Leadership Transitions in Family Business | AccountingWEB

Leadership Transitions in Family Business

Recently I attended the S. Dale High Family Business Center at Elizabethtown College’ssession on Leadership Transitions in Family Business. The session focused on best practices with input from an expert panel consisting of: 

  • Phil Clemens, Chairman & CEO of the Clemens Family Corporation of Hatfield.
  • Tony Martin, Vice President of Business Information Systems at Martin’s Famous Pastry Shoppe, Inc.
  • Dana Chryst, CEO/Owner of The Jay Group of Lancaster.
  • Matt Diller, General Manager of Precast Systems, LLC. 
The members of the panel represented various generations and life experiences with each member providing a unique perspective.
One key theme that was mentioned repeatedly related to what is commonly called “Founderitis.” This is a subject I have written about before and occurs when an entrepreneurial founder is not able to turn over control to the next generation. This often has the impact of suffocating next-generation leaders. A few ways to help overcome this unhealthy behavior in a family business is to have greater self-awareness. That can be very difficult for founders and often requires hard conversations from next generation and outside advisers (i.e. CPA's or Board of Advisors...). Phil mentioned the importance of having a mandatory retirement age.
Another reason that founders struggle to let go is they have nothing to retire to. A key point was made of the importance of retiring to something rather than from something. This too requires a planning process and being intentional about the succession.
Phil Clemens pointed out that the current CEO should not select the next CEO. He said he felt it was the responsibility of the current CEO to only develop a pool of candidates. These candidates would then be mentored and developed over a period of years. He believes it is the responsibility of the family and of the Board to actually interview and select the successor.
There was good conversation related to the actual timing of the succession. An 18 month transition plan was deemed to be wise and included a winding down stage. The panel agreed that this stage is beneficial to the company, the current CEO, and future CEO.
The panel listed the following steps be taken by the senior generation for a competitive resource transition:
  • Invest time in the plan – 15 years.
  • Invest time in the process.
  • Create accountability and oversight for yourself and your successors…The Board of Directors.
  • Accept the pain of this life cycle in your family business.
  • Enjoy the reward of perpetuating your values, strengthening family unity and business outcomes.
 They also offered the following checklist for a competitive resource transition:
  1. Values: Have you clearly defined your organization’s values? Are these values felt throughout the organization – and do they help define how your company does business?
  2. Vision: Is there a clearly defined vision for the future? Has the vision been communicated to the employees and is it easy to understand?
  3. Strategic Plan: Is there a plan for achieving this Vision? Is there buy-in throughout the organization?
  4. Resource Assessment: What are the resources embodied in the current generation of leaders? (Skills, knowledge base, relationships, etc.). Have the resources required for effective company-wide leadership been identified and is there a process for transferring them to the next generation of leaders?
  5. Potential Successors: Have you identified High Potential employees as your possible successor(s)? Are these High Potential employees aware that you consider them possible candidates for high-level leadership?
  6. Development Plan: Have you identified the strengths and weaknesses of your potential successors? Is there a plan in place to address their weakness and to continue building on their strengths?
  7. Career Path: Is there a clear career path in place that will ensure the on-going leadership development of your potential successor(s)? Does this path provide successors the opportunity to build the skills, knowledge, resources, etc. required for long-term leadership?
  8. Decision-Making Process: Is there a Board of Directors (or other similar body) that can serve to evaluate the potential successors and make (help make) the final decision about a successor? Is the Board empowered to create real accountability for managing the leadership transition process?
  9. Governance Structures: Have the owners defined the structures required to ensure a successful partnership? (Buy-Sell agreement, conflict of interest policy, fiduciary responsibilities, employment policy, family member involvement policy, etc.).
  10. CEO Transition: Is the CEO ready to transition to a new place? Is there a clearly defined set of roles and responsibilities into which the CEO can transition? (Founding Partners should view themselves as transitioning up, not out.)  Is there a clear transition process in place?
  11. Financial Security: Have the economic needs of the founding partners been openly discussed? Is there a plan for addressing these needs?
  12. Estate Plan: Have the partners planned for the efficient transfer of their assets to their chosen beneficiaries? Are these plans consistent with the vision for the future of the business?
  13. Team: Is there a team in place that will support the transition? Is there a process to ensure the on-going development of this new management team?
  14. Timing and Communication: Is there a defined time-line for the leadership transition? Has this time-line and its supporting implementation plan been clearly explained to the rest of the organization?
Leadership transition is a strategy issue. If you take a resource to the grave, you will dramatically impact your company's ability to compete.
I believe the most important point regarding succession is the importance of planning. There's a great quote that sums up the session, "If you don't know where you're going, any road will get you there.”

This blog

by Scott Heintzelman - Scott is a CPA, CMA and CFE living in Pennsylvania. Scott is a partner serving on the executive team at McKonly & Asbury LLP, a regional accounting firm with multiple offices in the Mid-Atlantic. The firm has been an IPA ALL-STAR as well as winning Best Places to Work in Pennsylvania for numerous years.

More from this blog

Bloggers crew

Steve Knowles has spent 25 years in business and practice in the UK, but he also worked in the states and the years haven't dulled his way of seeing an alternative view to everyone else, and every day is a new adventure.


Joel M. Ungar, CPA is a lifelong resident of the Detroit area and a graduate of The University of Michigan. He is a principal with Silberstein Ungar, PLLC, a Top 15 auditor of SEC public reporting companies.


Allan Boress, CPA, with over 25 years as a practitioner and consultant to the accounting profession. Mr. Boress is the author of 12 published books in 6 different languages, including a best-seller, The "I-Hate-Selling" Book.


Larry Perry, CPA, CPA Firm Support Services, LLC, is the author of accounting and auditing manuals, author and presenter of live staff training seminars, and author of webcast and self-study CPE programs. He blogs about small audits, reviews, and compilations.

Sandra Wiley, COO and Shareholder, is ranked by Accounting Today as one of the 100 Most Influential People in Accounting as a result of her prominent role as an industry expert on HR and training as well as influence as a management and planning consultant. She is also a founding member of The CPA Consultant's Alliance. Sandra is a certified Kolbe™ trainer who advises firms on building balanced teams, managing employee conflict and hiring staff.

Maria Calabrese, CIR, Human Resources manager for Fazio, Mannuzza, Roche, Tankel, LaPilusa, LLC in Cranford, New Jersey, Maria's topics revolve around the world of: Mentoring, Performance management, and The "Y Generation," a.k.a. "The whY generation".


William Brighenti is a CPA, Certified QuickBooks ProAdvisor, and Certified [Business] Valuation Analyst, operating an accounting, tax, and QuickBooks consulting firm in Hartford, Connecticut, Accountants CPA Hartford.


Ken Garen, CPA, is the co-founder and President of Universal Business Computing Company (www.ubcc.com), a software development firm of high-volume, high-productivity accounting and payroll technology.


Eva Rosenberg, MBA, EA, is the publisher of TaxMama.com, and author of the weekly syndicated Ask TaxMama column. She provides answers to tax questions from taxpayers and tax professionals worldwide.


Amy Vetter, CPA, CITP is the CPA Programs Leader for Intacct Corporation responsible for leading the CPA/BPO Partners nationally.

Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States. He also writes a weekly column in Tax Analysts State tax Notes entitled, "The SALT Effect." For more info, visit his website: www.leveragestateandlocaltax.com
Scott H. Cytron, ABC, is president of Cytron and Company, known for helping companies and organizations improve their bottom line through a hybrid of strategic public relations, communications, marketing programs and top-notch client service. An accredited consultant, Scott works with companies, organizations and individuals in professional services (accounting, finance, medical, legal, engineering), high-tech and B2B/B2C product/service sales.

Rita Keller is a nationally known CPA firm management consultant, speaker, author, mentor and blogger. She has over 30 years hands-on experience in CPA firm management, marketing, technology and administrative operations.

Stacy Kildal is the mom of two fantastic kids, an Advanced Certified QuickBooks ProAdvisor, Certified Enterprise Solutions ProAdvisor, Sleeter Group Certified Consultant, a nationally recognized member of the Intuit Trainer and Writer Network, and co-host of RadioFree QuickBooks.
Michael Alter's blog specializes in providing practical advice to those who seek greater profitability and practice management tactics that enhance deeper client relationships.

Sally Glick, CMO, Principal, Marketer of the Year in 2003 and AAM Hall of Famer in 2007, leads a lively discussion of the constantly expanding roles of marketing and the professional marketers that drive this initiative in accounting firms of all sizes.


The IMA Young Professionals Blog features the insights of IMA’s Young Professionals Committee. Committee members share advice and experiences on careers, continuing education, work/life balance, and other issues affecting young accounting and finance professionals.


FEI Financial Reporting Blog provides highlights from SEC, PCAOB, FASB, IASB, and other regulatory news, including reporting under Sarbanes-Oxley Sect 404. It is written by Edith Orenstein, Director of Technical Policy Analysis at FEI.


Sue Anderson has 30 years of experience in continuing education for accountants. Currently she is the program director for online CPE provider CPE Link.


Jim Fahey is COO of Apple Growth Partners, a regional CPA firm in Ohio. His focus is on the effective and efficient use of technology within the firm by all team members.

Caleb Newquist is the Editor-in-Chief of Sift Media US, overseeing content for both AccountingWEB and Going Concern.

Leita Hart-Fanta, CPA, CGFM, and CGAP is the author of "The Yellow Book Interpreted" and owner of Yellowbook-CPE.com a website devoted to training for governmental auditors.


AccountingWEB is more than just a U.S. team of journalists and financial and technology experts - we have an international side, too! Members of our British team who publish AccountingWEB.co.uk share their ideas, insights, and perspectives from across the pond.