1. Building Bench Strength
Presented by: Art Kuesel
LEA HR SIG
June 7, 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
Bench Building Programs
Boosting the Bench
Timeline, Contingencies and Best Practices 3

4. MP Survey Results

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

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

7. Succession Planning @ our Firms
5. Please rate your firm’s “bench”:
18% = GREAT (more candidates than partner slots)
73% = GOOD (1:1 ratio)
9% = 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?
86% = Yes
14% = No

9. Succession Planning @ our Firms
7. What is your firm doing to build the bench and develop top talent?
86% = Mentorship
64% = External development programs
59% = Personal development plans for rising stars
50% = 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?
41% = Experienced lateral hires aligning with our current practices
45% = Internal development programs (XYZ University)
41% = Real-time feedback
41% = Performance Coaching
36% = Experienced lateral hires bringing new practices/niches

11. Succession Planning @ our Firms
8. How is your firm fueling growth?
95% = Service line expansion
86% = Active client development
62% = M&A
48% = Practice innovation
38% = Lateral hires
29% = “Productization”
??% = BDE’s
??% = Other?

12. Succession Planning @ LEA Firms
9. My Firms biggest Succession Planning Challenge:
(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. Industry Trends

16. #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

17. #2 Population Size by Generation
Availability of Accounting Grads
Source: Pew Research

18. #3 Labor Force Size by Generation
Population Size

19. #4 Availability of Accounting Grads
Source: AICPA
2003: 53,000
2009: 35,000

20. #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.

21. #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>>>>

22. What’s in a Comprehensive Succession Plan?

23. 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”)

24. Your Succession Planning Matrix

25. 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

26. 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

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

28. 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
???

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

30. 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

31. Building your Bench

32. 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.

33. 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

34. 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

35. 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

36. 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

37. Who’s on the Bench for 12/31/20

38. Who’s on the Bench for 12/31/25

39. Bench Building Programs

40. “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

41. “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

42. “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

43. Boosting the Bench

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

45. 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

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

47. 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

48. 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

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

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

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

52. Timeline, Contingencies and Best Practices

53. 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.

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

55. 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!

56. 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

57. External Programs
Rainmaker
Upstream Academy
The Growth Partnership

58. 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

59. Find Resources: kueselconsulting.com/LEA

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