Practice Development Counsel

Succession Planning:
Breaking Down Silos, Ending Resistance, Avoiding Disruption

Given the potential loss of clients if a key firm contact leaves, uncertain and poor economic times make the need for succession planning even more urgent. The situation is magnified when prospective successors are not fully prepared to step in. Next-generation partners lacking business generation and client relations skills leave a firm on shaky ground.

In fact, there's a demographic perfect storm brewing and moving ever closer. But how have these critical issues that involve succession planning and the human side of business continuity taken on such urgency so quickly?

First, chalk it up to a large dose of denial or complacency of the "It can't happen here" variety. Of course it can, and it will.

Second, firms resist the initial investment of time it takes to get an effective process rolling.

Third, internal dynamics are usually significant. There is often a lack of openness and information-sharing among partners and administrative staff. Often too there are behavioral issues as incumbents won't let go of control, for example, or heirs apparent may push them too hard to achieve a harmonious transition.

While most firms have defined "business disruption" in the last decade or two in terms of technological meltdowns and terrorism threats, severe disruption to business continuity can occur whenever they lose a key player. It's not only the obvious ones like a managing partner, CEO, COO, practice head, or major rainmaker that are a concern - but any person with crucial knowledge, such as key office administration people, IT, marketing, and recruiting.

In fact, most disruption problems are human, not technological, and they can happen any day. We tend not to focus on it until it faces us and the result for the organization is an economic and emotional crisis of varying proportion.

Seven Succession Crises

A look at the most common events precipitating a succession and transition crisis underscores how they do indeed happen any time and all the time:

Retirement. Voluntary or involuntary - The latter can bring law suits, e.g., Sidley Austin's partner demotions. Firms need to plan transitioning of clients.
Defections - Partners leave for a supposedly better opportunity such as a bigger platform to grow their clients, or they may leave with clients because they've been demoted due to age.
Client dissatisfaction with associates' or partners' work.
Progress - The need to make way for the next generation to lead/manage practices and client relationships; the need for higher level IT or administrative skills, etc.
Relocation of personnel, which can result in substantial turnover costs and potential loss of clients and other relationships such as vendors, referral sources, etc.
Change in function or skills required - Firms need to cross-train people to avoid loss of revenue.
Death or disability - These situations may be unforeseen, but the disruption cost is mitigated if someone else is trained as a back-up and can step in at least temporarily.

The virtual inevitability of business disruption without a succession plan in place means that the need to start planning is now. Ask yourself: Who are the people whose loss would cause a significant disruption to your business? How can we assure the bench strength needed to stay on top of our game? What are the best practices in succession planning?

A recent survey and report, The Looming Leadership Void: Identifying, Developing and Retaining Your Top Talent by the Aberdeen Group, designates responding businesses as "best-in-class" based on criteria including:

Identifies high-potential talent early
Gains support and buy-in from senior management
Establishes a "development" culture/mindset within the organization
Identifies positions where succession planning is necessary
Aligns succession planning with the company's overall strategy
Clearly defines skills and knowledge required for specific positions

To achieve buy-in and success, it is extremely important to align succession planning with the strategic focus of the firm and its practice groups - something that is not done frequently as many important stakeholders are left out of the process. Firms likewise need to break down the silos among departmental functions such as marketing, IT, HR, professional development, and lateral recruiting.

They need to think in terms of both generational and diversity challenges - two of the most difficult challenges in business continuity because they are both such totally human challenges - especially as such internal issues may relate to client needs and preferences.

Generational Challenges

Most firms do not yet focus on the dangers of losing large numbers of Baby Boomers, who are seasoned, reliable, and have vast institutional knowledge. More commonly, they focus on short-term economics, often sacrificing the leadership training that young lawyers require.

Generation Y typically gets along with and will seek guidance from Baby Boomers - as long as they feel respected - more readily than they will from Gen X. Both Generation Y and the Baby Boomers entered the workplace with optimism, belief in their ability to succeed, and a desire to change the world. Gen Xers, to generalize, are not inherently good managers, and many have not come equipped with the interpersonal skills and team collaboration talents that would help bond the generations.

Don't write off the Baby Boomers in any event. These optimistic, highly educated achievers, the most competitive generation so far given their numbers, are not going to take a traditional en masse retirement when they reach 65 or any other arbitrary age.

Savvy firms will find ways to capitalize on the retention of some of them once their formal leadership roles are over, particularly as senior mentors in the professional development of young lawyers, as community ambassadors, and as referral sources. Some will still be valuable for their intense involvement in particular practice areas like estate planning and litigation where long experience, judgment, and maturity are assets.

Over the last few decades, as the pressure to bill more hours has increased, a badge of honor as well as concrete rewards have been bestowed on those who are over-committed and constantly "busy." In this milieu, two dubious values infiltrate firm cultures: doing lots of "stuff" whether or not it's meaningful and satisfying; and task-orientation rather than vision-orientation or people-orientation.

Generation X, and now Gen Y, has been caught in this trap. They have received training that is task-oriented and data-oriented. Indeed, their heads are jammed with facts but little strategic insight or comprehension of the value of human performance skills. Professional development training and coaching for succession and leadership is needed to begin correcting this pandemic imbalance in skills and orientation.

Opportunities for Women

Be sure to consider women when developing the short list for succession in all positions. Don't assume that they aren't interested because of the multiple demands on their time and attention.

Select those women who like management duties and start them out with pilot projects and mentoring early on. Currently very few (about eight percent, according to the 2007 National Association of Women Lawyers survey) are managing partners or chairs of AmLaw 200 firms.

The crucial alignment of the generations with firm objectives will require a greater focus on people at all levels, a greater representation of all ages and types of diversity, and a greater effort to harness the wisdom and institutional memory of the senior professionals and executives while capturing the hearts and imagination of the best mid-level and junior-level people that the firm has.

A Role for Younger Generations

Most people think that succession planning is a top-down activity involving management and seasoned professionals. I suggest that it is better to involve the younger generations as well so that they can help create a vision for what the organization aspires to, and for what it is really looking for in long-term leadership.

If you think of succession planning as a continual process, one way to involve the younger generations in the firm is to hold at least periodic meetings with junior employees (associates and professional staff), invite them to ask questions, and encourage their input. By tapping into the collective wisdom at all levels, partners, shareholders, executives and managers will learn a lot about what can make their firms more successful and what professional attributes the firm needs to continue developing.

The younger lawyers and employees have a longer future ahead of them and they see and experience the world in different ways. By engaging them in this ongoing dialogue, the organization will be more likely to retain their best talent.

At the same time, partners and managers should also be looking for leadership qualities among the younger generations. They need to encourage and allow junior people a chance to volunteer and take on responsibility for significant internal projects. In that way, they can prove themselves beyond mere technical competency.

So let's revisit our original question. When so much depends on client retention, talent retention and development, as well as avoiding productivity disruption of any sort, why are professional service firms so slow to institute an ongoing succession and transitioning process that reduces loss, generates profits, empowers leaders, and helps all team members sleep better at night?

Is it lack of know-how? Lack of internal resources? A reluctance to deal with sensitive issues and personalities?

Or simply a denial of the inevitable?

CHECKLIST FOR BREAKING DOWN THE SILOS IN SUCCESSION PLANNING

Use client service teams when possible to build relationships at many levels.
Include marketing/business development personnel in the selection and preparation process.
Include professional development and human resources personnel in the selection process.
Include administrative and information technology personnel to support change, transition, and successors' needs.
Compile best practices from your firm's experience and other models.
Include younger generations in establishing criteria for future needs.
Increase the number of qualified women, minorities, and younger leaders as successors, and make the roles appealing to them with strategic responsibilities, and recognition and rewards in accordance with their value to the firm.
Establish succession planning and transitioning as an ongoing strategic process.

-- Phyllis Weiss Haserot
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Phyllis Weiss Haserot is the president of Practice Development Counsel, a business development and organizational effectiveness consulting and coaching firm working with law firms for over 20 years. A special focus is on the profitability of improving inter-generational relations and transitioning planning for baby boomer senior partners and their firms. Phyllis is the author of The Rainmaking Machine (West LegalWorks 2007). Reach her at pwhaserot@pdcounsel.com.

tel: 212 593-1549
fax: 212 980-7940

pwhaserot@pdcounsel.com
www.pdcounsel.com

Succession Planning: Breaking Down Silos, Ending Resistance, Avoiding Disruption

Succession Planning:
Breaking Down Silos, Ending Resistance, Avoiding Disruption