1. Building Tax Bench Strength and Driving Growth for Succession
Presented by: Art Kuesel
LEA Tax Partner SIG
June 6, 2016

2. Art Kuesel, President Growth Plan Development/Implementation
EXPERTISE (Cont.)
Growth Plan Development/Implementation
Managing Partner Coaching
Sales & Marketing Recruiting
Partner Roundtables
STREET CRED
Top 100 Most Influential Person in Public Accounting: 2014
In-house and external experience
Clients include scores of T250 Firms including a third of the T100
Frequent writer and blogger for Accounting Today
Accomplished speaker and presenter on growth trends
EXPERIENCE
Sales Executive
3 $225M CPA firm
5 $40M CPA firm
6 years at PDI/Koltin Consulting
3 years at Kuesel Consulting
EXPERTISE
Leadership and Sales Coaching
Sales/Marketing Training

3. Today’s Discussion Survey Results Industry Trends
What’s in a Succession Plan
Your Succession Planning Matrix
Building your Bench
Starting the Various Levels
Getting them Ready: Skills & Plans
Timeline, Contingencies and Best Practices 3

4. Tax Survey Results

5. Succession Planning @ LEA Firms
1. What percentage of LEA firms have a formal, written succession plan in place?
LEA Yes = 55%
Tax Yes = 47%
Nationally/Top 250 Yes = 30% (AICPA)
2. Does your firm have a mandatory retirement age?
LEA Yes = 91% Tax Yes = 90%
Nationally/Top 250 Yes = 64% (Rosenberg)

6. Succession Planning @ LEA Firms
3. We want to remain independent?
LEA Yes = 91%
Tax Yes = 95%
Nationally/Top 250 Yes = “vast majority”
4. What percentage of your partners will retire in the next five years?
LEA 1-24% = 45% Tax = 55%
LEA 25-49% = 55% Tax = 35%
50-74% = 0% Tax = 10%
75+% = 0%

7. Succession Planning @ our Firms
5. Please rate your firm’s “bench”:
LEA 18% Tax 14% = GREAT (more candidates than partner slots)
LEA 73% Tax 76% = GOOD (1:1 ratio)
LEA 9% Tax 10% = FAIR (maybe 1 rising star)
0% = POOR (bench is empty)

8. Succession Planning @ LEA Firms
6. Do your firm’s “rising stars” know what it takes to be a partner?
LEA 86% Tax 76%= Yes
LEA 14% Tax 24% = No

9. Succession Planning @ our Firms
7. What is your firm doing to build the bench and develop top talent?
LEA 86% Tax 71% = Mentorship
LEA 59% Tax 62%= Personal development plans for rising stars
LEA 41% Tax 62%= Performance Coaching
LEA 64% Tax 57%= External dev. Programs
LEA 50% Tax 57% = Internal development programs for rising stars (XYZ Path to Partner Program)

10. Succession Planning @ LEA Firms
7. What is your firm doing to build the bench and develop top talent?
LEA 45% Tax 52% = Internal development programs (XYZ University)
LEA 41% Tax 47% = Experienced lateral hires aligning with our current practices
LEA 41% Tax 43%= Real-time feedback
LEA 36% Tax 33%= Experienced lateral hires bringing new practices/niches

11. Succession Planning @ our Firms
8. How is your firm fueling growth?
LEA 86% Tax 95% = Active client development
LEA 95% Tax 86% = Service line expansion
LEA 48% Tax 49% = Practice innovation
LEA 62% Tax 48% = M&A
LEA 38% Tax 43% = Lateral hires
LEA 29% Tax 19% = “Productization”
Giving great service to enable XS and Referrals
??% = BDE’s

12. Succession Planning @ LEA Firms
9. My Firms biggest Succession Planning Challenge (LEA FIRMS):
(4) Finding the time to develop/train future partners especially in BD/rainmaking
(3) Getting Partners to Transition Clients by 65
(2) Fueling Growth
(2) People Retention
Building the Bench with Laterals
Effectively using BDE’s

13. Succession Planning @ LEA Firms
9. My Firms biggest Succession Planning Challenge:
Aligning all Partners under Common Vision/Strategy
Keeping outgoing partners busy during last three years while work is being transitioned
Equity vs Income Partners (Income want it handed to me vs growing it)
Not enough 4-8 year talent to allow rising stars at SM level to become partner

14. Succession Planning @ LEA Firms
9. My Firms biggest Succession Planning Challenge:
Commitment of NG partners to relationship development, problem solving, and consulting
Finding good leaders 10 years out
Gap in business strategy knowledge among HP’s

15. Succession Planning @ LEA Firms
9. My Firms biggest Succession Planning Challenge (TAX):
(5) Outgoing partners not fully willing to transition or step aside for benefit of firm
(3) Continuously feeding the talent pipeline to address succession
(2) Future partners are not rainmakers
Finding young talent that wants to put in the time and effort and doesn’t feel entitled right away

16. Succession Planning @ LEA Firms
9. My Firms biggest Succession Planning Challenge (TAX):
Rising stars have the desire and ability but are overall quite inexperienced
No time limit for selling of equity
Developing specialized niche services
Hiring and maintaining seniors and managers to allow senior managers and partners to optimize roles
Timing: several big books are transitioning at once

17. Succession Planning @ LEA Firms
9. My Firms biggest Succession Planning Challenge (TAX):
The gap between partners with years of experience and partners with years of experience
Some niches in great shape for succession while others not so much. Who’s job is it to push the issue?

18. Industry Trends

19. #1 Average Age of Equity Partners
In 1995: 46
In 2000: 48
In 2015: 52
Percent of Partners 50+ in 2015
61%
Source Rosenberg Survey and IPA

20. #2 Population Size by Generation
Availability of Accounting Grads
Source: Pew Research

21. #3 Labor Force Size by Generation
Population Size

22. #4 Availability of Accounting Grads
Source: AICPA
2003: 53,000
2009: 35,000

23. #5 MP Job description
Turn lights 5:05am, client service, business development, people issues, partner issues, technical knowledge, physical space issues, financial management, hiring decisions, niche expansion, competitive intelligence, public relations, client retention, technology, vision, leadership, sports tickets, vendor relationships, industry knowledge, referral sources, recruiting and retention, legal and liability issues, lateral hires, M&A, partner performance, realization, profitability, strategic alliances, partner compensation, succession planning, and turn lights 9:27pm.

24. #6 Perceptions Our perception of the immediacy of this issue
Our perception of the need to help/develop the next generation
Our perception of the work ethic or style of the next generation of partner
Their (NG) perception of our firm
Their perception of the partner role
Their perception of the current partners
Our perception of our options
And the list goes on>>>>

25. What’s in a Comprehensive Succession Plan?

26. What’s in a Succession Plan?
Strategic Vision: Years (vision, mission, size goal, services, geography, niches, etc.)
ID retirement scope for each current partner
Identify people development needs to fill retirements and meet growth targets
Assess gaps & how we’ll fill them
Define criteria for future partners
ID partner candidates and plans for each
Buyout plan, buy-in plan
Client transition plans for “A” and “B” (process for “C”)

27. Your Succession Planning Matrix

28. Step 1: Your Partner Age Matrix
Partners & Ages
2016
2017
2018
2019
2020
Jim 64 65 66
Nancy 62 63
Mike 53 54 55 56 57
Graham 49 50 51 52
Jennifer 42 43 44 45 46

29. Step 2: Revenue/Partners Needed
Year
Revenue Growth at 9%
Partners Desired
Fees/
Partner
Retiring
Needed
Need to Prep
2016
$10M 5
$2M
>
2017
$10.9M
$2.2M
2018
$11.8M 6 1 2
???
2019
$13M
2020
$14M 7

30. > What Percentage of Managers “With Potential” Actually Make Partner?
10%
33%
50%
75%
100%

31. Step 2: Revenue/Partners Needed
Year
Revenue Growth at 9%
Partners Desired
Fees/
Partner
Retiring
Needed
Need to Prep
2016
$10M 5
$2M
>
2017
$10.9M
$2.2M
2018
$11.8M 6 1 2
3-4
2019
$13M
2020
$14M 7
???

32. > What Percentage of Supervisors “With Potential” Make Partner?
10%
33%
50%
75%
100%

33. Step 2: Revenue/Partners Needed
Year
Revenue Growth at 9%
Partners Desired
Fees/
Partner
Retiring
Needed
Need to Prep
2016
$10M 5
$2M
>
2017
$10.9M
$2.2M
2018
$11.8M 6 1 2
3-4
2019
$13M
2020
$14M 7
OMG

34. Building your Bench

35. So, Who’s on the Bench for 12/31/18?
2 spots open and we have 2 potentials…
Our Statistics tell us that up to 50% will:
Get recruited away, leave the profession, be terminated, have a major family change, have a personal life crisis, doesn’t end up being partner material, won’t delegate, can’t develop business, can’t develop people, cause internal issues, etc. and so on…
So We Ideally Need 3-4 Partner Potentials in Development…NOW.

36. Building the Bench for 12/31/18
Finding 1-2 more…
a) Accelerated development of YP’s with HP
8 years to partner? Why not!
There is no law that says it needs to be years “just because that’s the way it was for me…” (In fact, we can’t afford that luxury right now)
Create a customized internal plan* for your HP’s that are a bit “green” but are clearly partner material
Plug these people into external programs or internal programs earlier
ADVOCATE and SPONSOR

37. Building the Bench for 12/31/18
Finding 1-2 more…
b) Laterals/Experienced Recruitment
Retained search firm – with acute target(s) in mind
Recruiters on-staff
Staff communication and bonuses to recruit their friends
Personal talent pipelines – all levels
Boomerangs (geography and firm)
WHITE GLOVES OFF

38. Building the Bench for 12/31/18
Finding 1-2 more…
c) Rewrite the Requirements
Non-Equity
PT, Virtual, Flex, 70%
Non-CPA’s?!?!?!
Look outside our market
Use better VALUE PROPOSITIONS

39. Building the Bench for 12/31/18
Finding 1-2 more…
d) M&A
If the talent matrix works – why not?
Just make sure the culture is right

40. Who’s on the Bench for 12/31/20

41. Who’s on the Bench for 12/31/25

42. Bench Building Programs

43. “Path to Partner” Program (2018’s)
An intense program that combines evaluation, mentoring, coaching, sponsorship, shadowing, training/CPE, leadership project(s), roundtable forums, information sharing, Q&A, and more
Eligible candidates are senior managers (or equivalent)
Usually time-limited (for example 2 years)
Monthly touch-points and quarterly review-points
Significant commitment from participants and direct supervisors
Annual self-review/review
Partner memo

44. “Leadership Development” Program (2020’s)
A program that combines mentoring, training/CPE, roundtable forums, leadership projects, sponsorship, information sharing, Q&A, and more
Eligible candidates are new managers
Usually time-limited (for example 4 years)
6x annual touch points
Moderate commitment from participants and direct supervisors
Annual self-review/review

45. “XYZ Firm University/Academy” (2025’s)
A program that combines mentorship and training/CPE
Everyone is eligible, no time limits
4-12x annual touch points
Limited commitment from participants
Limited commitment from direct supervisors

46. Boosting the Bench

47. Core Skills for Leaders in CPA Firms
Firm Development
Business Development
People Development
Client Development
Personal/Professional Development

48. Personal and Professional Development
Technical Expertise
Personal SWOT/Defining your Personal Leadership Style
Time Management 101
Accounting Firm 101
Credibility
Communication
Strong Work Ethic
Billable Hours/Realization Goals

49. Client Development Understanding your Role with the Client
Being a Proactive Advisor
Developing Relationships and Building Trust
Cross-Serving/Selling
Achieving Loyalty – and Referrals!

50. People Development Delegation and Leverage as a Development Tool
Team Building 101
Serving as a Mentor and Coach to your Team
Performance Management of Others
Delivering Effective Feedback

51. Business Development Building a Personal Brand and/or Niche
Capitalizing on your Biggest Asset: Clients
Developing a Referral Source Network
Succeeding at the Sales Process
Achieving a Goal for Originations

52. Firm Development Herding Cats: Leading Other Partners
Creating a Culture of Accountability
Strategic Planning 101
Leveraging Technology
Talent Acquisition
Niche Growth and Expansion

53. Each Plan will be Different
Firm Development
Business Development
People Development
Client Development
Personal/Professional Development

54. Plan as Foundation Objective Strategies/Actions Goals Advisors/Coaches
Process/Approach

55. Timeline, Contingencies and Best Practices

56. Service Line Expansion: Tax Centric
Percentage of Top 100 Reporting Growth in these niches/service line specialties:
SALT %
International Tax 78%
Estate/Trust/Gift 78%
Family Office 60%
Cost Segregation 45%
R&D Tax/ICDISC XX?
What other service lines can we develop from within Tax?

57. Starting the Conversation with 2018’s (Path to Partner Program)
We think you are partner material here at the firm…
We’d like to work with you on a plan that rounds out your skills in areas we see as important to being a successful partner at this firm…
Short and medium term we’d like to expose you to more opportunities to lead and demonstrate your strengths while propping up acute weaknesses…
We don’t have all the answers you are probably seeking – yet – but we will find them together
Ideally we’d have you ready sometime between X and Y…

58. Fueling Growth: Three Ingredients
1 Part Organic
+ 1 Part Laterals
+ 1 Part M&A
= Growth!

59. Client Transition Guidelines
A and B Clients = 3 Year Runway
Minimum of 4 Transition Activities/Year
Definitions apply!
Goal is that by 12th touch all aspects of relationship have transitioned.
Closely managed by MP
Smaller Clients/C Clients
Full “hand-off” as early as possible
Priority should be on A’s and B’s

60. Budget Path to Partner Leadership Academy XYZ University
$4,000-7,500 per candidate per year
hours/year per candidate
Leadership Academy
$1,500 - $2,000 per learner per year
hours/year per candidate
XYZ University
$1,000 – $1,500 per learner per year
50-99 hours/year per candidate
Does not include time and resources used in establishing the programs.

61. Reasonable BD Targets for P2P Candidates
Year 1: $50K
Years 2-3: $50-100K
Years 4+: $100K+
Requirements for Originations to be Made Partner:
$100K-500K
Yes, this is more than many of your current partners!

62. Deconstructing a Successful BDE
Culture, Culture, Culture
Previous Success
Consultative Selling
Knows our Services
Worked in a Partnership
Strong Network of Ideal Clients
2 Year Runway for Success
Motivating Compensation Structure

63. What goes into High EE Retention?
Vision and mission
Ongoing Learning and Development
Opportunities to lead
Flexibility
Recognition and Frequent Feedback
Great firm
Challenging assignments
Strong employer brand
Community responsibility
Innovation
Internal Forums for YP’s
Communicate the Career Track/
Advancement Opportunities
Great compensation and benefits

64. Learning and Development Directors
A person responsible solely for the development of our people and creating and driving programs (like discussed today)
Not to be confused with a HR Director, HR Manager, HR Coordinator, Office Manager, COO, etc.

65. External Programs
Rainmaker
Upstream Academy
The Growth Partnership

66. LEA Support LEA YP Group
Promotes professional growth and advancement for future leaders:
Conference Calls
In-Person LEA Conferences
LEA YP Volunteer Week
Best Practices Sharing

67. Find Resources: kueselconsulting.com/LEA

68. THANK YOU! Art Kuesel, President Kuesel Consulting, Inc. 312.208.8774