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Good talent in the accounting industry is hard to find and firms must make a comprehensive succession plan in place.
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Spotlight on succession planning
25 February 2017
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13 minute read
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Australia is currently experiencing one of the toughest skills shortages in years, including in the accounting industry. However, alarmingly many executive managers are of the opinion when they need to hire they will pick up the phone, or post an advert, and hey, presto! All their talent needs will be resolved.
Good talent in the accounting industry is hard to find in both good and bad economic climates. It’s hard to find because talent is a combination of skills, behaviours, organisation fit and passion, and all these are hard to find when a fast solution is needed.
You may be thinking, “We don’t need to worry, we have our successors all picked out”. Not so fast – research shows that over 57 per cent of employees would be open to explore outside opportunities, combine that with over 60 per cent of executives that have not made provisions for succession plans. This leads to major hiring problems.
More frightening statistics on succession planning include:
• Only 34 per cent of organisations can effectively identify future leaders
• Only 1 per cent of executives believe their succession plans are excellent
• 66 per cent of executives rate their succession plans as fair or worse
There are three key reasons to have a succession plan: replacement for key employees, to support anticipated growth, and to address and deal with talent shortages.
Complacency about succession planning can be the little mouse that chews through the wires on your company’s engine. Unfortunately, however, succession planning is too often considered an exercise, a means to an end, a human resources task to be checked and moved into the done pile. This is absolutely the wrong way to think about succession planning.
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Succession planning is a process and not an event, and it is a process that is critical for all organisations whether they are anticipating turnover and vacancies, planning for growth, or working to adjust to talent shortages.
When senior leaders take on succession planning, they often focus on the C-suite roles – the roles that get the most attention in the media and in the marketplace – to the exclusion of other positions. But the best succession planning really involves a constant assembly and reassembly of a leadership puzzle with many pieces. In fact, the pieces themselves aren’t of constant shape or size. As each piece is selected – from CEO, CFO and COO, to finance and accounting chiefs and other C-level officers – the shape of the remaining pieces becomes clearer and external factors, such as company strategy, economic conditions and the like also affect the way the puzzle is solved.
The choice of the best candidate will depend partly on the team surrounding him or her, and how all their skill sets complement one another.
To manage the process effectively, we recommend the following steps:
• Assign responsibility for succession planning to executive team members and make its success part of their evaluation process
• Identify needs/key roles currently and in the future
• Develop and use methods/tools/techniques for identifying employee competencies and aspirations
• Implement a structure for developing potential successors
• Implement a structure for transitioning successors to and in new role(s)
• Identify an emergency or interim process to fulfil a role if for some reason the potential successor does not work out
• Align your recruitment initiative to succession planning by forecasting key needs and interview with growth and progression front of mind
• Evaluate the plan's effectiveness and update the plan as required – make it a working document
Many companies are about to find out what happens if they haven’t been proactively developing bench strength. Not only is the economy recovering, but boomers are retiring, which means people will be on the move, leaving for new opportunities or leaving permanently.
The problem is there are a limited number of top performers in the accounting sector. Consequently, you will not always meet the best candidates, and this will have a negative impact on you and your firm, leaving hiring managers becoming increasingly frustrated and annoyed with the standard of candidates being put forward.
Here are the kinds of additional questions you must have answers for. First, is there an emergency candidate who can take the reins for a time if XYZ position were to leave tomorrow? Second, whom do we have to invest in today so that he or she will be prepared tomorrow? Third, has the firm developed a team strong enough to ease the transition to a new XYZ position? And finally, is there a seasoned manager/leader in place, who is willing to coach and mentor a new employee?
In some cases, it may become apparent there are no internal candidates about whom the stakeholders are optimistic. Then the task becomes quite different. Now there is obviously real risk to the company, and a plan for recruitment and development needs to quickly be put in place.
Accounting firms cannot afford to underestimate the importance of succession planning and the need to have formal plans in place.
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