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.