I started this as an entry in my written journal (yes, it’s true – I still write a journal by hand), but this topic is near and dear to my heart and I felt it was important enough to write it out on my blog. I read this thread on Reddit and it made me think (again) about the nature of the profession and WHY being a CPA is so hard.
I’ve been an auditor for nine and a half years and being a CPA isn’t easy. It’s hard work, the hours are long, clients are difficult, and the rules seem to be constantly changing these days. (I’ve been hearing that US GAAP and IFRS are converging for almost 20 years and they’re actually finally getting close to it.) I’ve had good busy seasons and bad busy seasons. I’ve had busy seasons where there wasn’t enough work to go around and I’ve had busy seasons where there was too much work and too few people. The job cycles with the economy – when times are good, there’s plenty of work; when times are bad, there’s not much to do.
What I don’t understand is why we still expect our staff to work themselves to the point of exhaustion week after week during busy season. I don’t understand why we’re still expecting staff to “figure it out as they go along,” to “learn on the job.” I don’t understand why we still have the mentality that because busy season was shitty for us that it should be shitty for everyone who comes after us (and if we’re stressed out then everyone else has to be stressed out). It’s like the professional version of hazing – in the old days, I had to chisel my workpapers out in stone and send them to a partner in another state for review and if he hated them he’d call me up to yell at me personally and I took it and liked it! Y’all, I can’t believe that in the year of our Lord 2019 I’m still listening to people act like using Excel is “the easy way out,” and that leaning on technology makes you lazy.
The majority of the people who enter this profession are intelligent, well-educated people who can pick up new ideas quickly. A few become “super stars” and do so well that they’re able to take on harder work sooner than their peers. And a few of them are the kind that don’t do well for one reason or another and either linger until they’re fired or realize the job isn’t for them and they quit.
What I’ve noticed in almost ten years, based on my own experiences and in listening to friends’ experiences, is that a lot of the “pain” of busy season is self-inflicted. Partners and managers recall their own awful experiences and think that’s how it should be. Staff and seniors come to expect it based on the horror stories from their peers and their managers and partners. Firms are disincentivized to change because staff want the experience and the name on their resume. They’re willing to be put through the grinder for two or three years to get a big name firm on their resume and then move on to a better job.
What’s missing from the equation is stopping to ask yourself, why? Why does it need to be this way? For many firms, the most important thing is name recognition and a big bottom line. Investing in staff training and technology to make the work more efficient is hard and can be expensive in the short-run, so firms that are focused on today’s bottom line are not interested in doing so. They’re also more likely to expect (and demand) more out of lower levels to get higher realization rates – if a senior is expected to do manager-level work, the firm can get the same work at a lower rate than they would if the manager did the work.
While it’s true that expectations should be set high to provide an incentive to excel, the long-term impact of demanding that your staff do senior-level work, seniors do manager-level work, and managers do partner-level work, from day one is that your teams get burned out. They get to the point where they don’t care – the firm becomes a revolving door of kids who come in as interns and then leave as seniors because it’s too much to handle for too little payout. Then partners and managers will excuse it with the phrase, “Not everyone is cut out to be a CPA.” Well, sure, that’s true – not everyone WANTS to be a CPA either. The skill set and intellectual demand is a barrier to entry for people who hate numbers and don’t want to wade through thousands of pages of rules and regulations to do their jobs.
What I’ve seen over the years is that firms don’t want to change. End of busy season parties and summer golf events are seen as an easy morale booster for people who make it through busy season. Morning donuts are supposed to make you feel better for working 20 hour days the week of filing. Yet people keep leaving because the expectations are too high, because when they don’t meet expectations they’re yelled at, because if they’re less than perfect they get shuffled around, because yelling and verbally abusing people lower on the totem pole is normalized. Then I have to sit through lectures or read articles about how Millenials are lazy, disloyal, and don’t want to do “real work” blah blah blah….
David H. Maister writes in his book True Professionalism that “[t]he point of any business is to find ways to make money without working harder.”
“Increasing your utilization means you made more money because you (or your people) worked harder. This is certainly an accomplishment, but it still is primarily a short-term achievement.”
Maister’s point is that a firm has to earn respect, to get the market to place a higher value on the firm’s work, which will make clients want to pay more for the service. Firms earn respect by expecting professionalism from their people, from training their people to be professionals, and from leading by example. They earn respect by caring about both their clients and their people.
Instead, I see CPA firms trying to do more with less – giving clients a “bargain” so they feel good about a “necessary evil” (whether it’s an audit to maintain compliance with the SEC, or a tax return) and then demanding their teams do more with a smaller budget. That mentality will make clients see the firm as a vendor, to challenge the firm’s billings, and to continue to demand more for less. Maister goes on to say, “Working hard and cutting overhead costs are easier to do than achieving increases in your rate or leverage.” Which is true. A smaller bottom line is scary for people who care about today’s profits but not tomorrow’s.
In order to demand professionalism from your staff, however, you have to invest time, energy, and money into training – both technical skills and soft skills. You also have to invest in technology, look for better ways to do things. If your staff come in to work every day because they tolerate what feels like abuse so they can get a name on their resume so they can work somewhere else, you’re not building a healthy firm. You’re cruising on name recognition. And if your staff don’t like what they do, they’re not going to care about your clients, and your clients aren’t going to care about you. And if your clients don’t feel valued, if they don’t feel like you care about them, then why would they want to stay?
The main reason I hear companies say that they want to take their business away from Big 4 or other large firms is that they felt like those firms didn’t care about them, that they were being ignored or undervalued because they weren’t important to the firm. That’s exactly the reason I hear from people who leave those firms to go into industry or to a smaller firm – they were just a number, just a cog in the machine, they were expected to do more work with fewer incentives to stay.
I’ve heard people say that staff feelings don’t matter, that staff just want an easy job with a big paycheck, so why should we cater to lazy people who don’t want to work hard? But I don’t think that’s true. There’s a big difference between staff who legitimately don’t want to work hard, and staff who work hard and want to excel but don’t want to be treated like crap just for a paycheck. If you develop your staff, if you give them resources and coach them and train them, they’ll want to stay. They’ll want to do well. If you read down the thread you’ll see a number of horror stories from staff who worked for people who didn’t care, didn’t want to care, and just wanted to squeeze as much work from them as possible. But staff feelings SHOULD matter. Staff who are well-trained and care about the quality of their work and their clients turn into seniors and managers who care about their clients, and then into partners who have a good reputation and bring in clients who want to work with them, and who bring in staff who want to work for the firm. If your staff are failing and your realization rate sucks and your clients are shitty, then it’s probably a failing on your part – either from failing to train staff or from bringing in any old client just to make a buck or from treating your clients like they’re just a revenue source.
I’ve been a mentor or a coach for most of my career. I still care about my former staff who have moved on and I definitely offer to coach them through tough situations at work (or at home, if they want someone to give an outside point of view). Today’s bottom line doesn’t bother me as much as tomorrow’s or next year’s. If I want to have long-term productivity and profit, my staff’s feelings absolutely matter, and they’re going to continue to matter even after they’ve moved on. Treat your clients and teams like they’re actually people (because they are) and you’ll do well in the long-term.
By the way, if you haven’t yet read David H. Maister’s book, I highly recommend it. It has important advice for both the professional service firm and for professionals.