By Martin van Roekel, global CEO of BDO International
Recently I was in Las Vegas to attend the annual conference of the BDO US Alliance and I had the opportunity to spend time with colleagues from our US member firm as well as other industry professionals.
Thanks to the time difference and my slightly confused body clock, I also saw first-hand the truly 24 hour nature of the local economy. There is a constant expectation for consistently exceptional service in the casinos, the shops and restaurants, no matter what time of the day or night. Although I’ve already been to this tourism-focused city – a good few years ago now – I was struck yet again by how impressively this round-the-clock service is delivered – and I couldn’t help but think about how other businesses and industries should aim to ensure an unfaltering, high level of service, irrespective of circumstance.
This theme was also prominent in a presentation delivered at our conference by the American Institute for CPAs (AICPA) about Succession Planning – this is an element that is incredibly important to the continuing delivery of high quality services, not only in our profession but across the majority of businesses and industries. Interestingly, the AICPA revealed that only a minority of US accounting firms have written and approved succession plans.
The percentage has gone up compared to the survey conducted in 2008, but this suggests nonetheless that plans are not yet at the standard a client would expect, or that a business requires.
The AICPA also predicts that many firms will be up for sale in the years to come, as a consequence not only of the post-war generation reaching retirement age but also a perceived lack of internal talent to take over the reins. In my opinion, this trend will drive a change in the US market, moving it from a ‘sellers’ market’ to a ‘buyers’ market’.
By this I mean that, historically, if a firm found itself in a position where the senior partners came to retirement age, the business would need to be sold, or suitable successors be found. This was relatively easy to do because in most cases a candidate willing to take the firm over would be waiting in the wings. Now, however, as the competition for talent becomes stronger, it is increasingly more difficult for firms either to sell or find succeeding partners from outside the business. As a consequence, buyers will hold a much stronger position and sellers will find themselves exposed.
Crucially, this trend highlights the real necessity for professional services firms to protect their business by having an internal, multi-year succession plan to grow talent for the future. At BDO we have been paying a great deal of attention to this for a good number of years because we recognise how important it is to ensure that our firms have a proper succession plan in place if we are to give continuity and a consistently high quality service to our clients. In fact, a strong succession plan forms part of the accreditation criteria for firms joining our network. We actively support our member firms, especially smaller ones, to make appropriate plans and strive to help them and their clients reap the benefit of being part of a growing global network. It is through measures like this that we ensure consistently exceptional service for our clients.
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Inevitably, the future always holds elements of unpredictability, and with that comes risk. But with a solid succession plan in place, businesses can certainly be better positioned to ensure they are not gambling on their future.