One firm’s succession planning success story

The Journal of Accountancy‘s October cover story shares how one firm approaches succession planning. REDW is a top 200 firm with offices in Phoenix, Albuquerque, and Edmond, Okla. Christina Roderick, CPA, CGMA, is the head of REDW’s tax practice, a role she assumed in July 2020. She talks about her succession journey, REDW’s approach to identifying succession candidates early, and more.

Also, stay up to date on news related to FASB and the IRS, and get a primer on a CPA Insider feature on a topic certain to generate discussion: Taking a nap during the workday.

Here are several resources organizations can use in their succession planning efforts:

PCPS Succession Planning Resource Center

Practice Continuation Agreements: A Practice Survival Kit

Succession Planning Guide and Tools (open to PCPS members)

Succession Planning Quick Start Guide (open to PCPS members)

What you’ll learn from this episode:

• Why firm leader Christina Roderick was impressed early on by her manager’s transparency regarding succession planning.
• The role of mentoring in REDW’s succession planning efforts.
• The importance of “sharing the business of the business” with potential leaders.
• An explanation of REDW’s preparer labs and the role they’ve played in developing talent.
• How Roderick is communicating thoughts on her succession to others in the firm.

Play the episode below or read the edited transcript:

To comment on this episode or to suggest an idea for another episode, contact Neil Amato, a JofA senior editor, at Neil.Amato@aicpa-cima.com.

Transcript:                                                            

Neil Amato: Welcome back to the Journal of Accountancy podcast. This is your host, Neil Amato. This episode will focus on the topic of succession planning. It’s a vital one throughout business and one of particular importance in CPA firms.

The Journal of Accountancy’s October cover story shares the success of one accounting firm’s succession planning efforts. REDW is a top 200 firm with offices in Phoenix, Albuquerque, and Edmond, Oklahoma. Christina Roderick, a CPA who holds the CGMA designation, is the head of REDW’s tax practice, a role she assumed in July 2020. Christina, welcome to the podcast. I’m hoping briefly you can first share your journey with REDW and how the firm’s succession plan was part of that journey.

Christina Roderick: Well, first off, thank you, Neil, for having me participate in today’s podcast and discuss this important topic with you. I’m really happy to do this. My journey with REDW is very simple. I joined the firm November of 2012, and I was previously with a firm called Abalos & Associates, and we merged into REDW.

My journey came through merger. However, when I joined Abalos & Associates, which was just December of 2011, the managing partner at the time, Sandy Abalos, was very transparent with me. She let me know that she was hiring me not because of need, she was hiring me for succession, and she let me know that she was likely going to be selling or merging her firm in the next 18 to 24 months.

That transparency I really appreciated. She shared who she was potentially talking to and, of course, REDW was a suitor at the time. I really appreciated that, as it allowed me to make a decision for myself, knowing what might be coming down the pipeline in terms of succession and leadership roles, not only in her firm, but also in a firm that she was considering joining.

Amato: Obviously, that succession part was spelled out to you early. One part I think of succession is mentoring. What has the mentoring aspect of the succession plan meant to you?

Roderick: Mentoring for me, really when we talk about succession planning, means having a safety net. Having someone who you can go to with issues or concerns, someone that you use as a sounding board to make a decision. Often I’ll call one of my peers in leadership or someone within the firm who is a mentor to me and say, “I’m struggling with this issue. I’m really bothered by x, y, and z that’s occurring. Here are my thoughts on it.” Often I don’t necessarily get a reply from them that helps me form a decision, but just having the ability to go to a trusted resource, vocalize my thoughts and opinions helps me form a better decision. A lot of mentoring, at least in my current role today, is that.

As I progressed through the firm and became a partner, and then an owner, a member, and then becoming department head, I had mentors throughout those steps, and some of those mentors were firm leaders who had just more experience than I did and would maybe teach me to calm down and not be so reactionary to things. Or they are people who would maybe understand the firm metrics or the business a little bit better to me and maybe help me understand employee challenges and different ways of dealing with them. I don’t think you need to have one mentor, I think you just need to have trusted folks you can go to and speak to about the day’s issues.

Amato: For the listeners in that article, again, the cover story from October, there’s a little more info about the mentors, so do please check that out. Also, in that article was a bit of advice shared that sounds simple. It was, start early with your succession planning. The word early might mean different things to different people. How early is early?

Roderick: Well, as I shared in my story, early was really from Day One, whether Sandy was going to sell her firm or merge it in with REDW, she let me know early on that I was a potential successor to her book of work, her clientele. I always say succession is like a slow dance, really starts early and it’s both parties pushing and pulling each other through that dance.

The more you do it, the easier it becomes. Sandy was our tax office lead in our Phoenix office, and we were able to work together so well that by the end of her tenure with the firm, we finished each other’s sentences, we know what the other one is thinking because we’ve spent so much time working together on really firm management items and department management items, helping solve risk management issues or problems. It’s really helpful to just have a lot of touch points with your mentor as early on as you can.

The other thing that I would really stress is the need for communication. That’s something that I do think REDW does very well. We communicate internally retirement dates. We discuss pending retirements and where we are in transition plans. We discuss our members’ and our partners’ transition plans to basically anybody in the firm that has a question on those things.

We really tried to open those communication gates so the team knows change is coming. Here’s our plan around change. Did you want to participate in that change? There’s a lot of leadership hats a lot of us wear. It’s like, who else could be leading this initiative? Or who else could participate in something? We like to share what’s going on so that team members can raise their hands and volunteer and say, “Hey, I have a passion for that, help groom me for that role.”

Amato: I said that you assumed the role as tax leader in July 2020. So, as a newer leader, what actions are you taking today to prepare for your succession?

Roderick: So really it’s twofold. When we talk about communication, it’s really reminding our team that I don’t intend to be a department head forever. In all actuality, I’m really planning on doing it for the next five years is my window and sharing that with them and talking to our team members who I think would be viable candidates for the role and saying, “Here are the initiatives the department needs to accomplish in, say, the next 12 to 18 months.” What I find is that those folks who raised their hands to solve those problems of the department or lead those initiatives are our natural-born leaders and people who could potentially succeed in this role, and so that’s what I’m looking for as I’m communicating that there’s going to be a change, more short term than maybe people expect. Again, looking for team members who would be interested in making that change.

The other thing we do is share the business of the business with our team. REDW has a very complex structure in the sense that we’re a wealth management arm, we do a lot of consulting, we certainly have traditional tax and audit services, but we truly are an advisory firm. For someone to be in a leadership role, whether it’s a department head or a board member or really any key leader in the firm, you need to understand our business and understand how the departments interact with each other.

One of our team members actually came up with a concept, which is having us record onboarding sessions for new team members on the business of our business. What inputs matter? How do we build clients? How do we charge clients? How do we work with our clients? What kind of growth model are you on? Things that are just really important to the day-to-day operations of the business. It’s important for our team to know those things and participate in them.

In identifying successors, one thing that we did do, I’ve mentioned already is looking for team members to lead certain initiatives. So one thing that we did this year is that our tax group needs to improve our team member onboarding and training program. The best way to look for successors is to ask for help, and so in this case we said, “Who’s available to help overhaul those systems?” We had two team members, a manager and one of our seniors who stepped up and said, we see this as an issue, we understand how frustrating it is for new folks when they joined the firm and especially in COVID, right?

What they did is they created what we call these preparer labs. The preparer labs are weekly Zoom sessions that are scheduled on everyone’s calendar. If you can make it, great. If you can’t, that’s OK. They record them. What they do is they seek feedback every Monday from the tax return reviewers on commonly missed items, review points. They collect those items. They then train the team on those items, and then they have an open forum. For example, if you are a brand-new team member or perhaps an intern and you’re preparing tax returns for the first time, you may have some software problems. You may not understand our trial balance program. There’s a lot of pitfalls that makes your day a little bit harder. A preparer lab is a very safe space for our team members to come in and say, “Hey, I’m having this issue, how do I resolve it? Because I keep having it and I don’t know how to get past it.” And generally speaking, if they’re asking the question, there’s one or two other people who have a similar question and just don’t know who to ask of it. It’s a great learning forum.

The other thing that our team did that was really smart is they record these sessions and then they post them, and every time they change topics, they tag them in the video file, so a team knows, hey, if I’m having a trial balance question, go to Session 2 in minute 10, and that’s the part that I need to watch for 3 minutes. They are little increments of time, which is great because it solves the problem very quickly for our team, it’s a great resource for them to go back to when they’re experiencing the issue, and then they’re updated every single week. So, it’s been a very great way to teach fundamentals.

Amato: Yeah, I think those preparer labs are really a good lead-in to my last question because those, in and of themselves, are tips. But what tips do you have for organizations to make the transition go smoothly once decisions are made about new roles?

Roderick: I would share that, again communication, I can’t stress enough. Communication within the department on the role changing, sometimes there’s a bit of wanting to respect the person that was in the role and keep things the same because, if we change anything, it feels like it’s being disrespectful to that person, and so having the retiring person share that, “No, this is a good thing that’s happening. I’m supportive of this. I want everything to be successful.” Letting them communicate that message is very helpful. Another thing that’s really helpful is just resetting, what’s the vision or what am I planning to do and communicate that as frequently as I can. I read a quote once that said, “Trust is formed in the meetings between meetings,” and so I really find that reaching out to key team members within the department, building a relationship with them makes things a lot smoother in the department and also when I want to push a big change initiative, they are more supportive of that change because they understand who I am a little bit more, they feel safe asking me questions or perhaps sharing their concerns. I think building trust and communication is probably the thing that everyone needs to invest more time to, to be successful through transition.

Amato: Christina, this has been excellent today. Anything you’d like to add in closing?

Roderick: My last tip or closing comment is the one thing I meant to share that I hadn’t had an opportunity to is just the AICPA does have wonderful resources in their PCPS section on firm management regarding succession planning, business coaches that can be hired to help through the AICPA, checklists, and tools. I would really recommend members reach out and use those tools. There are certainly things that we’ve looked at and incorporated in our firm, and so that’s the last piece of advice I’d share and just wish everyone good luck on succession.

Amato: Great, thank you and we’ll link to some of those resources in the show notes for this episode. Christina, thanks for being on the podcast.

Roderick: Absolutely. Thank you for having me, Neil.

Amato: In other news, FASB has provided a new private company practical expedient. That was our recent JofA headline. What that means, briefly, is that FASB has issued a standard that says that private companies that issue equity-classified, share-based awards will be able to elect a practical expedient and apply a reasonable valuation method to determine the current price input of these awards offered as compensation.

Also, the IRS recently clarified the standards that a limited liability company, or LLC, must satisfy to obtain a determination letter that it is exempt from taxation under Sec. 501(c)(3) of the Internal Revenue Code.

Dave Strausfeld has that article on the guidance, which includes specifics on the language in an LLC’s articles of organization and its operating agreement.

And finally, a CPA Insider article delves into the topic of the at-home power nap. That’s right, people who work from home can be really tempted to curl up on the couch and get 20 minutes of shut-eye. Who knew?

Experts say a nap can be refreshing and help you be more productive, but the most important advice from the article is that the nap shouldn’t be abused. The same way you might be refreshed by taking a walk or listening to that new podcast, maybe when you’re wrapping up lunch, is how you should think about a nap. Listening to one episode: Certainly OK. Spending half the afternoon asleep or bingeing the whole show: Not OK, and a disservice to you and your organization. Longer sleep during the day might throw off your nighttime schedule as well. You can read more about napping best practices by going to the JofA homepage and scrolling down to the CPA Insider heading. We’ll also provide a link in this episode’s show notes.

That’s all for this week. Be sure to subscribe, share, rate, and review the Journal of Accountancy podcast wherever you get your podcasts. Thanks for listening.