Thanks!

-Ben

The traditional CPA firm really doesn’t teach anything. Well, not anything good. I didn’t learn taxes (According to Jody), I don’t think I learned much accounting, I couldn’t talk to clients so I didn’t learn selling or problem solving. What I did learn was how to fill out a time sheet and punch numbers into software. I also learned that there had to be a better way to serve customer and make a difference in their lives. Zoom into me leaving the traditional firm.

Anyway, good post Greg!

There’s a lot to unpack here. First off, before becoming a CPA, I was a middle school math teacher. In public education, you climb up the pay scale two ways: longevity and further education. Nothing else. You could be the crappiest teacher in the district, but if you were there for 28 years and had a PhD., you had the highest pay. Most CPA firms have a similar M.O., and it’s hugely de-motivational to your best people.

I have always thought it was effed up that CPA firms bill by the hour, but pay their employees on salary. It’s like buying gold by the pound and selling it by the foot. Since I hate the GD billable hour model, I say keep your people on salary and start value pricing.

Jason (above) once said, “If you suck, you suck at everything.” The billable hour sucks, and it makes everything else suck. There is no value-based compensation under the billable hour model. Under that schema, your ONLY value is attendance based, specifically time spent on billable work.

Value-based compensation requires at least three components. First, you can’t bill by the hour. Second, the firm must ensure quality hiring and retention. If HR sucks, everything sucks. Third, management (or partners or whatever) needs to have the balls to (a) give exceptional employees more compensation regardless of their tenure and (b) develop true value in their staff by making every employee exceptionally valuable to customers (as opposed to an exceptional cog in the firm’s wheel). Developing indispensably valuable staff requires management to take lots of time to reflect on what is valuable to begin with which is a lot harder than it sounds.

Ron Baker says that Peter Drucker says that all knowledge workers are volunteers – not employees – and they need to be treated as such. Some of the best in our profession (and in the teaching profession) leave because their true value is not recognized and is not properly compensated.

It’s fun to pretend like I know what I’m talking about.

Thanks Benjamin! Great questions. BTW, you need to be in THRIVEal dude: http://thriveal.com/thriveal-cpa-network-membership/ Your people are there!

Great post. I’m low-man on the totem pole and the only millenial on staff in my firm, so I’m going to push your point one further: What do you think about how staff get compensated? I’m lobbying hard for a value based compensation plan in our office because it seems like the industry standard for accountant’s value is “attendance based” compensation: the longer you don’t get fired, the more you get paid. In a value based billing environment, is it possible to have professionals without vacation time? without timecards and without standard office hours?

It obviously requires the right staff, but I’d be curious for your thoughts because I like your enthusiasm.

One minor quibble – the phenomenon you are description is called scope seep, not scope creep. Scope creep is when the customer asks for more than what was originally on the scope document and the professional does not properly process a change request/order. Scoop seep is when the professional does something over and above what the customer asks for.

How do we battle DIY bookkeeping?