Making the Case for Making Less

Setting your focus on profits aside might be key to motivating your talent and unlocking your firm’s long-term potential. By BRIDGET McCREA | Fall 2019



Keeping teams lean and squeezing as much as you could out of every single staffer in the name of profitability was once the goal. After all, there was a time when talent was plentiful, unemployment rates were high, the economy was weak, and people generally just accepted the fact that being employed—especially being employed as a CPA in a firm or corporate setting—required long hours and extra effort.

Fast-forward to 2019 and the recruiting and retention landscape looks a lot different for accounting and finance than it did, say, 10- 15 years ago. Illinois CPA Society member Russell Romanelli, CPA, managing partner at BKD CPAs & Advisors in Chicago, says that staffing is a primary concern among most accounting firms right now. It turns out that the industry’s long-standing reputation as a place that requires long hours behind a desk isn’t doing the profession any favors.

“I actually fear for the industry going forward,” Romanelli says. “If this industry is going to attract talented professionals, we have to make it more appealing. We really need to get this resolved; there are just too many other industries that have tackled this issue better than we have. We’re losing.”

About a year ago, BKD decided to start operating differently—its “new normal” would be putting a bigger emphasis on helping employees achieve better work-life balance. This move was important to the firm for two reasons. First, the profession isn’t attracting the number of college students and graduates it once did. “There’s a stigma associated with public accounting,” he says, “so the pipeline is growing thin.”

Second, the people who are coming into the profession are being worked to death. “If we keep giving them tons of hours without accommodating their personal needs or giving them the job flexibility that they’re looking for, we’re just going to scare them away,” Romanelli says, noting that three-to-five-year talent is particularly hard to hold on to in recent years.

“They’re the ones who stay a few years and leave just when we’ve been able to indoctrinate them into the business,” Romanelli shares. “If the work-life balance isn’t right, they move on to look for greener pastures.”

This year, the firm took an “all-hands-on-deck” approach to solving this retention issue by hiring an additional 10-12 employees—on similar revenue. In other words, the firm is setting profits second to its people. “We’re trying to attack it,” Romanelli states, explaining that BKD is concurrently taking a closer look at the clients that don’t necessarily fit its business model.

In return, Romanelli is hoping to create a better work environment for BKD staff, managers, and partners. “In offices where we’ve added people and thinned out the client ranks, morale has definitely improved,” he says. “Our team members now have the capacity to really focus on the clients and can even look for new ways to provide them with value—versus focusing on compliance.”

PROFITING ON PEOPLE PROBLEMS

CPA firms are in the people business. If you track partner income, for example, you’ll see that there’s a direct correlation between the number of employees and the amount of money that a firm makes. “Every time you add a team member, you’re adding more profit,” says Bill Reeb, CPA, CITP, CGMA, CEO of Succession Institute LLC and the 2019-2020 chair of the American Institute of CPAs Board of Directors.

Still, as he looks around at the accounting profession, Reeb sees a lot of understaffed firms. That’s because many of them are simply unrealistic about the number of people they need, not only to handle the firm’s current capacity but also to respond to the firm’s growth, the good employees leaving unexpectedly, and the marginal employees leaving at the firm’s direction.

“When you factor all of that together, you’ll find that most firms are understaffed and have a hiring plan that has no chance of rightsizing staff capacity,” Reeb states. “It’s not like they are better off using this strategy due to the negative morale created, staff dissatisfaction with their jobs, and paying the higher compensation required to console the workers for their extra efforts. There is a higher cost to overworking people than most firms consider.”

Some of these problems date back decades to a time when accounting firms (and other businesses) ran on the belief that once they got the business, they’d go out and find the talent to serve it. “The fact is that you’re not going to be able to hire a bunch of good experienced workers in today’s job market,” Reeb warns. “A lot of companies tell me that they have a hiring plan to bring in several five-, seven-, or eight-year people; I tell them that’s not a hiring plan—it’s a pipe dream.”

A plan must be something you can execute, after all, like hiring people out of school and developing them, Reeb continues. “If you actually find the number of experienced qualified people you are looking for, it’s more about luck.”

GETTING DOWN ON DEVELOPMENT

Reluctance to “push work down” to non-partners also comes into play here, Reeb says, who sees too many CPA firm leaders hoarding work at the top, which leaves less experienced employees sitting with too little challenge to keep them engaged. “It is common to find people, at every level, regularly working below their levels,” he says, stressing that there’s simply not enough time under current practice for partners and managers to even do the work that only they can do.

Reeb suggests accounting firms can reverse this problem by hiring more workers, training them, and giving them more meaningful work. For example, firms can fast-track training by setting up 20 different sample tax returns of increasing difficulty. Anytime a worker has 15-20 minutes available, have him or her start working through the next level of tax return in the hierarchy. And at various intervals, or upon completion of each return, every mistake made is an opportunity for the staff member to learn and get better. This will give them hands-on experience making them ready more quickly for more complicated work to be passed down to them.

“As a profession, we have to change our attitude about pushing work down,” Reeb says. “Then, we have to change our attitude about realization. It is a good management tool, but used as a key operating metric, it can create more baggage than value. There’s no reason why a new person can’t be billable all the time if we just change the way we think about our business.”

RETHINKING STAFFING OPTIONS

“Firms that want to offset the burden of employee burnout need to rethink their business models. There are all types of jobs in public accounting firms that can be reimagined,” adds Jennifer Wilson, partner and co-founder at ConvergenceCoaching LLC in Omaha, Neb.

“Firms get caught in the same paradigm and aren’t taking advantage of the different staffing options at their avail,” she suggests. For example, firms could consider hiring customer service representatives to serve as client liaisons who manage data entry and handle myriad other administrative tasks. Outsourcing is another option that can help ease some of the burden of compliance work.

“Ultimately, if it feels like you’re operating with a maximize-my-earnings business model mindset, the people who stick around probably aren’t the kind of people you want on your team,” Wilson says. “If your firm has historically been focused on maximizing profits at the expense of employee work-life balance, at some point, corporate greed is going to become a very unattractive quality in your firm.”

Every firm is grappling with ways to raise revenues, improve productivity, and reduce employee burnout. While adding more people to your team may seem counterintuitive to those who are solely profit minded, giving staff the capacity to do more meaningful work, and consciously cultivating their success, could yield dividends that surprise you.