Almost everything we do in the accounting profession for our clients and firms involves a little art and a little science. Succession planning, which continues to pick up steam in the current environment, is no different. Let’s look at the difference between art and science.
- Science: Associated with proving or convincing by raising the question of “how.”
- Art: Associated with emotions and looking into the “why.”
As accounting professionals, we’re very comfortable in the science arena. Science is straightforward and something you can dictate. Regarding succession planning, this includes mandatory retirement ages, documented succession strategies and exit plans, and payment agreements.
The art requires you to look beyond the science to figure out what’s best for the firm when looking forward. That includes considering if there will be gaps in talent and service and what analysis you can do to prepare for and address them. These decisions must be based on the culture of the firm. That’s a mix of historical perspective (including how to respect and honor the longtime partners involved with establishing your firm), current culture, and where you’re trying to go.
From personal experience, most firms focus primarily, if not exclusively, on art or science. The question is how to identify the attributes, benefits, and challenges of each approach taken in isolation. The challenge is finding the right intersection.
Here are the pros and cons of each:
Science
- Pros: Predictability. The accounting profession is unique compared to other professional services, such as law firms with state bar regulations that prohibit the ability to practice after a certain point. While not under the same bar requirements, accounting firms can still set a formal process that allows you to plan effectively.
- Cons: You have high-performing partners who could provide great value to your firm but having them stay around longer may result in losing younger team members looking to advance their careers.
Art
- Pros: You can look at each individual uniquely to see how they contribute to your firm and its strategy. You can care less about their age and the tangible retirement process and more about helping the firm and your clients.
- Cons: Lack of predictability. Not having a set process can leave you in a state of confusion and wondering about the future. One example is not knowing when you can name or elect someone partner because you don’t know when the other will retire.
As you see, the pros and cons of each are almost entirely opposite. This is why you need both art and science. Every situation is unique, and I encourage you to have a discussion rather than saying, “1+1=2, and we’re done.”
Here are a few dimensions that apply to both art and science you should consider when creating your succession strategy:
- Leadership
- Ownership
- Infrastructure
- Technical
- Client service
- Emergency/Contingency (impact of mental health issues)
- What else?
Each firm must evaluate the depth of each of these criteria with an eye on the art and science, but no firm is exempt from thinking broadly and deeply. Determining and executing your succession strategy is no easy task, but it’s a reality in our profession. How can I help set you and your firm up for the future?