How talent management sets successful accounting firms apart
Finding and keeping the right people seems to be the topic at the front of everyone’s minds in the era of the Great Resignation. The accounting world is certainly no exception.
Karbon’s 2022 Practice Excellence Report analyzed more than 1,000 accounting firms around the world to understand their performance and priorities. One of the key factors setting apart leading firms from the rest of the pack? Talent management.
I sat down with Jeff Phillips, Co-Founder of AccountingFly and CEO of Padgett Business Services, and one of the most qualified voices to speak to this problem and how accounting firms can solve it. We discussed retention, remote work, and how CEOs can set their firms up for success.
My top takeaways:
Before 2020, accounting firms deeply felt the impact of talent turnover—and the pandemic accelerated these effects. To retain talent, a strong onboarding program is one of the most important ways to ensure new hires stick around.
Today’s talent demands the flexibility to work when and where they want. Firms that don’t offer this kind of culture will miss out. But firm leaders should still seek opportunities for regular face-to-face interactions to foster a healthy, connected culture.
The most successful firm owners—even those that are deeply client-focused—can step into the CEO role and delegate the day-to-day ‘doing’ to their team. This further empowers staff members to expand and deepen their skill sets. This enrichment and the trust of their leadership also improves morale and retention.
Here’s a recap of the high points from our conversation.
The challenge of talent management for accounting firms
Ian: In the Practice Excellence Report, talent management was the highest changing aspect between 2020 and 2022. That was because of the immense resources required of firms to distribute stimulus funding from federal governments across the world. But it was also a focus because firm leaders needed to not only hire new talent but retain talent because of the sheer amount of work.
Before, you could churn and burn a bit, and you might be able to get seasonal employees. But now, you're trying to hold together this team that's having to work night and day, weekends, holidays, for over two years in an unfamiliar, virtual environment. And that forced the hand of a lot of practitioners. Those that rose to that challenge were able to succeed. Those that didn’t ultimately found either retirement, decreased business, or had other troubles overall.
Jeff: When one person leaves an accounting team, the rest of the team is overburdened by the work left by that person. It’s like putting too much weight on a structure: It starts to collapse. Then the team starts to fall apart.
Before we even got to the pandemic, accounting firms up to $20 million in revenue were experiencing 25% annual turnover of their staff to begin with. Finding qualified talent was always the number one issue in the AICPA issue survey. We were already in a struggling hiring environment, but the pandemic accelerated all of these things.
Our industry is set up to burn people out, but over the last decade it had gotten to its max peak—before we even hit the pandemic. Now it’s gone through the roof.
Recommended reading: This is why so many accountants are burned out and quitting right now
How firm owners should tackle retention
Jeff: Don't panic-hire! You need to have a thought-out system for hiring people, whether it's full-time or freelance. If you panic-hire, you’re setting yourself up for failure down the road.
One of those differentiating markers is a good onboarding program. Firms that don't take a really strong system-based approach to onboarding new employees will fall behind the eight-ball. There's a huge line between firms that build systems around great talent management and firms that don’t.
Ian: Absolutely. And while accountants view client onboarding as one of the most critical jobs that they need to do, employee onboarding doesn’t get the same degree of attention. Staff onboarding actually starts in the interview process, but it definitely kicks into gear right after there's a verbal agreement to move forward. Onboarding serves the purpose of making sure people know they made the right decision. That way, they have no regrets and won’t even be able to entertain other offers because it's not just about the money: it's about opportunity.
Jeff: How we get work done inside the firm is another differentiating marker. This is an opportunity for automation technology. We've got to get our staff away from lower-level tasks and move them up to more strategic-level tasks—and automation allows us to do that.
The culture of the business is also key. One of the things we learned about the Great Resignation is what people are looking for: they want top compensation, but they're also looking for flexibility, work-life balance, and meaningful work.
So top talent management companies are going to address that on an individual level. They’ll be patient, caring, and compassionate about that before they even start talking about how to get the work done.
Ian: The number of people leaving the profession is at a much faster rate than those coming in, and it's causing a huge compression on talent. People are looking for a different way of working. If I'm a bookkeeper, I'm not looking to just turn the crank like I was before. I'm looking to get more enrichment, like with automation systems that allow for work to be done more efficiently. But I’m also looking to have more fun with the work that I’m doing.
You have to put your people into situations where you are watching for their career, and you are intrinsically involved in their growth. Unfortunately, that can be outside of your firm—but you have to be comfortable with that.
The increased demand for remote work
Ian: There are things you can do to provide a sense of purpose, as well as flexibility in the way that millennials want to work. It's not that they don't want to work: They work within their ability to own the opportunity on their time horizons.
But at the most senior levels, those who are in their late 50s and 60s are tired—and then when they were ready to retire, COVID hit, which no one expected. Now they're in a situation where they don't want to be working those types of hours, but they feel forced to—and they want to have that balance as well. The desire for flexibility is almost across the board, but different demographics want it for different reasons.
Jeff: Millennials have this massive increase in desire for flexible location and flexible time over Gen Xers and Baby Boomers. Regardless of what your opinion is about giving flexibility to your staff, there's a market for this: 51%+ of your job candidate market is demanding to work when they want to and where they want to. When you're not giving that to your potential hires, you lose. You have no shot.
On the other hand, we've gotten so dependent on virtual environments that we're very isolated from one another. People are really burned out inside their own jobs and inside firms. We need to address that isolation: I recommend quarterly fly-ins to get these people together for fun and for work. We're getting the benefits from remote work, but we're almost taking advantage of it a little bit.
Ownership and structure of successful firms
Jeff: I want owners to look like CEOs—not accounting firm practitioners who happen to hire people. Our most successful owners made this switch to overseeing a system, investing in people, and planting seeds as a daily practice, rather than remaining in this reactive client service mode. When my CEO-type owners give real authority to their staff, great things start to happen in these firms. The people are getting developed and sticking around.
Ian: I often see owners’ love for client services and also their fear that others‘can't take care of my clients in the way that only I can’. A lot of times people will also say, ‘I stay involved in the day-to-day because I can't find any good people’. In that case, you are hiring staff members that are not qualified to take on client-facing work. And instead, you need to pay up and find someone who can run an accounting firm to be in a client-facing role, trust them, and move into a CEO role.
Jeff: If I’m running an accounting firm and I'm smaller, one of the things I get joy out of is working with clients every day. The problem is, as the firm grows, these CEOs can't let go of that particular aspect—they still want to own, control, and have those conversations. But as the firm gets bigger, you have to wear more of a CEO hat versus a doer hat. That means you have to let certain tasks go to your team, and you have to focus on the things that they're not comfortable doing.
People who go into accounting love the work and the satisfaction of helping businesses run better. It’s important work. It’s a proud work. It’s not accounting that is broken. It’s the career plan of public accounting.
Closing thoughts on attracting talent
Jeff: Attracting talent is doable. Do not write this off. It's not only doable, but you have to do it—you don't have a choice. Things have changed.
The first thing is that compensation has changed, and it's gone up. It's gone way up.
Ian: The market used to be your local geography, but now it’s a national geography due to remote work. That's caused the shift.
Jeff: The second thing that's changing is the pace of hiring. If you're hiring tax accountants, for example, in years past, you might have started that project in August. Now, you need to start in May.
If you think it's okay to let that email in your inbox from a candidate sit today, that would be a mistake. We need to keep the candidates warm, bond with them, engage them, and move them along the hiring process.
Ready for more thoughts from Jeff on finding and keeping talent? Keep your eyes on Karbon Magazine for the latest resources featuring Jeff’s wealth of wisdom on talent management for accounting firms.
In the meantime, review AccountingFly’s resources for more on these topics:
And keep in mind: As you adapt to each of these changes in the hiring market, AccountingFly can help you make better hires faster.
