Succession or Regression?

Last week I attended the annual confab of one of the state societies in the Midwest where – with fingers crossed - our exhibit booth was in full display to the hundreds of attendees at least some of whom we hoped would avail themselves of our services.

As it turned out, many belonged to my self-coined acronym - SPISCPE – sole practitioners in search of continuing professional education. Brief conversations with several resulted in similar outcomes – either they were looking practice continuation agreements or they would work at their firms until they no longer could. This included one elderly owner who navigated to my booth on a motorized scooter and sported a military tattoo from the Korean War.

Which in a tangential fashion brings me to the missive of the day – mandatory retirement. Most of the Big Four, super-regional and even regional firms have mandatory cutoffs for partners and principals – where it be 60, 62 or 65. However, lately, the Equal Employment Opportunity Commission has been pressuring a number of the global audit firms – most recently PwC, KPMG and Deloitte – to discontinue said policies.

The EEOC is citing a 1967 law the Age Discrimination in Employment Act, which essentially prohibits mandatory retirement ages for employees at most businesses. However, partnerships have typically been exempted from the legislation based on the theory that owners can’t discriminate against themselves.

In response the American Institute of CPAs has requested the EEOC to cease the action citing a laundry list of concerns – including one that sort of dovetails into a host of other concerns for CPA firms and the profession as a whole – that of impeding an orderly transition of younger members of a firm toward the partner track. With recruiting and retention at such a high premium at thousands of firms, there’s probably nothing more discouraging for a promising newcomer than being told that the line for partnership forms to the right with no discernible timetable.

That’s an exodus just waiting to happen.

At many of my presentations throughout the year I list what Millennials and members of the younger generation want from their accounting firm employer and of course salary and benefits are at or near the top of the list but lurking just behind is opportunity to advance. And allowing partners to remain on ad infinitum, would more or less erect a border fence to that personal and professional growth.

Someone once joked that the nine most frightening words in the English language are: “I’m from the government and I’m here to help.”

Case in point for the future ranks of the profession.