developing your next generation of leaders · developing your next generation of leaders to thrive...

a complimentary whitepaper for certified public accountants

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Developing your next generation

of leaders

To thrive tomorrow, you must start planning todayShe’s a skilled accountant with a knack for making clients feel confident. You’ve hired well over the years, but she really stands out. As you watch her wrap up another meeting with a happy client, you’re confident that, when the time is right, she’ll be ready to take your practice’s reins.

But if you had a crystal ball, you’d know that she’s going to take a job with one of your competitors in two years. When it happens, that news is going to stun you and the rest of your staff.

You thought you were doing all the right things. In your mind, you had a timetable for your retirement, and knew how you’d handle succession when you were ready to pull the plug. There were three problems with that approach. First, the plan was in your in mind, and you hadn’t shared it with anyone else who had a role. Second, you didn’t have any kind of a fallback position. You were so busy grooming your expected replacement that you neglected the rest of the team. Finally, you never asked her what it would take to keep her happy. Your competitor did, and look what happened.

It’s your responsibilityIf you have a plan for the future of your CPA practice (at least more than just a vague idea), good for you. You’re already ahead of many of your peers. But if you don’t also have a plan to mold and prepare the people who make that future happen, you’re just gambling.

If you’ve planned properly, you should be able to identify everyone who will play a leadership role in the future of your practice and where you may have gaps that you need to fill. But identifying your future leaders is only the first step. You also need to help them

develop the skills and knowledge they’ll need to serve in those roles, and have a way to monitor and track their progress. After all, you don’t want to ride off into the sunset if your team is only 85 percent ready.

In addition, you know that turnover is costly and want to identify ways to encourage top employees to stick around. The most effective retention strategies are those that focus on developing career paths that keep employees challenged and make them feel like important contributors to the practice’s success. Team members like to know where your practice is headed and the role they’ll play, and those who see their part as important are less likely to be pulled away by an aggressive competitor.

You’re not alone … and you must act nowNearly half of all American CPA practices will lose at least one partner to retirement by the end of the decade, according to a survey by the Global Accounting Alliance. All those retirements will put significant pressure on the profession’s labor pool, making it critical that the practices that hope to endure have a succession plan. Otherwise, the right talent might not be available when it’s needed most.1

Compounding that issue is the profound shifts in our nation’s population. In just three years, 46 percent of U.S. workers -- that’s nearly half of the workforce -- will fall into the generational group that’s typically labeled “Millennials.”2 You’ve probably heard a lot of stereotypes about Millennials, poking fun at their perceived habits and flaws, but the reality is that they have a different view of the world. They were raised in a different time and environment, so it’s no surprise that they don’t view things the same way we do.

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When you started your career, you probably had the attitude that you’d find an entry-level role, work hard, and earn a shot at a partnership. You were happy to have a job and didn’t hesitate to hustle to prove yourself. While it’s impossible to characterize an entire generation, you’ve probably noticed that the young accountants you’re interviewing and hiring bring a completely different set of attitudes and values to the workplace.

For example, Millennials seek more than a paycheck. According to Jason Dorsey, who is chief strategy officer of The Center for Generational Kinetics, there are five top drivers that Millennials seek from a job. First and most important, they want to feel that they are valued in a practice. They want to have confidence in the leadership (that’s you). It’s important that they enjoy the work they’re doing – they don’t want to perform an unpleasant task today so they have the potential to do something better tomorrow. They want to feel that they achieve progress on most of their workdays. Finally, they want to be treated as a person, and not an employee number.3

Appealing to Millennials Dorsey’s group recognizes companies that Millennials view as good employers. Through their research, they’ve identified four statements that employees at the top-rated companies make:

• I have a good understanding of how this organization is doing financially.

• Staffing levels are adequate to provide quality products or services.

• There is room for me to advance at this organization.

• Changes that may affect me are communicated to me prior to implementation.4

Think about your own relationship with your employees. Would they be able to make those statements about your practice? If you were an employee, wouldn’t you want to be able to say those things about your employer?

While some of these concepts may seem unsettling to Baby Boomers and members of Generation X, the underlying reasons make sense. For example, Millennials have been raised to be team players, working on group projects from their earliest days in school. They’re accustomed to working with collaborative technologies, and they’re used to having a say in decision-making. Millennials aren’t willing to accept “we’ve always done it this way” as an explanation for something that seems irrational. They’ll ask, “Well, what if we did it this way instead?”5

Few things are more important to Millennials than time. Raised as an over-scheduled generation, they place a premium on flexibility and free time. Instead of a typical 9-to-5 job in a cubicle and tight requirements for billable hours, they want the freedom to set their hours, work where it’s convenient, and be judged by deliverables instead of by the clock.6 Work-life balance is viewed as something approaching a physiological need, with plenty of vacation and personal time one of the most important benefits you can offer.7 Be sure that your policies, technology, and project management systems can provide that kind of flexibility.

Whitepaper: Developing your next generation of leaders

“ Millennials seek more than a paycheck... they want to feel that they are valued in a practice. They want to have confidence in leadership.”


You’ll also want to make sure your office is Millennial-friendly. If a prospective employee walks into your office and sees only old-looking computers, or if you don’t have a website and social media presence, that candidate is likely to walk right back out. Millennials expect access to technology when they shop and do business, and if you don’t offer the same to customers, they won’t be enthused about coming to work for you. The same is true if you have strict policies about cell phone use or accessing social media while at work. Keep the rules and boundaries fluid, and you’ll be surprised how productive your Millennial employees become.

What do they want?Many managing partners believe that they instinctively know what their younger employees want from their jobs and careers. Those are the partners who become surprised when those employees move to a competitor or different career. It’s important to talk with your employees on a regular basis (at least twice a year) to understand their own career goals and level of satisfaction with their positions.

It’s not the same as a performance review. Instead, you’re discussing opportunities and helping the employees identify what both of you will need to do to prepare them for those opportunities. As you develop a roadmap for that team member’s future, be sure to include measurable objectives, so you can share their progress.

By taking the time to learn what’s important to team members, and then investing in helping those team members enhance their skills and abilities, you’ll strengthen loyalty on the part of employees.

It can also be valuable to assign mentors to employees, no matter where they are in their careers or on your organizational chart. Have someone who can provide career guidance and act as a helpful sounding board. A formal mentoring program is also a way to transfer knowledge and maintain your practice’s culture as you move through transitions.8

Using data to trackAdding a rigorous data-capturing element to your personnel management process can play a critical role in the leadership development aspect of your succession planning. By quantifying and tracking your team members’ levels of skill and knowledge, you can immediately identify gaps you need to address. Just as important, a good data-based system will allow you instantly determine how many potential candidates will be available for each role within the next year, the next five years, and so on. That way, you can determine whether you need to perform any outside hiring and exactly what those new team members will need to bring with them.

To determine what data you need to measure and manage, start by determining the job skills and leadership characteristics that you view as most important to the future of your firm. Look at your current performance assessment tools to ensure that you have a way to measure those factors. You’ll want to be able to address categories such as experience, strengths, weaknesses, and career goals, so you can quickly see what kind of training, mentoring, and experiences each team member needs to bring them to your goal.



Practices that take the time to handle succession planning and leadership development in this manner create a strong pool of candidates who have the right skills when positions become open. Another benefit of this type of analysis and reporting is that it gives you options if an employee leaves unexpectedly, dies, or encounters significant health issues. Instead of being left in a lurch, you can quickly determine which current team members are best suited for the vacated role – along with specific areas in which they will need to sharpen their skills. In the meantime, other employees who have those skills can fill any gaps.

By preparing for the eventual departure of those who are on a retirement track, you can minimize the stress associated with transitions. If your team members are able to identify their targets for retirement well in advance, you’ll be better able to prepare their eventual successors.9

Investing to support leadershipAs you begin to prepare your practice’s future leadership team, you may need to consider investing in technology, training, space, or other areas. If you don’t have excess capital on hand, you’ll probably need to borrow, but remember that you’ll be funding costs that should improve your revenues and overall profitability.

When you borrow, you may be tempted to turn to a local bank officer you know, but traditional banks aren’t always comfortable with the structure of professional partnerships like CPA practices. Most banks are geared to making loans to businesses that have tangible assets such as inventory, equipment, and real estate. Another option is loans that are guaranteed by the Small Business Administration, but SBA loans typically take a long time to process, may involve an overwhelming amount of paperwork, and have relatively small lending limits.

That’s why a growing number of CPA practices turns to specialty lenders that are accustomed to working with the accounting profession. Such lenders understand how a practice like yours operates, and are familiar with the nature of your income streams, so they can approach the underwriting with realistic expectations and an appreciation for inherent risks. As private companies, they are not restricted by the federal limits associated with some others types of loans.

Working with Oak Street Funding®

With a loan from Oak Street Funding, you can borrow against the future cash flows from your clients. It’s a solution other CPA practice owners have used to finance strategies for growth and competitiveness.

Oak Street Funding can customize a loan for your needs and situation, from $100,000 to $20 million, with a term of one to ten years. The goal is to help you finance growth with minimal out-of-pocket cost by leveraging the power of your practice’s cash flow. Learn more or request a free quote at www.oakstreetfunding.com or 1-866-OAK FUND.

The strategic opportunities available to CPA practices are limitless. Access to affordable capital is the key to taking advantage of those opportunities, and Oak Street Funding can provide that capital.


“ If you don’t have excess capital on hand, you’ll probably need to borrow, but remember that you’ll be funding costs that should improve your revenues and overall profitability.”


About Oak Street FundingSince 2003, financial services professionals have benefited from hundreds of millions of dollars in loans from Oak Street Funding, a direct, non-SBA lender that understands their business model and appreciates their most valuable assets – even though they are intangible. Our strong financing expertise, innovative technology, proprietary actuarial models and experienced niche-lending team align to develop new products to meet the growing demand for RIA financing. Visit www.oakstreetfunding.com to learn more.

The materials in this paper are for informational purposes only. They are not offered as and do not constitute an offer for a loan, professional or legal advice or legal opinion and should not be used as a substitute for obtaining professional or legal advice. The use of this paper, including sending an email, voice mail or any other communication to Oak Street, does not create a relationship of any kind between you and Oak Street. Loans and lines of credit subject to approval. Rate may vary at any time. Potential borrowers are responsible for their own due diligence on acquisitions. CA residents: Loans made pursuant to a Department of Corporations California Finance Lenders License (#6039829).

1 Rush, Chris, “Yes, There’s a CPA Generation Gap. No, It’s Not Too Late to Recruit the Next Generation,” CPApracticeadvisor.com, October 26, 2016.

2 Espinosa, Melissa, “Insurance: Attracting Millennials,” careerplug.com, September 16, 2016.

3 Dorsey, Jason, “Unlocking Millennial Talent 2015,” genhq.com, 2015.

4 ibid.

5 Patel, Hitendra, “New Staffing Strategies for the Next-Generation Accounting Firm,” CPAtrendlines.com, March 3, 2017.

6 Vetter, Amy, “How to Evolve Your Practice to Attract Next-Generation Talent,” AccountingWeb.com, May 12, 2016.

7 Patel, op. cit.

8 Rush, op. cit.

9 ibid.


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