Rethinking Succession Planning for Tough Economic Times

In survey after survey in the business world, succession planning is near the top of the list of critical things to do ' and that doesn't get done. I strongly suggest that firms recognize the urgency of succession planning for firm and practice succession in these treacherous economic times.

Firms need to look at succession planning in the broad sense ' that is, relating to anyone who plays a critical role in the organization, including non-lawyers moving into leadership at various levels. Succession planning is not just about top management.

Five Reasons

Here are five important reasons for creating a succession plan now.

• Leadership ' to bring a strategic vision to the firm, its operations and marketing.
• Management ' to assure high quality execution of all critical roles at all levels.
• Retention ' to retain the confidence and trust of both clients and firm personnel.
• Compensation ' to provide fair compensation and benefits to partners planning to retire.
• Incentive ' for younger partners to reap the benefits of past goodwill and provide a platform for the expansion of business and firm continuity.

How to Plan for Succession

There is undoubtedly a strong business case for succession and transition planning. The key argument is to retain the clients that have built relationships with partners who will be leaving. Secondly, you want those partners to continue to refer business and recruiting candidates to the firm. Another important factor is to assure the transfer of knowledge, skills and relationships of the eventually departing personnel to successors. Without these monetizable assets, a firm is bound to suffer at any time. In economic downturns, the suffering is magnified, the stress is greater, and the cultural glue is at greater risk.

To ensure sound succession planning, an organization needs to establish and institutionalize a process that is ongoing and becomes part of the DNA of the firm. It begins with an attitude of urgency and flexibility. And professional development for the next generation that will step into the incumbents' shoes must begin early on. It needs to include: training and experience beyond legal skills; inter-personal skills; understanding of generational differences and needs; and a good grasp of the changing marketplace and economics. Some firms will need significant cultural change to make succession planning successful because they are too individually- and short-term focused. While in an economic downturn there is much pressure to hoard, that attitude is likely to doom a firm in the long run.

In addition to the changing economic factors we are witnessing now, there are two other differences savvy firms will need to address effectively in order to capitalize on the demographics of the firm and the marketplace: generational challenges and lateral moves. These are some new wrinkles that reframe the historical approach to succession planning.

Generational Differences

The first is the impact of generational differences, which are more pronounced than ever and need to be factored into the mix.

Flexibility

Most firms have thought of flexibility in terms of the younger generations, who have been the most vocal about it. Flexibility is equally important in dealing with the Boomers, who have been billing a lot of hours for many years. Many of them would like to cut back a bit without having to leave entirely. Cutting back can mean working very intensely on fewer clients or matters, and should be arranged with a commensurate reduction in compensation. This can be a first, effective step toward transitioning roles and transfering knowledge.

Gen X Leadership Gap

Generation X is a much smaller generation than the Boomers. While that should bode well for leadership opportunities, the outlook is complicated by a few factors: Gen X fears that they may miss their chance to run things because the Boomers are in no hurry to leave, and Gen Y/Millennials are ambitious to pass them; a substantial number of Gen X professionals reject the time commitment and personal sacrifice that comes with the heavy responsibilities of leadership; and overall, Gen X may not be sufficiently prepared for leadership, having not received the training and mentoring needed and not possessing the interpersonal skills needed for excellent client relationships.

Matching Attorneys and Clients

Careful consideration needs to be given to multi-generational matches between clients and the attorneys who will take over key roles with them. The attorneys need to understand typical generational differences in communication styles, work and life objectives, perceived work ethic, and more.

Differing Methods of Preparation

Training that engages the younger generations is generally different in format than the methods used for Boomers and the Traditionalists before them. Less lecturing, more interactivity and immediate feedback, practical application, more visual, shorter, more penetrating spurts, and coaching is required.

Re-Thinking Desired Attributes

The best leaders and managers for the future probably will not be clones of the Traditionalists and Boomers. Generations X and Y should be brought into the conversation about what the desired attributes of succeeding leaders are in an environment that is more collaborative with both firm colleagues and clients. The younger generations view the marketplace and work differently than many of the current leaders and managers do; their input is important for achieving their engagement and for a strong future for the firm.

Let's acknowledge that the multi-generational workplace will also be one of shared leadership between the generations. On the one hand, many Boomers want to continue working for both career fulfillment and economic reasons, while the next generation wants to step into their shoes; and on the other hand, their expertise, maturity and judgment and relationships are still needed. How do we incorporate this new phenomenon into succession planning? One approach I suggest to address this is to enable intra-firm lateral moves.

Lateral Moves

The legal profession has become quite accustomed to lateral moves from one firm to another, like it or not. Lateral moves to alternate roles within the firm could alleviate some of the tensions between the generations. For example, there are many needs in a professional business (read law firm) that have not been filled or filled on an adequately high level until recently. We have seen lawyers, even at the partner level, shift from full-time practice to directors or chiefs of professional development (chief learning officer), diversity, business development, pro bono, administrators for a practice group. Obviously, in the case of many of these, a firm can only utilize one person in the position.

However, a firm could have several administrative partners (non-equity) for practice groups and attorneys whose function is business development leads and client relationship management without performing billable work or being a major business generator. And large firms could have senior people in those roles in each large office.

Firms desperately need more mentoring, training and coaching for associates and junior partners. It is often not being done diligently and frequently because attorneys are not compensated for these functions and often are not even given non-financial rewards, including praise. Select those who have talent for these roles, and show they are valued.

Lateral moves within an organization are a coming trend as people shift careers over a lifetime. Many people welcome the opportunity to learn new skills and do something different. Career movement, which has been appealing to the younger generations, now has an attraction for the Boomers. Being creative in this regard provides choices to individuals, and for firms provide the luxury of being able to select qualified senior professionals who know the firm well to carry out needed functions in the firm business operations.

Merit-Based Processes

While the suggestions I have made here offer a new degree of control to individuals at all levels, it is equally important for the firm to maintain control by instituting merit-based processes for succession planning and transitioning. Again this is something the younger generations favor ' that promotions, opportunities and compensation be merit-based rather than longevity-based. Firms should require annually submitted and evaluated business plans from people requesting flexible schedules and to stay on past a specified age. A transparent process for selecting firm, practice group and other leaders should incorporate communication of criteria and clear expectations to build and retain trust in the system and among colleagues.

Conclusion

The above discussion provides food for thought for any firm serious about addressing the urgent need for succession planning given both the economic and demographic circumstances we find ourselves in. Three overarching keys to making it work are:

• Integrate succession planning into the firm's business model, incorporating continual leadership training, talent development and knowledge transfer.
• Conduct a dialogue with the younger generations and include them in the conversation.
• Revisit compensation, selection, promotion and flexibility policies to reward people development efforts and results.

It's time to jump-start succession and transitioning planning at all levels.

Phyllis Weiss Haserot, a member of this newsletter's Board of Editors, 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 (www.nextgeneration-nextdestination.com ). Phyllis is the author of The Rainmaking Machine and The Marketer's Handbook of Tips & Checklists (both Thomson/West Reuters 2008). [email protected]. URL: www.pdcounsel.com. ' Phyllis Weiss Haserot, 2009.

In survey after survey in the business world, succession planning is near the top of the list of critical things to do ' and that doesn't get done. I strongly suggest that firms recognize the urgency of succession planning for firm and practice succession in these treacherous economic times.

Firms need to look at succession planning in the broad sense ' that is, relating to anyone who plays a critical role in the organization, including non-lawyers moving into leadership at various levels. Succession planning is not just about top management.

Five Reasons

Here are five important reasons for creating a succession plan now.

• Leadership ' to bring a strategic vision to the firm, its operations and marketing.
• Management ' to assure high quality execution of all critical roles at all levels.
• Retention ' to retain the confidence and trust of both clients and firm personnel.
• Compensation ' to provide fair compensation and benefits to partners planning to retire.
• Incentive ' for younger partners to reap the benefits of past goodwill and provide a platform for the expansion of business and firm continuity.

How to Plan for Succession

There is undoubtedly a strong business case for succession and transition planning. The key argument is to retain the clients that have built relationships with partners who will be leaving. Secondly, you want those partners to continue to refer business and recruiting candidates to the firm. Another important factor is to assure the transfer of knowledge, skills and relationships of the eventually departing personnel to successors. Without these monetizable assets, a firm is bound to suffer at any time. In economic downturns, the suffering is magnified, the stress is greater, and the cultural glue is at greater risk.

To ensure sound succession planning, an organization needs to establish and institutionalize a process that is ongoing and becomes part of the DNA of the firm. It begins with an attitude of urgency and flexibility. And professional development for the next generation that will step into the incumbents' shoes must begin early on. It needs to include: training and experience beyond legal skills; inter-personal skills; understanding of generational differences and needs; and a good grasp of the changing marketplace and economics. Some firms will need significant cultural change to make succession planning successful because they are too individually- and short-term focused. While in an economic downturn there is much pressure to hoard, that attitude is likely to doom a firm in the long run.

In addition to the changing economic factors we are witnessing now, there are two other differences savvy firms will need to address effectively in order to capitalize on the demographics of the firm and the marketplace: generational challenges and lateral moves. These are some new wrinkles that reframe the historical approach to succession planning.

Generational Differences

The first is the impact of generational differences, which are more pronounced than ever and need to be factored into the mix.

Flexibility

Most firms have thought of flexibility in terms of the younger generations, who have been the most vocal about it. Flexibility is equally important in dealing with the Boomers, who have been billing a lot of hours for many years. Many of them would like to cut back a bit without having to leave entirely. Cutting back can mean working very intensely on fewer clients or matters, and should be arranged with a commensurate reduction in compensation. This can be a first, effective step toward transitioning roles and transfering knowledge.

Gen X Leadership Gap

Generation X is a much smaller generation than the Boomers. While that should bode well for leadership opportunities, the outlook is complicated by a few factors: Gen X fears that they may miss their chance to run things because the Boomers are in no hurry to leave, and Gen Y/Millennials are ambitious to pass them; a substantial number of Gen X professionals reject the time commitment and personal sacrifice that comes with the heavy responsibilities of leadership; and overall, Gen X may not be sufficiently prepared for leadership, having not received the training and mentoring needed and not possessing the interpersonal skills needed for excellent client relationships.

Matching Attorneys and Clients

Careful consideration needs to be given to multi-generational matches between clients and the attorneys who will take over key roles with them. The attorneys need to understand typical generational differences in communication styles, work and life objectives, perceived work ethic, and more.

Differing Methods of Preparation

Training that engages the younger generations is generally different in format than the methods used for Boomers and the Traditionalists before them. Less lecturing, more interactivity and immediate feedback, practical application, more visual, shorter, more penetrating spurts, and coaching is required.

Re-Thinking Desired Attributes

The best leaders and managers for the future probably will not be clones of the Traditionalists and Boomers. Generations X and Y should be brought into the conversation about what the desired attributes of succeeding leaders are in an environment that is more collaborative with both firm colleagues and clients. The younger generations view the marketplace and work differently than many of the current leaders and managers do; their input is important for achieving their engagement and for a strong future for the firm.

Let's acknowledge that the multi-generational workplace will also be one of shared leadership between the generations. On the one hand, many Boomers want to continue working for both career fulfillment and economic reasons, while the next generation wants to step into their shoes; and on the other hand, their expertise, maturity and judgment and relationships are still needed. How do we incorporate this new phenomenon into succession planning? One approach I suggest to address this is to enable intra-firm lateral moves.

Lateral Moves

The legal profession has become quite accustomed to lateral moves from one firm to another, like it or not. Lateral moves to alternate roles within the firm could alleviate some of the tensions between the generations. For example, there are many needs in a professional business (read law firm) that have not been filled or filled on an adequately high level until recently. We have seen lawyers, even at the partner level, shift from full-time practice to directors or chiefs of professional development (chief learning officer), diversity, business development, pro bono, administrators for a practice group. Obviously, in the case of many of these, a firm can only utilize one person in the position.

However, a firm could have several administrative partners (non-equity) for practice groups and attorneys whose function is business development leads and client relationship management without performing billable work or being a major business generator. And large firms could have senior people in those roles in each large office.

Firms desperately need more mentoring, training and coaching for associates and junior partners. It is often not being done diligently and frequently because attorneys are not compensated for these functions and often are not even given non-financial rewards, including praise. Select those who have talent for these roles, and show they are valued.

Lateral moves within an organization are a coming trend as people shift careers over a lifetime. Many people welcome the opportunity to learn new skills and do something different. Career movement, which has been appealing to the younger generations, now has an attraction for the Boomers. Being creative in this regard provides choices to individuals, and for firms provide the luxury of being able to select qualified senior professionals who know the firm well to carry out needed functions in the firm business operations.

Merit-Based Processes

While the suggestions I have made here offer a new degree of control to individuals at all levels, it is equally important for the firm to maintain control by instituting merit-based processes for succession planning and transitioning. Again this is something the younger generations favor ' that promotions, opportunities and compensation be merit-based rather than longevity-based. Firms should require annually submitted and evaluated business plans from people requesting flexible schedules and to stay on past a specified age. A transparent process for selecting firm, practice group and other leaders should incorporate communication of criteria and clear expectations to build and retain trust in the system and among colleagues.

Conclusion

The above discussion provides food for thought for any firm serious about addressing the urgent need for succession planning given both the economic and demographic circumstances we find ourselves in. Three overarching keys to making it work are:

• Integrate succession planning into the firm's business model, incorporating continual leadership training, talent development and knowledge transfer.
• Conduct a dialogue with the younger generations and include them in the conversation.
• Revisit compensation, selection, promotion and flexibility policies to reward people development efforts and results.

It's time to jump-start succession and transitioning planning at all levels.

Phyllis Weiss Haserot, a member of this newsletter's Board of Editors, 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 (www.nextgeneration-nextdestination.com ). Phyllis is the author of The Rainmaking Machine and The Marketer's Handbook of Tips & Checklists (both Thomson/West Reuters 2008). [email protected]. URL: www.pdcounsel.com. ' Phyllis Weiss Haserot, 2009.