will fill the void when someone leaves? Who can take over their management responsibilities, and who will be expected to be up to speed on their knowledge, their contacts and clients, and any technological proficiency required? It’s never too early to begin introducing clients to potential successors.
- Was your firm forward-looking enough when you formed that you worked out the precise financial details of a partner’s departure? Did you keep that plan updated as the years went by to accommodate any necessary changes?
This last question is critical, and it can be an uncomfortable area for you and your partners, depending on the nature of your personal relationships. Our professional services planning experts can be an impartial third party in working out these difficult specifics. Contact us, and we’ll help you create a strong succession plan or hone an existing one.