6 Steps to Sustainable Succession Management

By Robert Traphagen, CPA, CGMA, Traphagen CPAs & Wealth Advisors – December 22, 2021
6 Steps to Sustainable Succession Management

You can't spell "succession" without "success." So why is succession often such a challenge for CPA firms? CPAs prioritize providing quality services to foster client relations and grow their firms; however, they relegate succession to the back burner. According to the 2020 Succession Planning Survey conducted by the AICPA Private Companies Practice Section and Succession Institute LLC, more than half of multi-owner firms (55 percent) said they are currently expe­riencing succession challenges, up from 26 percent in 2016, the last time the survey was conducted. Succession, in a sense, is viewed more often as an end game by many firms rather than a critical component of firm management.

It is imperative to focus on the future of the firm by adopting a strategy that builds sustainability. This will add value and allow a firm to be in a position of strength to determine its own destiny — be it a sale, merger (upstream/downstream), acquisition or internal succession supporting a legacy approach.

Here are six steps to creating a best-practice sustainability plan.

1. Identify the Firm’s Culture

Karl Nelson, a New York Giants Super Bowl 1986 winner, said the following when asked how the Giants won that year: “Each player on that team knew their role as well as each other’s role on the team. We knew who we were as a team, and where we were going!” Every firm should know, live and breathe its culture. Ask and answer the following questions:

  • What is the firm’s mission statement? What does the firm actually do?
  • What is the firm’s vision? Where is the firm going?
  • What are the firm’s core values? Who is the firm and how does it operate?

2. Build Infrastructure

Every structure or entity starts with a strong foundation. The following initiatives can help firms develop a pipeline of talented, tech-savvy young professionals to build upon, nurture and grow with the firm:

  • Offer a college ambassador program.
  • Develop an onboarding process.
  • Provide training and coaching.
  • Promote professional networking for lateral growth.

3. Identify Leadership

Identifying emerging leaders is an essential component of any successful organization. Historically, many very successful small to midsize firms were founded by partners who left larger firms in part because they were not looked upon as leaders at these firms. Focus on the firm's leaders by using the following approach:

  • Adopt a Firm Competency Model (competency.aicpa.org/media_resources/209523-cpa-firm-competency-model) and communicate competencies that are needed for success.
  • Establish a career path.
  • Provide a road map for partner criteria.
  • Offer alternative leadership roles such as non-equity partners and devel­opmental managers.

4. Professional Development

The best firms invest in their staff’s professional development. Firm success is dependent upon having a system to monitor goals and commitments. Firms that maximize the abilities of their members have a competitive advantage. Management is a learned skill. Employ the following tactics:

  • Use periodic performance management to provide feedback.
  • Invest in entrepreneurial development (e.g., emerging leaders conferences, Dale Carnegie seminars).
  • Delegate and empower others.
  • Implement performance-based compensation.

5. Invest in Technology

The accounting profession is rapidly changing due to new technologies. The accountants of the future will need to evolve with the changing profession. As David Ben-Gurion says, “It’s not enough to be up to date, you have to be up to tomorrow.” Consider the following actions:

  • Fully leverage technology.
  • Consistently review and update systems.
  • Develop IT specialization within the firm.
  • Facilitate technical upskilling at all levels.

6. Client Transition

A successful transition should give clients peace of mind in knowing there is conti-nuity to meet their business and personal needs without disruption. According to the Succession Institute, “Orderly succession is about creating a system that supports change without change; organizational changes should always come from strategy redirection, not vacancies.” Sustainability is a success strategy, a most rewarding and exciting one; it allows a firm and its team members to change and grow. Components of this include the following:

  • Developing a team service
  • Having a Build a Village (BAV) versus Eat What You Kill (EWYK) mindset
  • Building brand loyalty versus partner loyalty
  • Redefining roles and responsibilities

Succession is a process that can take years, and it is never too early to start planning.


Robert J. Traphagen

Robert J. Traphagen

Robert Traphagen, CPA, CGMA, is the managing partner of Traphagen CPAs & Wealth Advisors. He is a past president of the NJCPA and is a trustee of the NJ-CPA-PAC. He can be reached at robert@tfgllc.com.

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This article appeared in the Winter 2021/22 issue of New Jersey CPA magazine. Read the full issue.