Future of Work and Change Management

The Impact of Millenials

April 10, 2017By Dave Shatkowski - VP of Communications at Indiana CPA SocietyArticle, Blog, Future of Work and Change Management, Talent Management and People

We’ve been hearing and talking about the millennials a lot, but what does it all mean? To the profession, to your business, to you?

The millennial generation, over 75 million strong, is transforming the workforce and the workplace. Already they make up more than one third of the workforce in the United States, and that number is growing every year.

A post by Justin Hayes on our other blog site, The Smoke Detector, examined what not to say to millennials. Things like “be patient,” “you’re not ready,” “that’s not how it was” and “you’re not working if you’re not here (in the office)” are all things that we have heard before or maybe even said ourselves. But they are not things that resonate with millennials.

I’m a lot older than Justin, but I thought his observations were right on target. Continue saying those things to millennials, and risk losing them. You might lose them to a competitor. We might lose them to another association. Or we all might lose them to another profession.

Millennials want change. I’ve seen it and I’m sure you have too. They want things like flexibility, recognition, inclusion and innovation. An article in Fortune magazine stated “certainly, it’s better to directly address the needs and understand the characteristics of the millennial generation than to pretend they don’t exist.” Are employers doing that? 

Though there are stereotypes surrounding millennials, many if not most are either untrue or misunderstood. And in the end, the changes that result in responding to their needs can benefit all. The Forbes article concludes, “in focusing on the needs of the next generation, these companies are creating a better place to work for everyone.”

Alternative credentialing such as digital badges and verified certificates is one area where we can make an impression on millennials. You (as CPAs) by understanding them and accepting their value, and we (as a CPA-supporting organization) by offering them. 

Millennials are receiving alternative credentials at colleges and universities across the nation, according to findings from a recent study by the University Professional and Continuing Education Association. Then they expect them post-graduation as well. One of the experts who conducted the survey said “what was previously thought as cutting edge is now becoming mainstream and is transforming the paths that learners take to success.”

More than 20 percent of U.S. colleges and universities are currently offering digital badges, and the state of Indiana is well represented by IU, Purdue and Notre Dame. After graduation, millennials will look to their profession and their association for their professional development needs. And their alternative credentialing preferences.

Like the changes in workplace culture and environments, other generations are likely to adapt to and appreciate alternative credentials. Let’s be a part of that change in ongoing professional development and lifelong learning.

#10: Never Stop Learning

January 17, 2017By Jess Halverson BowyerBlog, Future of Work and Change Management, Learning and Career Development

Resolve to be a lifelong learner

Books are my great love, and my great compulsion. I browse bookstores and libraries to relax, clinging to the little shots of adrenaline I get discovering new stories and new ideas from the thoughtfully crafted end caps and table displays. Each new volume represents hope – optimism – unlimited possibility – delivered by new ideas from the words on the page.

Discovering new ideas brings depth and meaning to my life. This passion for learning has also been a great benefit to me professionally – and this is what we hope you get from our resolution blog series: 10 ideas or goals for the new year to bolster your career.

Luckily, I win. Everything we’ve written about this week can be tied to the resolution I chose to write about: Never Stop Learning.

No matter what you choose to focus on this year, the act of career improvement is lifelong learning. Changing your organization’s annual performance review policy requires you to learn. Improving your leadership, decision-making, communication and other non-technical skills is a form of learning that also requires you to think differently and be willing to put yourself in uncomfortable situations. To make this type of learning happen, you must plan for it. To improve your interactions with other generations you must learn about them. Being open to a new method of working, like collaboration, allows you to learn from others. Lastly, innovation takes everything you’ve learned and feeds it into the basis of new ideas.

If you sincerely commit (or recommit) yourself to lifelong learning, there are no losses. No matter what you do, from first year public accounting to acting CFO of an international company, learning goes with you, it grows with you, and it will always give you an advantage — especially in today’s increasingly complex and global environment.

In a knowledge economy, your competitive edge comes from what you know or your ability and willingness to learn.

Now, I realize that some of you may be thinking, yea no kidding. It’s not a revelation that you must learn and adapt to be successful. Yet, this doesn’t mean we do our best — willingly or less so — to make time for deep learning. Day-to-day tasks, urgencies, emails, meetings and everything else involved with actually doing the work required for your career often pushes active learning aside. Truly becoming a lifelong learner requires incorporating the act of learning into your routines, your daily schedule, your calendar and your priorities. But often we don’t take the action to plan learning, as most of us operate under some modicum of curiosity and assume absorbing the knowledge we need is something that will just happen.

To truly be competitive in this knowledge economy, we must take an active, not passive, role in our own learning and develop a practice of learning.

That is my challenge to you this year – if you do nothing else, take an active role in your own learning, no matter what it is you need to know. And please forgive me for ending on an overused quote, because there is no better way to say it: knowledge is power.

If you need me, I’ll be over here, with the pile of books made from real paper.

Jess Halverson Bowyer is the strategist at the CPA Center of Excellence® and has worked for the Indiana CPA Society for six years. With a background in communications, design and visual thinking as well as a passion for learning, she has a hand in all things CPA Center of Excellence®, from strategic planning to learning design to hosting presentations and webinars.

#9: Innovate

January 14, 2017By Gary Bolinger, CAEBlog, Future of Work and Change Management, Innovation

Relish change and embrace the opportunity

I am sure that many, or most of you reading this, have heard the famous Jack Welch quote “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.” Well, that isn’t the exact quote. Actually, the concept was published in the GE’s Annual Report 2000 in the section on “Relishing Change.”

“We’ve long believed that when the rate of change inside an institution becomes slower than the rate of change outside, the end is in sight. The only question is when.”

Change is difficult. Change is frequently a source of significant discomfort. Change is complex. And today, the rate of change — the velocity of change — is accelerating. Much of the increasing velocity of change is attributed to technology. But there are other factors. Increased entrepreneurship is driving change. Ever evolving demographics drives change. And geopolitical influences on our global economy certainly drives change.

All of these influences on change (and more) are driving a mandate. We must learn to embrace change. Or, as the GE annual report said in 2000, we must relish change. We need to encourage our colleagues to view change as opportunity. There’s really no alternative. Change must be embedded in our cultures. Change needs to be positioned as the energy to create the new.

When you, your organization and /or everyone within your organization gets over the feelings that fuel the discomfort of change, you can move on to framing change as a primary source of innovation.

Innovation is probably the primary driver of growth in our businesses today. The engine driving positive economic improvement. Innovation = future success.

But, innovation is scary too! What? You expect me to innovate? I don’t know HOW!

Innovation should NOT be unsettling to you or your colleagues. Wikipedia defines innovation as a “new idea, device, or method.” Sure, there is a little more to the definition. Solutions that meet new requirements, more effective processes or something that breaks into a new market. In 2016 the Indiana CPA Society (INCPAS) Board of Directors established an innovation task force and they elected to use a definition of innovation crafted by Dan McClure: “Any practice that leverages creative invention to respond to an important challenge.” There are others. Pick one that fits you best and embrace it!

Innovation is process improvement. It might be a series of little things (marginal gains) that eventually make a big difference. Everyone in your organization can and should be challenged to find one or two little things that could be improved. Everyone should embrace the opportunity!

You will hear more in the near and long-term future from the CPA Center of Excellence®, powered by INCPAS, about innovation. We hope to hear from you as well. As we embrace change and implement thoughtful and purposeful innovation, we can all help to ensure a valuable and relevant future for the CPA profession. Let us know how you are innovating in your career.

Gary Bolinger, CAE, is president & CEO of the Indiana CPA Society, a position he has held since 1991. He has spent the last 32 years of his career at INCPAS, beginning in 1984 with the role of field activities director. Bolinger has served in numerous volunteer and presenter capacities in both the CPA and association professions nationally and in Indiana. He was named as one the most influential people in accounting by Accounting Today for each of the last two years. Bolinger is a regular blogger for the Society. 

#7: Bridge the Generation Gap

January 12, 2017By Lisa Brown, CPA, CGMABlog, Collaboration, Future of Work and Change Management, Talent Management and People

Consider the context and create great teams

I recently heard that Millennials do not like being referred to as Millennials, and who can blame them. Often, something unflattering follows the term. Even the mere word evokes knowing head nods from a room full of Baby Boomers.

As a college professor, I interact with Millennials on a daily basis. Millennials are the largest generation in U.S. history. They’re the fastest growing generation in the workforce. And by 2017, they are predicted to outspend Baby Boomers.

We can’t neatly put each generation into a stereotype box, but we can use these broad strokes of information as clues to how we can best communicate with one another. Understanding why the members of the “other” generation are the way they are and how to bridge our generational gap is extremely important. Understanding how to effectively communicate among generations is important for everyone, as we interact with each other on a daily, continual basis.

I was interested to read a blog post in the Huffington Post about Millennials. The author attended a conference on Millennials where the CEO of The Center for Generational Kinetics, Jason Dorsey, was one of the speakers. The top five interesting perspectives and opinions the author noted in a humorous way are:

  1. Eye contact is an increasingly unnatural behavior for Millennials.
  2. Emails are OK. Just don’t expect them to read more than the subject line.
  3. Phone calls are often seen as an invasion of privacy, so don’t call them unless your name is Mom. (And even if it is, they will still forward you to voicemail — which they never check.)
  4. They will not read blocks of text. Save the effort.
  5. They are visual thinkers and learners. Do not try to educate them or sell them something using a long, linear approach.

I have learned from my own experience that most of these examples ring true. According to Curt Steinhorst, the preferred methods of communication for millennials Millennials are text, email, and social media. Think about the technology this generation is immersed in every day and how it shapes their context. Thinking about the popularity of YouTube makes you realize how the internet has shaped this generation into visual thinkers and learners.

Inc. recently listed nine tips for communicating with Millennials which not surprisingly, corresponds with the perspectives listed above.

  1. Keep it brief, but meaningful
  2. At the same time, provide detail
  3. Choose the best medium for communication
  4. Understand the 24/7 communication cycle
  5. Communicate the path to career growth
  6. Don’t condescend or make jokes about age
  7. Demonstrate fairness in the workplace
  8. Commit to a social bottom line
  9. Nurture their passion

Twitter has helped Millennials convey their thoughts in 140 characters or less. They appreciate brevity. At the same time, they are outcome driven and want to know what the end result should be and what they need to do to achieve it. Just be concise!

One of the largest generation gaps is in the workplace concerns how we work. Baby Boomers measure work ethic by hours in the office, where they are seen. Millennials exist in a world where communication is available 24/7 and productivity can occur outside the office walls. That same technology has broken down hierarchy for this generation. They can communicate via social media with celebrities, politicians, and even the president. They see no issue in approaching the CEO with their ideas and opinions. Millennials want to be taken seriously, and sometimes believe they should be promoted within two years. It’s important to let Millennials know how they are doing and what their career path looks like. Finally, Millennials are passionate. Communicating how they can meaningfully contribute to a greater good is very important to them.

Great teams can be formulated from the experience of the Baby Boomers and the enthusiasm of Millennials. Understanding where each generation comes from will help us better communicate and foster wonderful multigenerational relationships.

If you are a Gen X’er or Baby Boomer, what key strategies do you have for effectively communicating with Millennials?

If you are a Millennial, help us be better communicators. What do want us to know about communicating with you?

Make this the year you start to bridge those generation gaps. You may be surprised by the results.

Lisa Brown, CPA, CGMA, is an assistant professor, accounting & finance, at Indiana Tech in Fort Wayne. Among the topics she teaches are accounting principles, corporate taxation and corporate finance. Brown previously worked in public accounting for Balestra, Harr, Scherer, CPAs in Ohio and in industry for an Ohio school district and Wright-Patterson Air Force Base. She is a campus presenter for the Indiana CPA Society and a member of the Fusion Network, a group of Indiana CPA Society member CPAs who blog on trends, new ideas and innovation in the CPA profession.  

#1: Stop Conforming

January 4, 2017By David Griffiths, Ph.D.Blog, Future of Work and Change Management, Talent Management and People

End the dreaded annual performance appraisal

Every year managers are required to provide an overview of staff performance. Each staff member’s performance is rigorously analyzed and, in many cases, an individual’s yearlong efforts are reduced to a series of numbers representing output. It is estimated that the cost for each appraisal, on average, equates to four to 10 hours of time per employee, depending on the type of analysis used. You are spending approximately $120-$400 per employee in salary-based cost.

Have you ever stopped to consider why you make your staff go through this annual performance appraisals process – one that originates from World War I “merit rating” systems developed by the U.S. Army? Created to identify and dismiss poor performers, about 60% of U.S. companies adopted this system after World War II, with 90% of companies adhering by the 1960s, according to Harvard Business Review.

Now, consider some of the challenges with the annual performance appraisal process.

  • Annual appraisals do not fit with the nature of today’s business environment. The environment is constantly changing, requiring adjustments across the year. So, why do people set rigid 12-month performance targets?
  • Performance appraisals tend to drive competition at the cost of collaboration.
  • Performance is a result of behaviors, processes and structures within the organization. People don’t intentionally set out to deliver a poor performance, therefore, when an employee is falling short, in terms of performance expectation, why do appraisals only focus on the individual performance? What about the processes and structures (the management) that contribute to the performance?
  • The recall of performance is impacted by primacy (performance that happened early in the year) and recent (performance that happened close to the appraisal process), while much of what happened in the middle of the year is forgotten.
  • Managers and reports can suffer from a number of unconscious biases, such as: availability cascade, the bandwagon effect, bias blind spot, choice-supportive bias, conservatism, fundamental attribution error, courtesy bias, the Dunning-Kruger effect, focusing effect, illusionary correlation, negativity bias, optimism bias, and that is just the start. So, why do organizations tend to place so much stock in the opinion of one person, the line manager?
  • The process is often opaque and alienates employees, increasing the risk of talent loss.
  • Annual appraisals can cause tension between a line manager and his or her direct report.
  • If you are interested in the acquiring and retaining the best talent, shouldn’t you be more interested in developing people, as opposed to ranking them?

All this considered, why do you persist with annual performance appraisals? Why persist with a highly subjective, judgment-driven process that costs, on average $1,200-$4,000 per group of 10 employees; to say nothing of productivity loss due to tensions created between line manager and direct reports?

Instead, decide to forgo annual performance appraisals for ongoing performance conversations. Engage and involve your employees in the design of this new performance feedback processes. Just imagine what you might create.

This is my challenge to you this year: Stop Conforming. Challenge your traditional beliefs and become a talent leader. You are competing in a talent-led knowledge economy, where talent is the currency of longevity. To acquire and retain the best people, you need leading-edge talent management processes.

David Griffiths, Ph.D. is the award winning managing director of K3-Cubed Limited, a consulting, advising and training company that specializes in organizational development, knowledge management, and strategic and change management. Griffiths has been an advisor to the Indiana CPA Society since 2012 and was the driving force behind the creation of the CPA Center of Excellence®. Griffiths is an internationally recognized author, blogger, learning design advisor and thought leader.

Do you want to know how you’re doing? Find out with this online self-assessment tool designed specifically for CPAs and related professionals.

Learning, even if it doesn’t “count”

December 8, 2015By Jess Halverson BowyerBlog, Future of Work and Change Management, Learning and Career Development

But, as I was filling out the audit form, it got me thinking. What did I learn from the courses I took over the last three years, and did it make me a better CPA? I picked up some good tidbits of knowledge along the way, learning about new regulations, etc., but one thing I realized was that the things I really learned the most from over the last three years that made me a better CPA didn’t even count toward my license renewal requirements.

Over the last three years:

  • I was on the INCPAS Board of Directors, and learned plenty of things about the CPA profession and about public accounting that I never would have known working in industry. None of that knowledge counts for my license renewal.
  • I later joined the staff, and became staff liaison to the INCPAS Ethics Committee, and was responsible for fielding member calls, calls from committee members to help discuss possible ethical issues, and researched the Code of Professional Conduct and Indiana Accountancy Act to help answer those questions. A great learning opportunity, but doesn’t count toward license renewal.
  • I worked with groups of members to develop responses for various AICPA Exposure Drafts on professional issues, mainly related to ethics and Peer Review.  Again, great learning opportunities, and hopefully our responses helped enable better rules, but the time and knowledge gained doesn’t count toward license renewal.
  • I worked with a number of member committees to draft an Integrated Report for INCPAS. A whole new form of organizational reporting, and a great opportunity to learn and innovate, but again, it didn’t count toward license renewal.
  • I helped work with our Not-For-Profit CFO peer group, facilitating meetings on various topics that enabled great discussions and knowledge sharing among the group members. A great way to learn, but it didn’t count toward license renewal.

I fully believe that as professionals we need to learn and grow throughout our careers, but is sitting in a classroom for 8 hours or watching a webinar the best way to learn and grow? For some things like an A&A update, maybe a class is, but there are so many other ways we learn new things that help us grow throughout our careers, whether it’s working with committees, being involved in a mentoring relationship or a myriad of other possibilities. Why are we stuck on reporting hours spend in a classroom?

Most of the time, if you look around the room, you will find at least one person looking at their phone or computer. That’s not learning, that’s just fulfilling an arbitrary statutory requirement. We need to find a better way to show we’re growing as professionals. What are your thoughts?

Thank you for a great year

November 26, 2015By Jess Halverson BowyerBlog, Future of Work and Change Management, Innovation
This year, we give thanks for you. The CPA Center of Excellence® has had a great year – all due to the hard work, support, volunteering, encouraging notes, smiles, jokes, and great ideas of Indiana CPA Society members, the INCPAS staff, our friends and supporters from other states, our CPA volunteers, the INCPAS Board and everyone with us on this journey.

A few highlights: 

Happy Thanksgiving.

This is what real change looks like

November 24, 2015By Jess Halverson BowyerBlog, Future of Work and Change Management, Learning and Career Development
Real change starts small.

One of the biggest changes to continuing professional education for CPAs in decades took it’s first tiny, deliberate step on Friday when the Indiana Board of Accountancy approved language for an Ethics requirement rule change, proposed by the Indiana CPA Society and CPA Center of Excellence®. 

While actually changing the Ethics requirement could take up to a year via the rule-making process, this approval of language marks real progress towards getting competency-based CPE on the books, and Indiana is the first state doing this.

The proposed rule change keeps the current ethics requirement in place, which is to complete four hours of ethics education in a classroom setting. The competency-based part comes in the addition of two new options to meet the requirement: 1) completion of a competency-based ethics course; or 2) achieving verified, relevant experience in ethics through a non-compensated role with a professional or trade organization.

Why is this important? Because competency-based education is about showing what you’ve learned, not about how long you were sitting in a certain seat – which is really all that the hours based model measures. It measures that you were there, it doesn’t give you credit for what you actually learned — and we all know that sometimes you learn the most when outside of a classroom setting, like when serving on the INCPAS Ethics Committee.

Competency-based courses are designed in a way that you must demonstrate what you have learned by participating in the course in order to finish it. Depending on how you learn it might take you six hours or it might take you 10 hours to finish a course designed to average out to eight hours. In an hours-based model, you would then essentially be punished for being a quick learner. And on the flip side, if you find the material interesting and want to do extra research on your own, there’s no way to demonstrate what you’ve learned.

While other states have been experimenting with a nano-learning model, this only takes the hours based model and breaks it down into smaller chunks – which is merely breaking an outdated hours-based system into a minutes-based system.

What we are doing here in Indiana is to actually change the system to include competency- and experience-based learning.
The reason we are doing this really struck me the other week when I overheard a CPA member ask INCPAS staff how many CPE hours he would get for attending a conference, as he had to leave a half hour early. Here’s a grown up, a professional who has to track the minutes he is there, not allowing for whatever reason he was leaving – to finish something up at work, to pick up his kids, to attend to life – who knows. But whatever the reason, it seems obvious this CPA deserves a more flexible option that allows him to show what he actually learns, not how many minutes he was present. If it were an online interactive competency course like the ones we offer, he could have finished up his work after he took care of his other obligations, and still have gotten the credit.

There have been so many advances in research about how adults learn and in technology allowing for high quality online education that just weren’t around when the current hours-based CPE model was put into place.

As supporters and ambassadors for one of the most important professions, we feel pressed to do more, to utilize this new research and these new technologies to create a better opportunity for CPAs to learn.

Don’t our CPAs deserve a real change?

Have You Had Enough?

March 20, 2015By Jess Halverson BowyerBlog, Future of Work and Change Management, Learning and Career Development

Have You Had Enough?

Regulation of the CPA profession in the U.S. needs a transformation. Mind you now, not a change – a TRANSFORMATION. Yes – a major overhaul. We need to look at this system in a different way. We need to look at this system from a 21st century perspective. There have been ongoing attempts during the entire history of the CPA profession in the U.S. to change. To align all of the jurisdictions throughout the U.S. Progress has been made. But, the profession will never get to the goal of having a uniform system of regulation in the future as long as we wrap our collective arms around the current system.

Okay, some of you are already saying that there is no way you can support a national license for the profession. That’s fine. It isn’t being suggested here. Bear with me.

Let’s look at some fundamental components of the current system. For example, the educational requirement for the uniform CPA Exam. More than 50 years ago, recommendations were made to enhance the educational requirements for CPAs. Thirty years ago (1984) Florida became the first state to enact a 150 hour educational requirement to qualify for the exam. Over the years, states were added to the list. Then, sometime around the time as the exam became computer-based (2003), some states made amendments to allow a candidate to sit at 120 hours but not certify until 150 hours. Now we have some “pure 150 hour” states and some “120 /150 hour” states. Crazy. Employers are interested in hiring the most qualified candidates. It doesn’t matter how many hours they have and if they took the exam before, in between or after the hours were earned.

Do I need to mention a fairly wide variety of experience requirements across the U.S.? CPE requirements may even be more inconsistent. Especially in terms of things like state-specific “ethics” and A&A requirements (how many hours do you need?). And what about the various sign in /sign out requirements? One hour increments, half-hour increments and now “nano-learning.” Would it make sense to forget all of that and simply focus on a competency-based learning system for professional development?

A recent effort to achieve uniformity is focused on attestation. Yep – attestation. You may think that you know how attest is defined. As we enter 2015, we have maybe 21 states that have it “right.” At least for the time being. By the time the 50th state gets it in statute, the model will have changed – again. And yes, I do know that there are 55 jurisdictions, not just the 50 states. Besides, there IS a definition of attest – it’s in the professional standards. Let’s not forget it seems that more and more users are really not interested in that attested-to-historical financial information. They might be more interested in an integrated report. Is the profession going to try to regulate that on a state-by-state basis?

The list could go on and on. Who can be owners? What can a firm call itself? Make up your own list. Or, I’m pretty sure you can at least add to the list here.

The environment that the profession operates in drives change. It’s called the market. The market is a very strong force. CPAs will respond to the market as best as they can. Some without regard to what a particular state statute says. These aren’t bad CPAs. They want and need to remain relevant and they need to deliver value. Firm business models are changing. The value proposition of CPAs in business and industry is evolving. How work gets done is changing, and a lot of that is driven by technology and user (market) expectations. Specialization is demanded by ever increasing complexity. Oh yeah … and globalization. And I am sure that you have noticed that the velocity of all of this change is accelerating. We shouldn’t kid ourselves here, U.S. jurisdictions likely won’t be able play in that arena. It’s true. State legislators and regulators won’t be able to keep up with the rate of change.

State-based regulation has served the U.S. CPA profession well. It has served the public well. However, in today’s environment it can’t keep pace. The legislative and regulatory process is designed to be very deliberate. And rightfully so. The question then becomes what is a realistic alternative? Well, probably not a national license administered by the federal government. Again, a system that is too deliberate in a very dynamic and ever changing environment.

Self-regulation may be a practical answer. Or perhaps a reasonable alternative is market-based regulation. Call it deregulation. Call it whatever makes sense, but continuing to embrace a state-based system of professional regulation for CPAs does not serve the public well. And the current system doesn’t recognize the need for the profession to be responsive, adaptive and agile in a business environment that won’t wait for some state to get the definition of attest amended. It could be argued that a move away from the current system will become an economic necessity.

We will need to talk about it. We will need to argue about it. It likely won’t be pretty. How many “problems” and “challenges” might be eliminated? What resources could be redirected to truly value-adding activities as opposed to antiquated compliance issues? The current system will become increasingly irrelevant as we move farther into the 21st century. It has to change.

Is Succession Planning on Your Radar?

March 20, 2015By Jess Halverson BowyerBlog, Future of Work and Change Management

Is Succession Planning on Your Radar?

As the Baby Boomer generation continues to enter the retirement phase of their lives, the need for effective succession planning is becoming more and more critical for those in our profession. This is particularly an issue in the service industries, where the value of your asset is based upon intangibles. These would be comprised of many things, including:

the relationships you have built over years with your clients;
the trust they have put in you and your expertise to help them in their time(s) of need;
your intellectual capital earned over years;
and your brand within the community.
To maximize the value of these items, as well as the protection of your clients’ interests, it is critical to design and implement an efficient and effective succession plan.

The AICPA Succession Planning Resource Center provides CPAs with a great starting point to think about how to design your plan. The need to use a resource like this is clear. Yet according to the AIPCA website, as of 2012, only 46% of multi-owner firms and 6% of sole practitioners have a written succession plan.

These statistics are not surprising to me as I have experienced it in my own professional life. For the last 14 years I worked closely with highly successful financial planners, many times talking with them about their business plans and what their aspirations for the future were. During that time, I discovered these consistent steps to the succession planning process:

Step 1 – Do you have a current business plan?

You would be surprised at the number of successful business people who have not put a plan together. It doesn’t have to be super-detailed, but it should involve your revenue and expense goals for the coming year, and the plan on how to achieve it. The best plans don’t just look at the current year, but go out for at least 5 years.

Most plans should be focused on three levels:

a “worse than expected” scenario (i.e. business is down 20%);
an “expected” scenario (revenue and expenses go according to plan); and
a “better than expected” scenario (revenue is 20% higher than expected).
To do this, think about your current client listing and economic conditions. Will there be significant changes to either during the time horizon being looked at?

Having this plan will help answer the next question …

Step 2 – At what point do I want to start transitioning the business to someone else?

A business plan will help direct you as to when the right time to start looking for that next generation of leader should be.

Step 3 – How do I want the transition to look and how do I value my practice?

You need to answer the question of how you want your succession to be: do you want to sell and walk away from the business, do a long-term succession, or something in between. Knowing what your business plan is and the time of when you want to start transitioning the business will help show you how this transition should look. Additionally there are a variety of resources available to help value your practice and the most effective way for you to realize that value (lump-sum payment, over time in payment etc.).

Step 4 – Where do I go to look for this successor?

How you want the transition to look will help guide as to where to find your potential successor. Resources like the CPA Center of Excellence® and peers in the CPA profession can help as you with planning and to look to find the right person for your needs.

This is certainly not the only way to do a plan. There is no cookie-cutter pattern on how to do this. The key is to just start.

I would also encourage you to start this planning regardless of your stage in life. We typically think only those who are within 5 years of retirement should have a succession plan. My experience however tells me that you should always plan for the unexpected, and that part of being a smart business owner is to make sure that you and your family are protected. A key piece of this is planning for the future.

If you haven’t yet started down the path of a succession plan, I would encourage you to do so. There is no better time than the present.