Will the success of your company continue once current managing partners are no longer the leaders? It is a question of tremendous importance that too often gets put on the back burner. But, the worst-case scenario is avoidable. Here are the reasons why your firm should move succession planning to the front burner.
It’s probably worse than you think
There are three kinds of firms when it comes to succession planning.
- First, there are ones who have a solid succession plan with concrete steps for leadership development and financial transitions. They are a rarity.
- Second, there are the ones that have no plan at all. Partners and staff are so fixated on client needs and bringing in new business that there hasn’t been any real discussion about the next generation. These firms know they need help.
- And third, and in some ways, the worst kind, are the ones that have some vague idea for how succession could happen, but unfortunately, their “idea” is often more like a wish-list rather than a concrete step-by-step plan.
Why the third kind is so risky
I see this group as one of the worst off. They believe they have enough for right now and do not openly discuss needing help. Your firm falls into this category when:
- You have a list of names but no execution steps. Leaders need to be fostered. Are your leaders of today truly committed to mentoring the staff and developing them as leaders for tomorrow?
- You are clinging to outdated beliefs. “We just need that one good younger person to come in who can buy us out.” Is that your strategy? Here's a dose of reality: That "young savior" pool is shrinking. On the other hand, as baby boomers age and want to get out, the market gets flooded with sellers.
- You assume the less tenured value succession but do nothing to promote it. Put yourself in the shoes of your staff with partner potential. Knowing what they only know right now, would your young talent want to buy you out?
- You have managing partners who are great at rainmaking but not managing. Yes, your entrepreneurial partners are the achievers who are great at growing the client base. However, firm management is not their forte, and an action-based succession plan does not get off the ground.
- You have not synched the partner buyout and buy-in plans. Partner retirement planning, which includes holding discussions with each senior partner about their future intentions, and creating a predictable progression for client transition, all through the lens of making the math work, is necessary.
- None of your plans are in writing. Enough said.
Bottom line: Even businesses built on financial services are susceptible to failing at succession planning. Do not let that happen to your firm. Schedule a meeting with me to discuss our consultative services to help you plan for future succession (and so much more!).