Next Generation Next Destination

YOUNG GENERATIONS’ APPROACH TO PHILANTHROPY

For some time I have been following the philanthropic and legacy efforts of Generations X and Y and how they differ from Traditionalists and Boomer generations in general. Also I’ve been advising on conflicting approaches within families that financial advisors and planners often need to address with their clients. So the report “Next Gen Donors: Respecting Legacy, Revolutionizing Philanthropy” by 21/64 and the Johnson Center for Philanthropy caught my interest. I found the conclusions align pretty much with my more limited research and my experiences working with inter-generational workplace issues.

The examples of what twenty-somethings are doing are quite enlightening. As always they want to do it their own new way, not only in their use of technology, but also in making it about connecting with other people. Though some of the young people I worked or spoke with had substantial wealth, most others were finding ways to donate very limited assets and make them add up to become very meaningful contributions.

Here are the typical elements I noticed concerning this philanthropic activities.

• The younger generations are looking for an “experience.”
• They prefer ongoing involvement rather than an annual event.
• What really juices many of them is to be able to connect directly to the recipient of their contribution
• They use e-mail blasts to urge everyone they have ever come in contact with to join in. They are very open in their connections and it’s all about connecting.
• They like voting for “the person who contributes the most…” and cash awards and recognition.
• They are drawn to compete in contests; they like competitions and prizes.

According to Sharna Goldseker, Managing Director of 21/64, consultants on strategic philanthropy and the generations, beneath the surface of much of the under 35-year-old involvement in philanthropic projects is a search for their own identity.

Keep in mind that the Gen Y way is another search for community much as Gen X did, but perhaps for different reasons and with a desire for individual attention. Gen X originally sought community at work because it was missing for them outside of work. Gen Y has been educated in a more collaborative environment and it is their modus operandi.

I definitely see the desire to be hands on and to produce measurable change with their giving. Interestingly, this has been characteristic of the Boomer generation of women donors and something I personally very much relate to. All my professional life I have observed that women donors don’t simply want to write checks.

As for the under 35 year olds in families with foundations desiring to maintain family bonds as philanthropists, that is not surprising. Gen X and Yers are typically quite family-centric. The tension comes.from wanting to have a strong voice and their own style of philanthropy while maintaining family harmony

Millennials don’t think they have to wait to be older and richer. They think they can make meaningful contributions right away, and they do it creatively with new methods and tools.

Phyllis Weiss Haserot     www.pdcounsel.com.

EXCUSES TO AVOID SUCCESSION PLANNING

It’s not a secret that the majority of organizations are not doing succession planning and certainly not doing it below the highest levels though they give a lot of lip service as to how important it is. Many of those that do some sort of succession planning hold the process and the chosen successors close to the vest.

Why do organizations closely guard their succession plans? Several surveys cited in an article on Human Resources Executive Online indicate that the reasons are often based on internal forces as much as external ones.

So the reasoning behind the lack of succession planning is complicated. An article from HRE Online discusses a variety of rationales, including lack of transparency. These exist in companies of all sizes and at all levels, not just the C-Suite. The “secrecy” may be attributed to:

• Business competition and not wanting external competitors to know their plans.
• There may not be an actual succession plan.
• They fear those not on the list of candidates may become disengaged and disgruntled.
• Fear that another division in the company may poach the designated successor for its team.
• Circumstances may change affecting strategy and who is best to implement it.
• Top leaders may want to retain the flexibility to change the list of candidates.

Organizations grapple with not only whether or not to make the process transparent, but also if they should let the high potential candidates know they are being considered. The risk of telling them is they may get to feel entitled and others may feel disenfranchised and that they are not getting development attention. Whether or not the candidates are told of their status, the criteria for choosing successors should be specific, performance-based and widely communicated throughout the organization.

Phyllis Weiss Haserot     www.pdcounsel.com

 

BETTING ON THE UNKNOWN. HOPING POTENTIAL ACHIEVES GREATNESS?

Good news for the younger generation? Does this explain high salaries large firms pay to inexperienced law school grads?

As reported by the Wall Street Journal (7.25.12) a study by Stanford and Harvard scholars that consisted of 8 experiments with people in a wide variety of settings found they get more excited about individuals with promise and potential than they do about those with an actual proven performance record. Further, people are more willing to hire and pay more for the individuals with high potential.

The researchers could only speculate as to why this is so, but the findings were consistent.

Is uncertainty more appealing, the gamble that the high potential individual will achieve greatness? What do you think?

 

PROFESSIONAL PARTNERSHIP TRANSITIONING PREDICAMENTS

My guest blogger for this post is Brannon Poe, CPA of Poe Group Advisors in Charleston, SC, who advises accounting practices on practice management and selling their practices and author of Accountant’s Flight Plan.

There are two dilemmas that rattle the human skull: How do you hang on to

someone who won't stay? And how do you get rid of someone who won't go?

Danny DeVito, in The War of the Roses

When it comes to practice sales, timing is everything. It’s rare for practice partners to have the same exit timetable. Tensions mount when one partner wants out and the remaining partner either doesn’t want to buy the business or sell to a third party. If partners are the same age, the odds for a smooth dissolution are improved, but even a couple of years’ difference can strain a sale. 

In a small practice, the process of selling or retiring is complicated for both the senior and junior partner in question. Motivations are completely opposed. The senior partner is ready to move on, while the junior member is often very resistant—understandably apprehensive about the changes this will mean for the business’s operation and his or her livelihood. Change is rarely welcome, and taking on a new outside partner can be a frightening prospect, as is the possibility of running the practice without the senior partner. Finding the right replacement partner is far easier said than done—just ask any departing partner who has tried to please an objection-filled remaining partner! Sometimes the junior partner is empowered by this naysayer role, and any perceived previous injustices seem to rise to the surface as negotiations move forward.

Making someone a partner is a significant step, one that shouldn’t be taken lightly. If you feel that partnership is the right path for your practice, great care should be given to selecting an attorney who can help structure your partnership agreement. This contract should clearly address exit strategies by any one or a group of partners. Excellent legal advice at this juncture is one of the best investments you’ll ever make.

Spend some time and money on your partnership agreement and make sure the lawyer you use has significant experience in this area. You’ll be glad you did.

Brannon Poe, CPA

www.poegroupadvisors.com

The above is an excerpt from Accountant’s Flight Plan, Best Practices for Today’s Firms.

 

MANAGING THE RISK OF MID-LEVEL SCARCITY - Suggestions

I ended the last post saying once again organizations have to play catch up, figure out how to replace the mid-level talent and engage them in fostering the younger talent, many of whom are eager to leapfrog them. There is no quick fix, but here are some thoughts on aligning management of the risks discussed in the earlier post and talent management.

• When hiring, really think fit and attitude before skills on a resume. You’ve probably heard that “culture eats strategy for breakfast.”
• Hire people who buy into an articulated belief system that includes instilling the good behavior and belief system and the professional development of young talent.
• Make that an explicit part of the job description and reward system. Some of the large accounting firms as well as “best place to work” companies do this.
• Facilitate dialogues among the different generations to avoid/eliminate friction when mid-level Gen Xers are asked to supervise and mentor Gen Y/Millennials and Boomers to do the same for Gen Xers.
• Avoid decimating or sharply reducing mid-level personnel during economic downturns. Instead, selectively offer reduced schedules at reduced pay to minimize lay-offs of valued talent and maintain a consistent competency level during economic cycles. Clients hate turnover and want to see familiar faces.
• Cross-train people to take on other roles when their work slows, including training and coaching junior staff.

Firms must figure out how to better manage the risk of talent and skills shortages. The past record has been far from stellar. Ability to maintain high professional standards in serving, and thereby retaining, clients is at stake. That’s too big a risk to warrant inaction, especially since change happens faster than ever.

Please share you thoughts in the comments section.

Phyllis Weiss Haserot    www.pdcounsel.com

 

 

SAME OLD TUNE: SUCCESSION PLANNING STILL LAGS

Nearly one-third (31 percent) of companies with more than 1,000 employees said they don’t currently have a succession planning program at their organization. This was reported in a new Career Builders survey. 50 percent of senior management (CEO, CFO, Senior VP, etc.) and 52 percent of those in a vice president position said they do not have a successor for their current role.

Responses when asked what is lacking in their current succession planning program:

•     Not enough opportunities for employees to learn beyond their own roles – 39 percent
•     Process isn’t formalized – 38 percent
•     Not enough investment in training and development – 33 percent
•     Not actively involving employees or seeking their input – 31 percent
•     It only focuses on top executives – 29 percent

Managers also reported that workers’ awareness of and input on their own succession planning is important. Forty-nine percent of employers said employees don’t set up career paths with their managers with timelines and milestones.

Still a top HR priority. Still little positive action.

The neglect of career planning is going to bite as the economy comes back to life and people have more options.  High potential personnel will be waving bye-bye for the places that promise an appealing career path at any age.

 

 

LIP SERVICE WON’T RESULT IN A SUCCESSION PLANNING AND TRANSITIONING WINNER

The American Management Association (AMA) surveyed 1,098 senior managers and executives in December 2010, and released the results in late March 2011. 43% said their senior management team is “sporadic in its commitment” to succession planning, 34% said their team is “genuinely committed,” while 14% said their team just “pays lip service” to succession planning. So at least 66% are not “genuinely committed” and working on their succession plans for all positions that are critical to avoid business disruption.

 This is a critical issue for Fortune 500 businesses, where 1 in 5 executives are reaching retirement age with no named successor in sight. It is also critical for professional firms, whose main assets walk out the door every night, and not-for-profits and many other types of institutions as well as small business.

Why is so much succession planning talk just lip service? Why does a process so obviously an asset in avoiding business disruption and client defections so widely resisted?

There’s a lot of denial underlying the widespread inaction. To varying degrees I believe it’s about:

• Individual’s, particularly Baby Boomers now, fear of losing influence, clout with colleagues and clients;
• Fear of change of direction, personalities and policies;
• Reluctance to admit that talent will defect
• Unwillingness to confront mortality

Can you add other reasons?  Please do comment.

One solution is to establish an ongoing process for succession planning and transitioning as an institutional and cultural expectation. That becomes an integral part of the business model and is applicable to everyone. It’s not a personal judgment. It’s a business imperative and a foundation for sustainable success.

Enough of silence and lip service.

Submit your comments here. Thanks!

Phyllis Weiss Haserot     www.pdcounsel.com

 

 

WOMEN AND SUCCESSION PLANNING

How will findings in management consulting firm McKinsey & Co.'s report released April, 4, 2011 affect succession planning?

The report examines barriers to women’s advancement in corporations and concludes that what has kept women from reaching top corporate positions is inadequate career development. The report’s author, Joanna Barsh, who is a McKinsey senior partner, said that companies were not systematically watching women in middle management positions. They were not establishing programs, including coaching and “sponsoring”, that would help them develop and get over the hurdles to their next promotion. Lack of that assistance made the barriers become insurmountable.

Findings were based on a 2011 survey of 2,525 college educated women and men; 1,525 of them were employed in large companies, mostly in management positions. The researchers found that the ambition of women declined sharply between age 45 and 54. About 64% of them expressed a desire to advance professionally compared with 78% of men in that age cohort. That varied significantly from the 23 to 34 years of age range in which 92% of women and 98% of men expressed eagerness to advance. The fault was not with the popular belief that women can’t juggle certain jobs if they have family responsibilities. There is a mindset that must be changed that limits women’s opportunities.

The report said that even a 25% increase in the ranks of middle management women reaching the next level (for example vice president) would significantly change the pipeline. Now only 15% of executive committee positions in Fortune 200 companies are filled by women. And the majority are in staff positions that rarely lead to a CEO role.

One remedy the report suggests is that the performance of top managers be partly evaluated on their ability to groom and promote women. A determined effort to groom more women would increase the number in the succession planning pool and perhaps even increase the amount of succession planning that is actually done, preparing companies with a stronger, better prepared and dedicated bench.

What are your thoughts? How will men react? Please comment?

Phyllis Weiss Haserot   www.pdcounsel.com

 

POLITICAL REINVENTION, AND THEN SUCCESSION PLANNING

I am thrilled to see the success of the young people of Egypt and elsewhere in the Middle East and northern Africa striving for democracy with so far so little violence. If – and it’s a big if – they can bring about positive change in a peaceful way, they will have shown that this Gen Y/Millennials generation has strong convictions and the will to fight for them with less of the lasting harm the protests of the Baby Boomers in the 1960s brought.

Since it takes two sides to come together, perhaps the older generations will learn something too about achieving change. It’s too early to tell, but you know I’m an optimist.

Now the harder part, succession planning and peaceful succession 

Phyllis Weiss Haserot

CFOs OUTLOOK ON RETIREMENT, SUCCESSION PLANNING AND TALENT RETENTION

The 3^rd Quarter CFO Outlook Survey, conducted by Financial Executives International and Baruch College’s Zicklin School of Business, showed optimism on hiring and a desire to delay retirement out of both desire and need. The survey comprised interviews of 249 corporate CFOs electronically from October 6-14 from both public and private companies and from a broad range of industries, revenues and geographic areas, including some off-shore companies. 

The survey also revealed the following priorities coming out of the recession and following the staff reductions experienced by many:

• Retention of remaining talent is a priority for 80 percent of CFOs.
• Training and development ranked as the top tactic for retaining talent (47 percent).
• Compensation followed closely (45 percent).
• Improvements to office atmosphere (35 percent)
• Team building (35 percent), and
• Ensuring opportunities for career advancements (30 percent).

The survey found that many CFOs plan to work beyond the traditional retirement age. Further, they are, in fact, in favor of increasing the retirement age. Forty-one percent anticipate that they will work past age 65 out of desire while 31 percent will do so out of need.  Three percent of them already are working beyond 65. As for an overall increase to the traditional U.S. retirement age, 59 percent favor it, with three years being the average desired increase among those respondents who specified an age.

Succession planning continues to lag despite lip service to its importance. Only 30 percent of responding CFOs currently have a plan in place. While 40 percent of the remaining CFOs believe a plan should be created, another 31 percent do not see the need for one at all.

Full survey results and historical data comparisons are available at www.financialexecutives.org.  The study also is available online at the Financial Executives Research Foundation bookstore and on the Baruch College home page at www.baruch.cuny.edu.