Create True Culture and Watch Your Firm Excel with Jennifer Wilson

Jennifer Wilson of ConvergenceCoaching returns for part 2 of her conversation with John Randolph on Episode 37 of CPA Life. She delves into the intricacies of employee motivation, hiring practices, and compensation in CPA firms, and they discuss the vital role culture plays in everything a firm does, from hiring, to acquisitions, to turnover. Jen highlights the importance of learning from cultural mistakes, with John pointing out the rose-colored glasses that certain clients and partnerships can impart. Jen, a member of the National Pipeline Advisory Group, encourages those in the accounting profession to have their say by completing the group’s survey, which closes May 3rd, 2024.

Transcript:

Thanks for tuning into CPA Life. We now rejoin John Randolph and guest Jennifer Wilson of ConvergenceCoaching, for part two of their conversation, where they discuss employee turnover, the pipeline problem, and insightful strategies to confront these and other issues in the accounting profession. Welcome to CPA Life.

Like I said earlier about our folks that we can’t get inspired and up on their tiptoes about our mission and ministry—maybe they can’t work here anymore. We can’t just accept that they aren’t, and that they don’t feel it, and that they don’t want to stay, but we need them to grind. “Stay here and grind with me, please.” That’s a quick way to get people to quit around them.

Yeah!

Nobody wants to work with grinders, you know, and so we act like, well, I can’t swap them out. You know, somebody would say to me, fix the pipeline, Jennifer, because we can’t swap them out because there’s nobody available. Well, yes there are. You could hire people at distance. You know, you can run a hybrid remote model. You can there’s all kinds of people available to you that will be attracted to your exciting, inspiring vision.

Yep. Absolutely.

You just have to get on your tiptoes yourself and start, you know, shifting the way we think, the way we talk, the way we behave, and make some of the hard decisions to remove the stuff that doesn’t work. So that one to five years piece is really, really important. And John, you know, the people listening to your podcast, they can make a difference on tell a better story, they can make a difference here in one to five years. We we need to pay higher starting salaries. You know, that’s a real tough one to swallow, but If you go out and you do the research and it’s not hard to do, you can do it, AI, ChatGPT will give you a good start, then you can go out and find other referential sources. But starting salaries in actuarial Economics, Finance, Technology, you know, just to name a few, business majors starting salary’s higher than accounting.

Yep.

And those are just a few of the ones. We have a, kind of, a depressed starting salary, comparative, and a lot of firms will tell me, well, hey, Jen, wait a minute now. You compare the last three, four years, we’re double digits on salary increases that, you know, in total over those three or four years, and I’ll say, okay, let’s add up the consumer price index, and we’re going to be in double digits, because we had one year, two years ago, CPI was 8%.

Right.

I’m sorry. Not every firm gave their people an 8% CPI raise in addition to merit. It just isn’t happening, guys. So we have to figure out then, you’re going to say, well, how do I afford this? Raise your fees. Well, how do I do that with my clients? You know, well, you might say goodbye to some who aren’t going to be able to afford that, and make sure you have the right value proposition.

It’s not simple. I’m saying it simply, and I know it’s not simple. But there are so many examples of firms who have headed down this path who are making it more attractive to work at their organization and are offering higher starting salaries. I say to small firms who’ve always said, Jen, I can’t compete with the Big Four and recruiting and stuff. I’ll say, yes you can! You go out there and say, here’s our mission and ministry. Here’s the joy we get from the work. We’re not working ourselves to death. We’re really flexible and care about our people. And by the way, our starting salaries mirror theirs. You do that, they’re coming to you, because they’re going to understand that.

Yeah. There’s this huge misnomer in the industry that smaller firms are going to pay less money. And that may have been the case 10 years ago, 15 years ago. That may have been the case. I can’t say it was or wasn’t the case because 10, 15 years ago, this was not our niche that we played in 100% of the time. Over the last five years, it’s all we’ve done. Over the last five years, that has not been the case. Now, again, are there outliers? Of course there are. But those firms that are leading the way in making change—they recognize and see the value in the people that they bring to the table. They’ve wrapped their head around the fact that hey, we’re not selling tax returns, we’re not selling audits. We’re selling knowledge. We’re selling intellectual capital. We’re selling value. And there is a price to that.

You know, I may have a conversation when we talk to a client about—that we haven’t talked to maybe in a year or two about an opening. And we’ll start talking about compensation, and I’ll ask them, you know, kind of where are you kicking around numbers? And they may throw out a number. And if it’s in where I think market can be, then great. But most of the time, if they’ve been out of the hiring space for a little while, the numbers aren’t really where they need to be, and what I’ll typically say to them is look, unless you’ve got hard and fast bookends that you need me to work in, here’s my commitment to you: I will bring people to the table that I feel based on our knowledge of the market are realistic in their ask, based on their skill set, based on their knowledge, what they bring to the table. If they are realistic in their ask, and I think at this level, here’s kinda where we’re going to be looking. Are you good with that? And the firms that get it? Their answer is absolutely. If that’s what we gotta do, sure. Not a problem.

Yeah. Well, we’re notorious for being solid, career earnings at mid-career, and certainly the partner level. And I think we ought to be way more transparent about partner compensation. I was with my good friend, Allan Koltin, this week at a consultants’ meeting. And, you know, he said, hey, in legal, there are law firms that publish what everybody makes. It’s very transparent on the legal side, what starting salaries are, and what each level makes, and what partners are making. It’s very, you know—they have real compensation transparency. We don’t have that in accounting. And if we had more of that, people would understand. And I’m not saying comp is the only motivator. Don’t get me wrong. Comp is actually table stakes to play. You gotta pay at or above market.

Completely agree.

You know, I tell people all the time, what would you advise your kids? “Hey kid, go into this profession. It sounds like it’s kind of, you know, got some grindy elements to it. Could be a little hard. And at first, you’re going to make less than other business majors that you’re also well suited to, and you’ll know, kind of pay your dues and get three to five years in, and if you last, then we’ll start really earning.” Are you going to, like, as a parent hearing your kid tell you that’s what I’m thinking about, and you’d be like, wait a minute now. You know, there’s gotta be some other things out there that you could look at instead, that would pay more, so you can get some ROI, and pay that car payment and pay your student loans down, and afford that nice place to live, and all those fun activities you want to do. And it matters. And the advisors around these young people are pushing them toward those jobs, which is why we’re seeing, you know, such big growth in finance, let’s say.

Right.

You know, because starting salaries are calling them, whether they stay there or not, and certainly, you could tell me finance, Jen, you know, get real, the hours there are insane, you know, and they could be same with law, right? But we make it sound like ours are too, and our salaries don’t measure up.

Exactly. You know, you mentioned the points that are coming out, for solutions.

Yes.

We talked about one or two of them. What are the others just real quickly?

Okay. I’ll tell a better story with one that we’ve covered. And we’ve covered, you know, make the employment experience more engaging and more inviting and more “sticky.” The others are, really focus on how we can decrease the additional time and cost of the additional education required to become a licensed CPA. So that additional 30 hours, how can we reduce the cost and time of that? How can we create a more engaging college experience and pull people through instead of weed them out? How can we make them successful when they choose accounting? And also how can we make that principles course more inviting? ’Cause every business major has to take it and if they thought it was really cool and entrepreneurial and technology forward and interesting, they might go on and take intermediate. And now we don’t have that. And then provide better CPA exam support real serious exam support, you know, that’s a super crucial one. And then we talked about the employment experience. The sixth—which permeates everything, it’s across all the other five—is increase the number of underrepresented minorities…

Yes.

…that come into our profession, and stay. And that, you know, there are strategies under each of the other five for compelling, you know, more underrepresented, and certainly one of those goes back to your listeners, and that is, really, how can we have a more inclusive environment? How can we be more inviting? How can people feel that they belong? How can we hire from more underrepresented, higher population of underrepresented universities, community colleges? How can we begin to create a change in what it looks like? What the face of public accounting looks like? Because the face of our clients are diverse.

Very diverse.

Increasingly diverse. And if we don’t look like our clients, they’re going to go somewhere else for services. So that’s something we just have to do.

Absolutely right. I want to change the subject for just a minute because I was listening to your leadership lunch that you guys do on a weekly basis, and I think it was either last week or the week before with Amy Vetter.

Yep. Okay.

And you guys touched on something that really hit home with me, and you were talking about the importance of building culture and understanding, hey, what are our values, and what’s our long term—and long term doesn’t have to be 10 years. It could be three years—but what’s our goal here? Is our goal building for growth and legacy? Because this is who we’re going to be, and we’re not going to sell, we’re not going to take on private equity money, this is who we are? Or are we building to merge to sell to to go another direction? And you guys spent some time talking about the importance of understanding your culture, and how does that align with a potential other firm?

And that really hit home with me because I’ve said for years that the recruiting industry is very similar to the public accounting industry. It is a service-based business. There’s no manufacturing plans. There’s no equipment. It is all intellectual capital. It is knowledge that you’re selling—end results and knowledge day in and day out. You’re selling relationships as well when you sell your firm. And if that culture fit isn’t there, You could spend millions of dollars on an acquisition and you blink, and within six months, key players are gone, therefore, clients are gone, and you have blown through some cash.

And I’ve seen it. I was a part of 13 acquisition integrations. And I have seen it done well, I’ve seen it done horrifically. When you look at, as a firm owner, if you’re looking to go down that path, what’s important to you? What should you be focused on when you’re building your culture? And then as you consider other firms to merge with, how do you advise those players of, these are the things that you need to take some critical time to look into?

Well, so we tell people all the time—everybody thinks they have a special culture.

Yes!

That’s what they always say. So describe it! And then they’re like, it’s just really special. Or good. Or sometimes they’ll do, like the throwaway like tight knit, or we’re a family or one of those things, but you can define your culture with actual words, attributes they call them. And we have this cultural assessment that has, like, eighty or something words for people to pick from, and they’re not meant to be the words you used to write copy or something, but they’re the the the prescribers of the things we value most, the things that are most critical, and culture is the way it feels to work with you or at your place. So clients feel culture, team members feel culture, third parties feel culture. They just feel it.

And so we think one of our cultural attributes is generosity. And, like, if you said, okay, Jennifer, you know, just pick your favorite, most important, cultural attributes that seem to lead to the most success, especially for remaining independent. I would say generosity is one of them. And that’s the leader’s commitment to put the entity first, to put others first. Each of us, as individuals saying, hey, man. I’m not going to just be me, me, me. It’s not all about me. I’m not going to put my needs ahead of other people. I’m not going to put my needs ahead of the staff or ahead of my clients. I’m going to think about the greater good all the time. That—the degree of selfishness or generosity that is supported inside the entity—really does have a massive influence on so many other of the attributes.

I would also tell you, trust. We talked about it earlier, related to remote or hybrid. Oh, is it a big one? And if you say we’re going to operate in trust, then you feel like you’re operating a trust in your policies and programs and procedures are going to be trusted. Now that doesn’t mean, you know, you don’t have KPIs. That doesn’t mean we’re not measuring performance. It doesn’t mean that we’re not “trust and verify” what we’re doing to test services or checking with clients on the tax side. We’re not blind trust. We’re trusting and trusted and honest, transparent, vulnerable, a whole bunch of stuff comes with that.

But you don’t have to find your culture in writing, John. I don’t know how you find a cultural match unless you can say the things that you’re trying to match. And then you have to say, how will we assess them and others? How will we assess them as prospective employees? How would we assess this in future acquisitions or merger partners? What are the questions we’ll ask? What are the things we’re going to look for? And then you also have to empower your team to identify what we would call cultural red flags. And so, like, you have a meeting, a leadership team meeting, with their leadership team, and somebody on your team is sitting there thinking, wow, that story that guy just told is really illustrative of this kind of an approach, which is counterculture to us. And give people the right to call out cultural red flags. Oh, we’re not aligned.

Mmm hmm.

And if you don’t allow for that, because sometimes we get in those and we’re so excited with the idea of doing a combination or have and layering on that revenue or, you know, having somebody come in and take these clients from us, and start doing it as part of our team, and we get sort of blind to the, you know, you said you did marriage coaching, which I think is amazing. And mergers, acquisitions, PE? Those are marriages, man! And I’m inviting somebody into my business, and I am inviting myself into theirs, and these new people will become part of my business marriage. And I better check to see if after all the shine wears off that marriage, you know, the infatuation of this pursuit we’re on together, and we get into day-to-day living, that we are going to be aligned, in our core values or what we’re really seeking.

So I just think unfortunately, sometimes we get so excited about it, that we blow off those cultural red flags, and we have to empower anybody in the process to say it, and then we all need to be quiet, listen, and seriously think. And I think there’s enough combination opportunity today, enough acquisitions to do, and upstream mergers you could entertain—enough PE guys out there interested in investing. Enough employees, really, enough employees, if you are willing to look at distance and nontraditional, there’s enough of everything that you don’t have to say yes to things that are going to hurt you.

Yeah. I think that when the geography or the footprints, whether it’s geography or area specialization—when there’s a lot of overlap in those things, from my experience, you tend to peel the layers back a little farther. But when there’s no overlap in geography, and that’s going to be a new area for us, or there’s no overlap in client space, and that’s going to be new revenue for us, we tend to almost look at it with, you know, sunglasses. You know, and we’re looking at it and we’re not really digging into it. We’re just looking at the numbers.

And, again, because I’ve been there—and you start digging into that and you forget the stuff that is behind those numbers, and those rose-colored glasses, they come off real quick. Real quick. So I think it’s extremely cautionary for those that are stepping into that, that where there is little to no overlap that already exists, I think it’s hypercritical that you do your due diligence, peel that that onion back as many layers as you can, and not just get jaded on the additional revenue stream that you’re looking at.

Agreed.

One of the things also through that discussion that I was really intrigued by that you guys were talking about was the importance of, again, when we’re talking about culture, not creating that in a vacuum. And I think that so many times leadership wants to do that, whether that leadership is one partner, two partners, 15 partners or 150 partners. You want to create that in the boardroom and say, this is who we are, this is what we do, and then drive that down, which I think in the world that we live in today, more so than probably any other that I’ve been a part of in my career. Today, that’s a recipe for disaster. How do you talk to your leadership teams that you work with and coach about the importance of building culture with that second, third, fourth tier leadership, all the way down to the people at the staff level who are boots on the ground?

Well, first, you have to define it. And then you have—and by the way, I would get all their input on it too. And culture can be how it feels right now, and culture can be aspirational, and I encourage people to ask it both ways. Because that usually shows up with what we would call culture gaps, where people say, this isn’t how it is now, but boy I wish it was, or, you know, I would aspire to this. And so we can, if you include everybody in your organization with some sort of survey tool or some sort of input process, they start to think, oh, cool, we’re going through this formal definition of culture, then you roll out that definition once we’ve had those inputs, and you try to make it memorable, it doesn’t want to be too big, too many words, all that stuff.

Then you recruit and try to identify at least some cultural, fundamental underpinnings as new people join part of our employee orientation. We talk about the culture and what it feels like, to work here, and we give examples of how culture can kind of be impacted to the negative, under stress or duress, and how we manage it differently, what we’re trying, what our thought processes are, and we just talk about it and teach it. There are a number of firms out there who do a really incredible job where they have the cultural attribute of the week or the month. Some of them even put it in their PowerPoint background at work. They have somebody from the firm, send out an email to everybody or put something in teams about here’s this attribute and how it’s alive in my work today. And you feature one a week or one a month, and rotate them and never stop. So that it’s a constant and, you know, change who’s talking about them.

Those are always to keep it alive when something that’s happened in the firm is attacking that. Like, maybe we make a mistake, and we, you know, made a hire at a high level that came in and really messed with the group, and we had turnover there, and then that person didn’t work out, and they left. We put our palms up and say, hey, we made some mistakes, and we made a cultural, hiring mistake there. It was a mismatch, and I take responsibility for that, and we’re super committed to not have those attributes where, you know, so just like acknowledging failures of culture, all those things make a huge difference in getting it acculturated, and getting people bought into it.

And also, like I said, maybe that empowerment of cultural red flags is always for everybody in all circumstances. So I work for you, and you and I are having an interaction with the client, and I feel like one of our cultural values is really under attack in this whole process, and I can’t tell if you feel that, so I feel comfortable raising and saying, hey, John, you know, these people, you know, they really are not being respectful. You know, there’s a lack of respect happening, and I feel that when they’re interacting with us, and I just wondered if you felt it? Should we continue with this client, or do we need to call them out on this? And you teach your clients your culture too. Hopefully, they want to be with you because of it. They are attracted to it because it aligns with them.

Yeah. And I think that, you know, when you said that a minute ago, that was something that I hadn’t really thought about, but you’re right on point was saying that your values, your culture, is felt by your clients, and it is something that attracts them. Now they may not say, they may not know, it just may be, it’s who you are. It’s what oozes out of you when you do what you do, and there’s something about it that you just resonate with, as a person looking for a service provider, and that’s what you hope that you align with.

And I think that that’s a challenge sometimes—again, we get blinded by the dollars. When your area of specialization is, we do tax returns, or we do audits, and it’s not more narrowly focused to understand really who you are, I think it’s easier to get blinded by that and not have the grounding to say, you know what? This doesn’t fit with who we are.

Yeah, it is easy. And it’s sometimes leaders, rose-colored glasses can be part of it, but also there is like this practicality to running the business and making payroll and, you know, growing by a certain percent, and and we can get into what I’m going to call them nuts and bolts thinking or even debits and credits or something, you know, like really, literally, very practical, but not that kind of magical, aspirational thing we’re trying to build together. You know, nuts and bolts. We’re like, oh my gosh. We could really use this client. Even though cultural red flags are flying right left, you know, it never works out. I’ve been doing this long enough now. I’m going to tell you. It doesn’t! It comes back. It comes around and bites you on the tail end later.

It does. It does.

And then you’re like, man, I feel like I keep learning this lesson. You know, why am I doing this? And your team, nobody respects a leadership team more—you can’t have a better, confident group of employees inside a firm where they think their leaders are fiercely protecting the culture, fiercely protecting the vision, fiercely protecting them. And living it—not hypocritically, defining it and living against it, and acknowledging when we make mistakes against what we are all trying to do together. That’s just like the recipe for the best retention possible, because people are like, these people are real.

Yep. We talk to firms every week about the and and I’m talking new firms that reach out to us for help. And we hear the same story: We’re dying. We’re short staffed. We’re at capacity. Hours are through the roof. People are walking out the back door. Help help help. And we talk about, you know, their goals, where they’re trying to get to, what they’re trying to accomplish, you know, what are they doing to fix that? And you talk about aligning actions with words, and your people see that, and, again, going back to more is caught than taught.

We ask through that qualification process, basically, if you will, that we’re going through when we talk to firm owners, we ultimately get to a point of one very simple question that determines, do we continue this conversation or not. And that question is pretty simple. So, you know, you told me you guys are dying. You’re working crazy overtime. You’re losing people. You’re trying to fix it. You want to hold on to people. I have a question for you, and you said this has been going on for a year or two or three or whatever the case may be. How much business have you guys had to walk away from because your people are already at capacity?

And I’m a stat person. I love keeping numbers. Some, you know, very scientific, some not. And over the last two years, the number hasn’t moved a whole lot. 83% of the firms we talk to say in some form/fashion, we don’t walk away from business, we don’t say no. So that tells me that your actions—and your people are seeing this—your actions aren’t aligning with everything that you’re saying. ’Cause if you’re telling me that your people are dying already, your people are at wits’ end, but yet you’re piling more work on their desk, they see that. They see that.

And the wonderful adage of you can’t say yes to everything because every time you say yes to something, you’re saying no to something else. So you may say that you want to create a better work life balance for your people. You may say that you want to do those things. But your actions over here are saying no. Now if you say you’re not turning down business because it’s better business and you’ve culled 35% of your client base, whole different story. There’s obviously exceptions to that rule. But for the most part, what we hear is “We don’t walk away from business.”

Right. I agree. And we also don’t cull the business in the firm that doesn’t work for us. You know, that we underpriced, that’s common, you know, especially in early startup, underpricing and then just never addressing it. You can’t sometimes you can’t catch that underpriced work, up. It’s gotta move on to somebody else. Sometimes you can, but it’s a big, big ask. You have to have the courage to do it, but you gotta move clients out that don’t work culturally, or the work isn’t the kind of work we want that we’re finding we’re really good at, or that we find we really love. It was part of, you know, keeping the lights on at the very beginning, but now it’s gotta go. There’s a bunch of hard decisions that have to be made in order to keep to your culture and take care of your people. There are hard decisions to make, but you can make a lot of money and find a lot of joy and still make those hard decisions. They’re all part of the same package.

Or, you can sort of, again, back to the top of the call, you can act like this business is the tail wagging your dog. And whatever it wakes up with and wants you to do today that comes in your email, or hits your voice mail or or your cell phone, okay, I guess I have to do that. And it’s that intentionality that you talked about earlier, related to remote, it really applies to every single thing we’re doing. And life is real and it’s fast, and it’s happening to us all. It’s easy not to be intentional.

Yep.

So, you know, having good friends and business partners and talent on your team that are empowered to call you on it: Hey, man, I think you’re auto-piloting this. It feels a little bit like a runaway train right now. I think we need to slow down. It feels a little bit like the business is running us, not us running it. Empowering people to call you on it—that’s super helpful.

Yeah. I think that it really boils down to, and it’s probably a good place to kind of wrap things up. But I think it what it really boil boils down to is the the old adage, choose your hard. You know?

Yes. I love that.

It’s—one of these is going to be hard. You know, again, you talked about how I’ve mentioned a couple times, the marriage coaching that we do. Again, one of the things that we’ll talk to couples about is, hey, marriage is hard. Marriage is really hard. You know what’s hard also? Divorce and trying to juggle who’s taking care of the kids. That’s really, really hard. So if you think this is hard when you’re at least on the same team, wait till you’re not on the the same team anymore! It’s hard.

I love it.

You know, running a business and making the decisions of who are our clients? Who do we say no to? What do we cull? What are our values? That’s hard when you put those definitions around you. What else is hard is the tail wagging the dog. It’s really hard.

So, Jen, as we wrap up today, if there are folks out there that want to make their voices known with respect to the accounting Pipeline Advisory Group survey that’s going on right now, where can they do that? And also, where are the best places to reach you or hear more about the work that you’re doing in and out of ConvergenceCoaching?

Okay. So, there’s a website that’s accountingpipeline.org. And that is the NPAG website where the 22 stakeholders have worked so far, thinking and ideas, research we’ve read, that’s there. But when you first go to accountingpipeline.org, you’re going to get a survey, QR code page that says, hey, we need your help, and we are testing solutions. Not testing barriers and hurdles and problems because there was so much research we could already leverage for that. Now we have solution ideas. And we have, like, 60 some solution ideas. We’re not testing them all. It’s a less than ten minute survey. We want all comers.

There’s one that’s a national survey for professors, for people in firms, people in finance, and accounting departments, people in government, not for profit, state society folks, we want you to take that survey. Then there’s the student survey for bachelor’s and master’s folks, inside both business and accounting majors. So not just accounting majors. And universities, colleges, and community colleges, especially. So we’d love you to take the surveys, but also pass them along. If you’re out talking to students, make it happen. The survey is open through May 3rd.

You can always reach me at Jen@convergencecoachingdot. I’d love to hear from anybody on anything related to this. Always open to new ideas and willing to listen and learn. So send it along.

Perfect. And for those wondering that may be sitting there going, hey, I don’t have time to to do this survey, just so you’ll know, when I found out about this two weeks ago, I tried to include that in some conversations with people that will talk to that are frustrated with the industry. And part of it was selfishly, I wanted to find out how long does it take and how easy is it, and I’m not an accountant. I just place accountants. So I had several people, I told them, hey—if you want to have a voice in what the industry is doing to kinda try to fix some of this stuff, go to this website, and do me a favor. Tell me how long it took you to take the survey and how easy was it? And I had about five or six people get back to me and say, hey. It took me about 5½, 6 minutes. It was real easy. Love the options. I liked the questions they asked.

So it’s a pretty easy process. So go make your voice known. It’s kinda like the wonderful country we live in. If you’re not going to vote, you can’t complain. So go have a say in what is potentially some solutions coming out of the back end of this. So, Jen, I can’t thank you enough for spending some time with us today. Thank you so much.

Thanks for inviting me, John. Happy to be here.

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Important Links:

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National Pipeline Advisory Group survey

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