“you can’t ask people to act like partners and then treat them like employees.”
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big 4 transparency
by dominic piscopo, cpa
for 卡塔尔世界杯常规比赛时间
in an industry marked by incremental change and cautious tradition, tim petrey, managing partner at hd growth partners, is going all-in on a radical reimagining of what an accounting firm can be. speaking on the big 4 transparency podcast, petrey shares how his firm has abandoned the tired trappings of the old model – mandatory billable hours, rigid promotion timelines, and siloed service delivery – in favor of a more dynamic, entrepreneurial approach.
and he isn’t just talking about change, he’s living it.
more dominic piscopo | more private equity | more pay & compensation
the episode dives deep into how hd growth partners embraces a consulting-first approach, using accounting services as a wedge rather than a foundation. the firm encourages team members, even juniors, to build one-on-one relationships with clients. petrey believes the best learning happens on the job, with mentorship layered into real-world client work. this, he argues, is what keeps staff engaged and clients loyal.
far from following the typical “up or out” mentality, petrey’s firm offers employees multiple career lanes that can flex with their life stage and aspirations.
sponsored by “it’s not just the numbers: how to move beyond the numbers and deliver real value for your clients.”
by penny breslin and damien greathead. see today’s special offer
he openly criticizes the narrow pyramid model most firms adhere to and champions a flatter, more purpose-driven structure. “not everyone wants to become partner,” he says. “and that shouldn’t be the only path to respect and reward.”
as firms grapple with talent shortages and shifting client expectations, petrey’s conversation is both a wake-up call and a blueprint. rather than waiting for the next generation to demand change, he’s architecting a firm they’d actually want to work for and stay in.
in doing so, he’s not just recruiting talent. he’s retaining and growing it.
5 key takeaways
- redesign onboarding and training. hd growth partners’ internal academy replaces outdated apprenticeship models and accelerates learning curves through applied mentorship.
- build a culture of entrepreneurship. understand how giving junior staff client exposure early and treating them like decision-makers can boost retention and engagement.
- rethink the firm’s structure. evaluate the flaws of the traditional pyramid model and explore alternatives that accommodate diverse career trajectories beyond partner-track.
- create meaning alongside money. compensation alone may not be enough. purpose, autonomy, and growth opportunities complete the equation.
- enable multidirectional growth paths. hd’s flexible role design allows team members to shift focus over time without losing momentum.
more about tim petrey
tim petrey is the ceo at hd growth partners (formerly hd davis cpas), where he has spearheaded a remarkable transformation of this youngstown, ohio-based firm into one of the most innovative accounting practices in the region. after graduating from youngstown state university in 2008, petrey joined hd davis cpas in 2009. his exceptional leadership qualities and forward-thinking approach quickly propelled him to partnership by 2012, and he assumed the role of managing partner in 2015. under his visionary guidance, the firm has experienced extraordinary growth, expanding from 4 employees to more than 65 professionals with team members across the us and abroad. a champion of workplace innovation, petrey has created collaborative office environments designed to foster connection and community among team members. his commitment to employee experience has earned the firm numerous prestigious recognitions, some of which include multiple placements by accounting today for best accounting firms to work for (2022, 2023, 2024); crain’s cleveland best employers in ohio (2022, 2023, 2024); best companies group’s america’s best workplaces and america’s best remote and hybrid workplaces (2025). petrey’s personal accolades include being named among ohio’s 15 most powerful and influential leaders, a 40 under 40 honoree by cpa practice advisor in 2022 and 2024. in 2024, petrey was named to the forbes top 200 cpa’s list.
transcript
(transcripts are made available as soon as possible. they are not fully edited for grammar or spelling.)
dom (00:01.186)
hello and welcome to the big four transparency podcast. today i’m joined by tim petrey, ceo of hd growth partners and founder of white glove payroll, as well as the penguin collective. welcome to the pod, tim.
tim petrey (00:12.114)
thanks for having me, dom.
dom (00:14.102)
yeah, my pleasure. founder of quite a few things. that was a, that was a long breath to hold me through that intro segment. so we’ll, we’ll touch on those a little bit later. but to start off, hd growth partners was actually acquired this year by pe group ascend. and i’m a little bit curious to understand like, you know, how did that happen and, and what has changed in your day to day since the acquisition?
tim petrey (00:41.15)
yeah. so how it happened is an interesting story. you know, we, had grown a lot. our firm, has been around for about, 15 years. we started with about three or four employees. was a small book of business, three, $400,000. and i, i was involved.
in the firm straight out of school. was basically my first job. had interned a regional firm. i started here answering the phones for nine bucks an hour. it’s supposed to be kind of a temporary situation. ultimately ended up sticking around and really getting along with my original partner and mentor there. and he bestowed upon me the ability to take over our firm at a very young age. i took over our firm. i took an ownership position when i was 23 and i took over as a managing partner.
i 25 years old. and then, then grew the firm from, you know, three or four employees, a couple hundred thousand dollars in revenue to about $7 million in revenue with about 70-ish or so employees. and realized if we wanted to keep growing, we were going to need to do something different. so i set out to, to learn about what was next. i started to going, going to more conferences. i started meeting more people.
dom (01:35.618)
wow.
tim petrey (02:03.71)
i just started trying to educate myself about, you know, what, what the natural life cycle is of an accounting firm and what’s next. and, and a lot of people were kind of, you know, pushing me towards the idea of rolling up into a larger firm. and they thought that that was the best move. and because that’s basically what everybody else did. there really weren’t many other options, right? it was, well, this is what we’ve always done. so you should probably just roll up into another firm. so i had a bunch of those conversations.
it was really disheartened and, underwhelmed by, what that looked like. so it was funny. it was out of happenstance. actually. one of my favorite conferences, i give my buddy, gary, plug here is winning ways, in chicago by winding river consulting. really, really great operations focused conference. lot of great firm leaders, they have a bootcamp program. that’s awesome.
i went there for their conference and it was the second or third year that i had gone. and i’m sitting there. actually i’m sitting with my buddy, chase burkey from dark horse. and we’re the only guys wearing hats and kind of looking like unruly millennials in the room. and it’s this other young guy walks up to me and i see it. i look at his name tag and it says white glove payroll on it. and i said, man, you don’t, you don’t, you don’t work for white glove payroll. i know everyone that works for white glove payroll. and it was, it was one of the guys that, that wasn’t worked for alpine.
which is the pe firm that backs ascend. and he and i immediately hit it off. he was kind of there learning about the industry and we spent a bunch of time together at that conference. and then subsequently spent a bunch of time together talking after that about, you know, how i viewed the industry and what i thought needed to happen. and i was really excited by what they were doing, but i just didn’t think that we were, we would ever be a fit. i mean, i thought that number one, we were too small. we were a little bit too radical and progressive about how we viewed the world.
it just, you know, w wasn’t going to work and we kept talking and we kept kind of hashing it out. and, they, we, we talked through some ideas. ultimately, they went out and they, they acquired a few other firms and came back to me a few months later and said, a, we, we understand what, what you want to do. and we want you to be a part of this. we want you to help us build something here and we want you to help us be a part of something different progressive.
tim petrey (04:24.744)
so we continue to talk through it and it was never, it really wasn’t anything that was on my radar. i didn’t think that that was something that would ever fit for us, but did a lot of soul searching, had a lot of conversations with a lot of my close friends and other people in the industry and thought, you know, this is an opportunity not only for us as a firm, but really an opportunity for me to leave a bigger impact in the industry and to maybe make a bigger change than what i could do with my little firm in youngstown, ohio.
so we, we, we closed our transaction in january 1st of this year and joined the ascend platform. the first few months of it was, you know, a lot of your normal just kind of integration stuff. you know, getting used to changing up some processes and systems and, you know, me ultimately, not never having a boss. like i thought i was like unemployable.
you know, so i, that was, that was a change for me, but something that i leaned into, i’ve gotten really comfortable with, because we’ve got some really impressive leaders that are part of this organization that i enjoy working with. but you know, the biggest transition for me was once, once we got past tax season, and this was a big transition year for me transitioning some of my tax work to some of our team members and people that i had hired. i needed to take the role of ceo.
and no longer just be a managing partner. i had a pretty sizable book of business that i’m working on, sharing with other new partners and new managers that are coming up in the firm and really taking that step into a new role as the ceo. and it’s not an easy transition because there’s a lot of unknown around it. i was a very good accountant. i am a very good accountant. i’m a good practitioner. i’m a good advisor.
you know, i say that confidently because i built a good book of business and my clients love me and i found purpose for many years in doing that. but, but i’ve realized that, you know, the most impact that i’m going to make is by being the ceo of our organization and developing our team members into better advisors and leaders and, you know, impact creators within our community. so that’s ultimately been the biggest, biggest and most difficult thing for me is just working through that transition. but,
tim petrey (06:41.374)
the great part is that there’s a dozen or so others that are part of the ascend platform that are all going through this at the same time. so we have a great community of other ceos that, you know, we’re either managing partners or actively partners in their businesses. so they’re making that transition. and i do think that it is undoubtedly the right thing for us all to be doing. and it makes it a lot easier when you’re doing that together as a group. we’re learning quick and we’re making adjustments fast as opposed to,
when we were doing it kind of on our own little island. so, so far it’s been a good adventure. our team’s excited about it. there’s been a lot of great things that have come out of this and the future is remarkably bright for what this could turn into.
dom (07:13.486)
mm-hmm.
dom (07:25.351)
and so you referred to ascend in there as a platform rather than, know, private equity group or acquirer or whatever that might be. why? why the distinction on calling it a platform?
tim petrey (07:40.146)
well, know, ascend is in a private equity group. and that’s important to understand is that ascend is a business in and of itself. you know, the capital that backs ascend is obviously, primarily private equity, but it may not always be that way. it may eventually use traditional financing or other mechanisms. but
dom (07:42.51)
mm-hmm.
tim petrey (08:01.896)
you know, ascend is a business in and of itself. then that is a big differentiation between what we’re doing with ascend versus what other private equity plays are doing within the industry is that ascend is providing value to regional middle market firms. ascend is aggregating certain resources behind the scenes, such as, know, your in-house accounting and recruiting and tech innovations and ai investments and learning and development and training and professional development.
business development, you know, and all of those things that, you know, as a $10 – $50 million firm, you know, you struggle with having the resources to be able to keep up with all the demands in all of those areas. but if you take a bunch of those 10, 10 to $50 million firms together and you pull your resources together to be able to approach all those things, that’s a different end result. so, you know, ascend’s mission is to, is to create something very different within our industry.
dom (08:52.632)
mm-hmm.
tim petrey (08:59.218)
there aren’t many, there’s nothing to compare this to quite frankly. i mean, you you could compare it to an alliance, but it’s very different. it’s very different than an alliance because in an alliance you pay a fee to be a part of an alliance and whether or not you, you you implement things or do this, that, or the other, it doesn’t matter. right. but it, within the platform.
dom (09:07.314)
yeah, that’s what i was gonna… yeah.
tim petrey (09:21.406)
you know, if, my friends in san antonio need help with something or i need help with something and i pick up the phone and i call my friends, the ceo in san antonio at atkg and i say, eric, i need to, i need to bounce something off of you. he’s going to take my call and vice versa. whereas if i call somebody that’s part of an alliance with me, they might, they might not, they have no financial incentive to help me. you know, so there, there’s a lot of value in that resource of community that is a
dom (09:37.922)
mm-hmm.
tim petrey (09:49.864)
that’s a very different approach that no one has ever done in this industry. no one’s properly leveraged a community with equity in this way, which is one of the many reasons that this is a very unique, refreshing and exciting play in the industry.
dom (10:07.148)
yeah, so it’s like an alliance, but with like absolute perfect incentive alignment, right in a certain way where it’s not about getting more fees or getting more of a cut of the products that they’re selling to you because at the end of the day, everyone presumably is holding kind of the same equity, right. and so if everyone holds equity in the same entity, the whole point is to do things that will be value accretive to that entity, rather than
having some not quite zero sum game, but like, of, okay, we need to extract more fees, or we need to do this. that’s interesting. i like that. and then as part of this acquisition, like, i imagine there was probably a large part of that, which was paid out kind of in terms of equity in ascend to the firm owners, is that correct?
tim petrey (10:58.239)
yep. yep. so, you know, we all retained ownership, in the broader ascend platform, which was extremely important to all of us and extremely important to ascend, obviously, because we’re all motivated by the same thing. you know, one of the things that was a huge deal for me in our transition was, i wanted to ensure that some of our young staff got, got equity as a result of this. you know, so
one of the really exciting parts about this is that via the alternative practice structure, non-cpas can have ownership. so we gave out hundreds of thousands of dollars of equity to our key staff members, the managers and senior managers and even operational level people that historically and normally in a traditional public accounting firm aren’t getting ownership. we wanted them to have real skin in the game, just like us.
so it was really exciting to be able to do that. not something that was realistically an option for us if we were doing our own thing.
they’re the people that are overseeing and implementing operational change in our business. and they’re the people that are making our business great in every way that it is. so we wanted to make sure that those people were receiving some skin in the game in this new adventure that we were going on. we’re excited to see, i mean, we had multiple people, late 20s, early 30s that received substantial amounts of equity. that doesn’t traditionally happen in our industry.
you know, you’re not, you’re not seeing equity until much later in the game. and even the equity that you’re normally receiving in a public accounting basically just means that, you know, you have to stay until you’re 55. that’s, that’s what equity, that’s a partner model means for most people is like, congratulations, you’re a partner and you get equity, but nothing’s really going to change until you’re 55, because then you’ll get your deferred compensation over the course of the next 10 years. when you decide to retire.
dom (14:21.442)
mm-hmm.
tim petrey (14:46.278)
in this circumstance, that was not the case is that we wanted people to be able to get equity right away and then see some benefit of that earlier on in their career rather than having to wait until they were 65 years old to see some benefit of staying in public accounting.
dom (14:59.254)
yeah, that’s that’s like a big piece of like my optimism, to a degree to like with private equities involvement in these firms is like, a lot of people kind of view it as like necessarily a bunch of people who were on the partner track or aspired to the partner track are getting the rug pulled out from under them. but in reality, like, so i went from accounting to kind of more private company tech. and right, so i went from okay, i have
10 or 12 years ahead of me of stuff i don’t necessarily like. and like, had conversations with the, with like the managing partner where i was. and he’s like, i think you’re going to be a tremendous senior manager and partner, but he’s like, between you and me, you’re to have a hard time as like a manager and a senior. because i was more kind of the business development guy. was more process minded. i didn’t love the work. like i was fine at it. mostly just because i had tremendous coaching, but like, i was not that guy who was.
you know, super happy putting his head down, doing all kinds of returns and, and, you know, the kind of extreme delayed gratification that comes with that model. so that’s part of my kind of optimism towards this. private equity model potentially working when the private equity group is in it for the right reason. right. so, yeah. yeah.
tim petrey (16:15.71)
yeah, they won’t, they won’t all work. mean, you know, but the way that public accounting has worked for the last, you know, 30, 40, 50 years isn’t going to work into the future. can, i can promise you that if there’s one thing that i can say with certainty is that the traditional partnership model of public accounting will not continue to work a special, it, it, it may survive at a very different level at the top, top four, top six.
beyond that in your middle market, your regional firms, it just won’t. people aren’t going to drink that kool-aid anymore. and mathematically, there’s not enough people to do it for it to work. because it ultimately ends up creating the situation where most of these firms are built on the ideology of deferred compensation as the most attractive piece of being a partner. most partners in cpa firms are not real business owners.
okay. it’s important to understand that is that most, most partners in cpa firms are not entrepreneurs. are not people that have built businesses from the ground up. most partners in cpa firms are glorified employees. they’re just called partners because that’s what they call them after a certain period of time. and that’s what makes them stay. you know, so most of those people are, are sticking around with the promise that at 55 or 60, i’m going to then receive this large.
dom (17:18.722)
yeah.
dom (17:33.678)
mm-hmm.
tim petrey (17:43.634)
deferred compensation for the next 10, 15 years that’s based on some formula of my highest earning years. and that’s how they’re continuing to feed the beast. that’s the golden handcuffs. that’s how they got people to stay so long. the problem is that you have such a substantial gap between those people and our generation of people is that, you know,
those of us that have been in the business for five to 10 years are looking up and saying, you need to tell me that i need to stick around for another 25 years in order for me to see the value of the equity that i have earned. and quite frankly, if you’re an accountant and you’re thinking about doing that,
a question how good of an accountant you are, because then you’re thinking, you’re just 20 years time value money. what else could you have done in that 20 years? you could have bought and sold 10 different baby boomer businesses in that period of time and made a lot more money than just sitting around being complacent in the public accounting industry.
dom (18:48.362)
yeah. and that’s a lot of the conversation around, i mean, with, big four transparency, like doing that calculus was part of why i was like, man, we need a tool that makes sense. like i remember sitting down with like some people from my cohort and being like, first of all, didn’t, i didn’t understand the numbers of like what a partner made or senior manager made, but i was like, hey, like, i don’t think this like makes sense. and it kind of can, right. but like, it is this like extreme, like
you’re feeding the beast, feeding the beast. and then hopefully at one point you’re on the other side and you benefit from that. but a lot of people don’t make it there or will quit after, you know, whatever, several years. and you’ve kind of at that point, like from an opportunity cost perspective, you might find yourself a little bit behind. so, yeah, i find that really.
tim petrey (19:22.482)
mm-hmm.
tim petrey (19:37.0)
i would go as far as say is the number one issue in our industry and the reason that our industry is in this quote unquote problem, type, the talent pipeline problem that most firms say that they have is because of lack of transparency. there is no transparency surrounding career pathing at the vast majority of firms. no one has any idea what it takes to become a partner. like none whatsoever. they’re like, i just put your head down kid for another 20 years.
dom (19:52.174)
mm-hmm.
tim petrey (20:04.158)
maybe, you know, we’ll just keep telling you on the partner track and eventually you’ll be a partner. and then you realize once you become a partner, you’re like, shit, that’s, that’s not what i thought it was going to be. thought partner meant like that make a bunch of money and i don’t have to work as much and this, that and the other, when in reality, the story that like made it all work for me was, i, i had, i had lunch with a gentleman. i don’t know, won’t throw any firm names out here. i don’t want to throw shade, but it is substantial firm.
i’m one of the larger firms in the country. and he explained to me, what happens when someone becomes a partner there? because i was interested. said, what does that, how does that work? like when do you start teaching people about partner and this that and the other, and they’re like, well, we really don’t. you know, but like it’s a big deal when somebody becomes a partner, but everybody’s surprised when i walk in their office and i ask them for a check for $250,000 when they become a partner. said, so you mean to tell me.
dom (20:37.537)
mm-hmm.
tim petrey (21:02.792)
that you give somebody a raise to partner. and then the next day, you know, approximately whatever you walk into their office and ask them for a check for $250,000. and that’s worked. and he goes, yeah, it’s worked. and look at our firm, we have this huge ginormous firm. and i’m like, you’re, you got it. you’re, you’re shitting me. there’s no way that people are falling for that. and he’s like, yeah, that’s how the industry works. and in that moment, i realized that
dom (21:13.015)
yeah.
tim petrey (21:32.326)
this was going to come crumbling down. there was no way that there’s like, are too many really intelligent people that i have a lot of respect for in our industry that i was like, there’s people aren’t, people aren’t listening to this. people aren’t falling for this nonsense. so that lack of transparency is a huge premise of what we’ve tried to build at our firm to try to ensure that people are staying longer and know what it takes to become a partner and then know what they get at that. is it worth it? is the juice worth the squeeze?
because the reason that they don’t tell you is because most of the time the juice isn’t worth a squeeze, right? becoming partner in most of those big firms means that you probably throw your first and or second marriage away. you probably have really poor health. you probably drink a lot or have other really terrible habits. like you’re, you’re not an active member of your family. you’re, know, you’re just not a good contributor to society. as a result of that and
dom (22:26.51)
yeah.
tim petrey (22:29.296)
i think that if more people were transparent about it, then people would realize sooner that the juice isn’t worth the squeeze. and i’m not going to stay at public accounting in this place, but they keep it just kind of dark enough that people stay. and then at a certain point, it’s like your pot committed, right? for the, for the poker players out there, you’ve got too many chips on the table. you can’t wake up, walk away from this hand because you are pot committed.
dom (22:47.213)
yeah.
tim petrey (22:55.588)
and that’s the leverage that our industry has used to get people to stay.
dom (23:00.268)
yeah, and it is golden handcuffs in a way, right? we’re like, once you reach that partner level, like, there aren’t really any opportunities out there for you where you could go make the same or more money. for the most part, like, there’s exceptions to that for sure. but it’s cool, like the, the data that i collect, like, there isnt a ton of participation from partners, but there’s enough that you can kind of see the trend. and it’s like, job satisfaction from partners is like pretty low and people report hours work.
and it actually just kind of like gets worse and worse and worse. and i’ve had this conversation a lot of times where like, i really think that like a lot of these partners in the traditional firms would benefit from a lifestyle perspective to have, you know, 10 or 20 % lower comp that goes to the staff, you reduce turnover, you have more staff, less crap rolls up to you and you get to actually like enjoy making, you know, $600,000 instead of $800,000. but you actually like you see your wife and kids and
tim petrey (23:44.168)
yeah. yeah. right.
tim petrey (23:56.69)
that, that was the premise of our business from the beginning was that was, you know, i, i went and i said, i’m to go hire great people. and so what i’ll, i’ll make less money. i’m going to work less. i’m still going to make enough money. i live in youngstown, ohio. like it’s pretty okay around here. it’s not the most expensive place to live, but you know, i just continued to tell my partners, said, guys, if you, if you want a leader of our firm,
dom (23:56.886)
or spouse and kids. yeah.
tim petrey (24:25.682)
that is going to put the maximum amount of dollars in your pocket. probably ain’t me. but if you want a leader of our firm, that’s going to maximize the amount of time that you can spend with your children, i’m your guy. and, and i will try to find that balance where we can hire great people. you can still make a very, very good living and you can still have a life. and if we can balance that, yes, our average partner comp is going to be lower than the average firm. however,
dom (24:37.698)
mm-hmm.
tim petrey (24:54.258)
the quality of life of our partners is going to be much higher than the traditional firm. so, you know, just, just continuing to press that again, that was done selfishly for me and my family and my kids. i wanted to be there. i wanted to be around for my kids. i mean, i, i didn’t, i didn’t have parents growing up. i didn’t, i didn’t have that luxury of having some of those traditional upbringings, you know? so i was like, i get one crack at this. i get one chance. get 18 summers with my kids.
dom (25:18.946)
mm-hmm.
dom (25:24.462)
yeah.
tim petrey (25:25.023)
i’m going to enjoy every single one of them and we’re going to build that firm that allows for that to happen. and, know, as it turns out, other people kind of dig that and they were like, i could see tim’s actually enjoying his life. maybe when i become a partner, i could do the same and i could build into the same thing. and as a result, you know, super low turnover and very high retention rate of our employees.
dom (25:47.522)
yeah, it’s it’s no wonder you’re good pals with chase birky know, for for listeners, if you’re looking for something to add to queue, i would recommend adding that episode up next. but it’s a lot of the same ideas. and it’s cool that you guys went about it in kind of very different ways. but like, i think you guys share a lot of the same ideals and have ended up in a kind of similar place, which is which is really cool to see. and i’ve kind of jokingly had this conversation before, but i’m like, hey, like
part of the talent pipeline crisis is like more pictures of partners on jet skis. you know, like just
tim petrey (26:23.026)
yeah. yeah. you know, if, you got, if you’re working at a cpa firm and when you leave, all the partners are still there at night. they’re doing a great job of leading by example. congratulations. that’s, that’s wonderful. they’re, they’re, they’re good leaders because they’re putting their head down and they’re grinding and they’re doing the things that you do, but they’re bad leaders because of the fact that this is what you have to look forward to. the business that you’re a part of.
is creating a circumstance that the best case scenario that you’re going to have, you’re going to make a shitload of money, but you’re not going to get to enjoy it. you know, so, you know, just look around, look up and are those people happy? do they, do they still have good relationships with their spouses? do they, do they, you know, are they showing up to the community events with their kids? do you see them, you know, talking about how they enjoy their weekend with their family or these, just see them at the office.
dom (27:18.774)
yeah. yeah. so you mentioned transparency quite a few times. and so, and i think we share a lot of similar views on the industry and, so, you know, spoiler alert, but you actually ended up investing in big four transparency. so, a little context on that, but we actually had a sales call for hd growth partners to kind of work with big 4 transparency and the compensation solution. and then we have a recruiting solution as well.
and kind of a certain point, you’re kind of like, hey, how closed is this funding round? and i’m very curious to understand like, what was it in that process that kind of made you decide like, okay, this is something i really believe in. this is something i want to invest in.
tim petrey (28:04.968)
so, i mean, our firm from the beginning has been built around the ideology of transparency. and being able to provide that transparency with our team members to me was the key to a lot of the things that we had been able to build. and i’m adamantly believe that the biggest problem in our industry is a lack of transparency. think that, you know, if you look at good leaders in the history of this country, and you look at good people that have gone through crises and led people through difficult situations.
they have done so through transparency. they’ve done, they’ve led people through that by being transparent about celebrating the wins, acknowledging the failures, realizing where there are shortcomings, failing forward and figuring it out and getting better. right. i don’t, i don’t think that much is going to happen in our industry as a result of just trying to do the same thing over and over again. so it’s time to, it’s time to crack this bad boy open.
it’s time to be able to see the inner workings and see how the sausage is made and figure out how to make the sausage better. we have a problem in our industry. and, you know, one of the quotes that’s always stuck with me is, is elon musk. mean, dude is full blown crazy. what do i mean? when you listen to him, he’s just a different level of intelligence and he’s terrifying and entertaining at the same time. but
dom (29:20.868)
yeah.
tim petrey (29:29.246)
you know, he said something that always stuck with me. he said, you’re paid directly in proportion to the difficulty of problem that you saw. right. and that’s been something that has really become a core of how i view not only our industry, but how i coach other people within our firm on how to make more money. you know, our, our staff will come to me and we have a very open relationship. i have a staff advisory council that i work with on a regular basis.
most of my conversations around the competitiveness of our compensation has been around conversations with my team. like, hey, you know, what are you hearing other people are paying and what’s it look like at the firm down the street and your buddy works there and ask him what he makes. and, you know, let’s, let’s make sure that you guys are being compensated within market. i, i used market compensation to derive our pricing. because, know, from my perspective, i think that,
you know, your biggest cost in a cpa firm is obviously labor. it’s the most important asset that you have in your firm. and if you’re not paying people appropriately, you’re not going to have that asset for long. so always really focused on trying to aggregate that data and have good, healthy data to make those decisions. and the data that’s out there sucks. i just don’t, i don’t like it. i don’t like the way that it’s, accumulated. don’t like the way that it’s acquired.
i don’t trust it. i don’t feel that it’s robust enough. i don’t feel that it factors in things like the amount of hours that you’re working, the benefits in hybrid or remote or in person or geographical, you know, what do you make in, in la and new york versus good old youngstown, ohio? like that stuff matters. right. and, know, i wanted to be able to have an educated conversation with my staff. wanted to be able to look at my staff in the eyes and say,
dom (31:11.298)
mm-hmm.
tim petrey (31:19.378)
you’re being paid fairly, period. i love to be able to have that confidence to be able to come to the people that are dedicating their time, lives, energy to working at our firm and building their careers here. i want to be real with them. i don’t want to lie to them. don’t want to say, i’m paying you as much as i have to pay you. that’s not fair. that’s silly. i’m paying you what market rate is. and then we are defining the pricing that we charge our clients based on the market rate that we’re paying for you.
dom (31:22.242)
yeah.
dom (31:40.386)
mm-hmm.
tim petrey (31:48.99)
i’ve always built a business on being fair. i don’t want to build a business that’s taking advantage of people. i see my clients everywhere. i see my clients and my staff. i’m at their weddings. i’m at their bar mitzvahs. i’m at their christmas parties. i’m at their funerals. i see them at the grocery store. we volunteer for the same stuff together. i want people to see me and know that, tim…
tim treated me fair. tim was valuable to me as an asset. tim was valuable to me as a leader. and i feel that the only way to do that is to have full-blown transparency about what market price really is. so rather than doing that via the traditional resources that we had, which was whatever market study data that’s out there that isn’t that great and not as…
inclusive of all those qualitative measures, the big four transparency is trying to capture. just wasn’t that good. so i see a huge opportunity here. think the transparency is a huge part of what the ultimate solution to our problem in our industry is. and it’s a big problem, right? so let’s come back to the old elon musk quote here. it’s big problem. therefore.
it likely will be paid appropriately if we are able to collectively solve some of that problem within big four transparency. so mathematically there’s potential that it’s a very good investment. so if nothing else, as a result of this investment, i’m very impressed by you.
and what you’re doing and how you view our industry. before i called you, i listened to a variety of your podcasts and conversations that you had had with other people in the industry. and i felt you got it and that you understood it. and a problem can only truly be solved by someone that understands it. they say that if you have a problem and you can write it down, that you’re halfway there. you’re halfway there. you’re probably a little bit more than halfway there.
tim petrey (33:54.878)
so to me, that was really exciting to be a part of that and to potentially make a little mark in our world and our industry by doing something positive that gives people something that allows them to get paid appropriately at their firm. and then at the same time, from a firm owner standpoint, i think there’s a ton of value there too. i think that the idea of the reverse recruiting option eventually and the reverse job board kind of theory and
and being able to do that makes a ton of sense for, you know, the people that are in our industry. most people are, are introverts in our industry and they don’t want to go through interviews and they don’t want to go through looking for a new job and they’ll, they’ll stay at a really terrible employer as a result of that, uncomfortableness of going out and looking. but if they could just say, hey, this is the amount of willing, this is the amount that if you pay me in these circumstances, i’ll talk to you. i think that you got something special there too.
dom (34:42.402)
mm-hmm.
tim petrey (34:53.202)
you know, so i’ve not had a ton of success with, with professional recruiters. sorry to any of y’all that are listening. i just don’t love it. i don’t love the fact that i’m paying you 30 ish percent of first year compensation and don’t feel like i’m getting any level of, you know, long-term, commitment from some of those employees. now i get that once you get those people in your firm, it’s your responsibility to keep them. but you know, it,
dom (35:21.133)
mm-hmm.
tim petrey (35:22.302)
there’s only so much you can find out in an interview with somebody. your resume is going to look great. your compensation level is going to be what it’s going to be, but i’m not going to find out if you’re good or not until you come start working for me. i see your attitude and i see how you view the world and i see how you handle clients and i see how you manage people. a shake-up is necessary here. i think that big four transparency could be a part of that. i’m excited to be a part of it. i’m excited to…
dom (35:35.854)
yeah.
tim petrey (35:50.162)
you know, lend my input as a, as a firm owner, as someone that leads a firm, as someone that is boots on the ground, dealing with these issues on a regular basis and building our strategic plan and doing our budget and talking to my staff. and, i feel that, you know, insight from people like me will make big for transparency that much, that much better and that much more impactful because it’s not, it’s not just your perspective, don. it’s, your perspective.
dom (36:16.621)
yeah.
tim petrey (36:17.702)
did you’ve experienced in the big four and as a staff, it’s my perspective as someone that owns a firm and it’s the, it’s then indirectly the perspective of my team members that, you know, we’ll see some of this data and i’ll pick their brains about what it means to them. and hopefully via all that various different perspectives, we can make something really special at big four.
dom (36:39.274)
awesome, man. i’m like, i’m like excited to get back to it after this now. it’s, know, it’s good to hear this type of stuff externally every once in a while, you know, i, obviously think all the same things as the ways i wouldn’t have just left my job for it. but, you know, it’s nice to hear it for sure. so i really appreciate it. and i really appreciate your, your involvement. i have a couple kind of quick, quick things. if you have a few more minutes, we’re kind of over time here, but yeah.
tim petrey (36:43.699)
good.
tim petrey (37:02.908)
yeah, yeah, let’s do it.
dom (37:05.558)
okay, so you’re involved in a number of things, including i mean, you know, angel investing, but we talked about white glove payroll, penguin collective. and i’m curious to ask you, like, at what points in a business does it make sense to be staying laser focused on like, the one thing you’re doing, and it’s working? and at what point does it make sense to kind of branch into sort of other projects the way you’ve done?
tim petrey (37:29.252)
so i’ll tell you that the reason that i’ve gotten involved in a lot of different businesses and that that’s about half of them, that we’re talking about now, there’s another few other businesses that are maybe for round two of our, our pod. i am a very motivated person. i, i had a very non-traditional upbringing. i was on my own at a very early age. i’m an extremely independent person. i pushed very hard.
dom (37:42.765)
yeah.
tim petrey (37:57.682)
and at a certain point, i also feel that one of the things that i’ve gotten better at as i’ve grown is that my emotional intelligence has increased just as much as my regular old book smarts. and i realize when i’m in a business and i’m pushing maybe my group of leaders a little bit too far, i need to put that energy somewhere else. i don’t want to stop putting that energy out of the universe, but i need to put it somewhere else.
dom (38:20.737)
mmm.
tim petrey (38:26.814)
you know, at a certain point in our firm, i had two new partners at our firm early on. was 2019. had two new partners and, they were making the transition from being, you know, regular employees to partners. and then, you know, dealing with the demands of someone like me, that is a, you know, very, very active individual. they, they struggled with that a little bit. and, and i realized quickly, said, tim, you got to back off a little bit. we, we need to take a step.
and just kind of slow down. and at that point in time, i said, okay, well, let’s branch off into something else. let’s, let’s go try and experiment somewhere else. so i actually, did some angel investing for an e-commerce business in the clothing space. i invested in a company called youngstown clothing company. and it’s a homage ask, super high end, cool t-shirts, very comfortable, high level artwork.
but i wanted to learn shopify and i needed a distraction from not pushing my cpa partners too hard. and i needed something else to keep me busy. like my business is not just my business, it’s probably also my hobby too. i really enjoy it. i love building things. so at a certain point i said, okay, i’m going to take my time away from there and i’m going to go focus on this and i’m going to build this thing up. and my book of business is kind of on cruise control. my staff has built, my team is cooking.
dom (39:27.406)
hmm.
tim petrey (39:53.554)
you guys kind of get settled and when i feel that you all are ready for me to come back in and throw some gas on it, i will. and i stuck around and got involved in that clothing business, got involved in promotional products business and insurance business, a couple of real estate ventures over about a two year period of time. and then i came back and got a little bit more aggressive with our growth into the firm. but you got to listen, man. mean, that’s to me,
the key to doing anything in life is being able to listen. and, you know, it’s not just like listening to your spouse or to your partners or this, that or the other and having healthy relationships, but you know, listen to your business and listen to what it’s telling you that it needs from you. and sometimes your businesses need space. sometimes you need to go out and see other businesses and how they operate because you get too in the weeds of the business that you’re in. like, you know, all the things that i learned from building
dom (40:48.204)
mm-hmm.
tim petrey (40:52.966)
the e-commerce business, the clothing business, all the things that i learned from building the promotional products business and some of those other ancillary plays. i was able to then bring back into the cpa firm when i felt that we were a little bit more appropriately staffed and some of my partners had gotten their footing and we had gone through some other things. so, you know, to me, you just, you got to learn to listen to your business and pay attention to know when it’s, when, when you need to back off, when you need to give it a little bit of space, you know, sometimes, you know, to give you a baking or a cooking analogy is that.
you take something out of the oven too early and it’s not very good. if you leave it in there for that couple extra minutes, it’s perfect. so nailing that art is certainly something i’ve learned a lot about. it’s fun, it’s exciting, but you do need to pay attention.
dom (41:27.244)
yeah.
dom (41:41.134)
yeah, that’s cool. different stages of life. but i like the analogy of like you wanted to learn shopify and ecom. and so you invested in a business for me, it was i was gearing up to potentially apply for a job at shopify way back when because i’m in ottawa where they’re based. and i was like, i’m going to start a shopify store. and, know, i did a couple thousand bucks of sales of selling silk pocket squares and not a great business going into covid poor market timing. but
tim petrey (41:47.358)
hmm?
tim petrey (42:02.588)
nice.
dom (42:09.26)
i learned so much about it. and then then i ended up in like a shopify adjacent business. and it was crazy how like, you know, the little bit that i had done actually like propelled me in terms of my understanding of that business is really cool. and i don’t know, i urge people, like, if you look at an area and you’re curious about and want to learn, like get involved, it’s the easiest way you’ll learn by accident. right. so, cool.
tim petrey (42:14.078)
mm-hmm.
tim petrey (42:30.6)
jump in. yeah. yeah. i mean, i, i, that’s always the way i learned. didn’t learn from reading books and then learn. like i learned from, i like listening to podcasts. like talking to other people, but like i learned by getting my hands in and making mistakes and failing, and learning from that and improving the process. like it, everybody learns differently. i’m not saying that what i did was right for other people, but for me, it was, you know, i was self-aware of the way that i learned. and that made the most sense.
dom (42:44.108)
yeah.
dom (43:00.748)
yeah, that’s cool. and then last question i have for you with white glove payroll. why like why a payroll business? because i don’t know, i feel like i talked to so many people starting new firms. and i don’t really see a lot of people starting payroll businesses talking about them. but like, adp seems to be like rolling them up, like there seems to be a lot of interest in like, we’ll buy out the payroll section of your practice. so there’s something going on there.
tim petrey (43:29.374)
yeah. so i mean, the payroll business has been a lot of fun. so you have, payroll business was really my first foray into something that was like truly mine. wycliffe payroll, i found it on my own, as, as, as, as a spinoff from the cpa firm in support of all my partners at the time. but, we had, we had been doing some payroll for some clients at cpa firm. and i acknowledged quickly that it was, it was painful. it was not.
it wasn’t a service that you should be just dabbling in. there were too many ways to make mistakes. if you weren’t super efficient, there was no profit in it. but i still felt like, boy, mean, everybody needs payroll. there, there must be something here, but you know, when i was going around and i was talking to other people in the industry, like, nah, don’t waste your time, man. there’s not enough money to make doing it. it’s not worth it.
dom (44:05.047)
yeah.
tim petrey (44:27.358)
i said, well, it sure seems like a business that i i could really create processes around. and it would be much, much easier to scale a payroll business than a cpa firm because scaling a cpa firm is dependent upon having like partners to manage books of business. whereas scaling a payroll business is much more of a commodity based business. right? so, you know, if we were, if we found something within the industry that we could solve a big problem, there was going to be some money there. right? so.
one of the founders or early investors of paychecks lives down the street from me. and so every year my wife and kids or just my wife and i would go and see his christmas lights. and like, it’s hard for me to put this in context over a podcast, but like his christmas lights are what you would pay to go see. and he does them for free for his little community in salem, ohio. and takes up an entire street.
dom (45:19.211)
okay.
tim petrey (45:26.494)
you know, he’s he has staff at his house and they take months and months and months to erect all of these christmas lights. ok, so you can piece this together and assuming that all right, you know, i may not be that good at math, but i understand that, know, if you have that many christmas lights, you have a fair amount of disposable and or discretionary income. there must be some money to make doing payroll.
so really kind of came back to the firm and said, okay, guys, there’s something here. we just need to figure it out. so i spent a lot of time again, just asking questions and learning and observing and paying attention and asked a lot of my clients like, are you happy with adp? you know, and again, i don’t, i’m not, i’m not here to throw shade at adp. okay. and, or any of, so from here on out, it’s like big box providers, right? are you happy with your big box provider of payroll?
dom (45:53.974)
mm-hmm.
dom (46:20.108)
mm-hmm.
tim petrey (46:23.078)
and some of them said, yes, you know, the big box providers of payroll are, are, are very good because of the fact that they have the best software. they have the best, you know, platform for you to access, but ultimately what they have all become is sas based businesses. okay. they are software as a service business. and, and i felt that there was an opportunity to create a truly service based business and payroll.
you know, i got to a point in life where, it really, really busy, you know, with, with the businesses and with my family and, i viewed time very differently than most. and, and i looked at payroll and i said, there’s something here that if we can be giving people time back into their business, if we can be reducing the amount of time that they’re spending on payroll,
and if we can be providing them with a truly high level service, a luxury service, think, you know, i bought a mercedes, if you, i don’t buy mercedes benz, but if you go buy a mercedes benz or you go buy a really high end car, when it needs an oil change, they come and pick it up and they bring a new one. you don’t have to drive it through valvoline or whatever, like us regular people, you know, you, you, you, you get that level of luxury service. and i said, people aren’t getting that with your big box providers. i think that there’s a market.
dom (47:34.474)
mm-hmm.
tim petrey (47:46.728)
for a luxury service related to payroll. so, you i went to one of my good friends that owns a little ice cream shop and i said, hey, i want to do your payroll and i want to do it for like free. i want to just jump in and i want to learn how to do it and i want to build some systems and i want to use you as my guinea pig. and he’s like, so you’re telling me that you’re going to do my payroll for free. and he’s like, you’re not going to screw it up. right. and no, man, i’m a cpa.
we’re going to do a great job. i promise you, i won’t screw up your payroll, but like, you’re not going to have like this smooth system at first, and you’re not going to have the luxuries of working with a big box company. so he said yes. and he just kind of allowed us to test on him. then we started, we went all in, in terms of our investment of people, we hired some really great people to run the business. and we, we shopped around for some great softwares to run the business.
dom (48:16.652)
yeah
tim petrey (48:41.906)
and as i started to see it kind of coming together, it was, it was a big investment. was well into the six figures of the investment in the first couple of years, what we were putting into the thing. i realized that it was the only business that i owned that, was the easiest to exit to. if i, if i ever wanted to sell the thing, i could just call adp and paychecks and they’d buy it in a second. so that gave me even more freedom to go all in, because i said, you know, now i’m going to keep, i’m going to invest everything.
every dollar that we made in the payroll company went right back into the payroll company for like a decade. and it just became this monster in and of itself. and we hired great people and we were just moving and our clients were loving us and we were adding hr consulting services and our tech got better and this, that and the other. and we realized before covid that none of our employees in this business wanted to come to the office.
there, we, we went after a very specific part of the labor market. we targeted stay at home parents, that were underemployed. and so our entire team at white club payroll is number one, decentralized and number two, they’re there. they were otherwise underemployed and people elsewhere. so we have a brilliant group of people that have a tremendous amount of flexibility and autonomy. so as a result, they treat their clients like gold.
dom (49:46.422)
nice. yeah.
tim petrey (50:08.126)
and as a result, we charge appropriately. we’re not that much more expensive than your big box providers. in some cases, we’re comparable. but ultimately, what they’re getting with us is they’re getting the chick-fil-a of payroll processing. they’re getting the disney experience. they’re getting the pleases and thank yous. our payroll folks are called payroll concierges. when you call in and have a problem with our payroll company, you don’t go to a phone bank.
you don’t go to some generic customer service line. you get, you get the person you’re used to talking to. get, you get karen as one of our payroll concierges and karen knows your business and she, she understands the problems that you might have. and she knows when maybe your submission looks a little bit wonky and maybe somebody didn’t clock out or had the wrong kind of hours or this, that or the other. we just, you know, slapped a different level of service on the payroll business and it really took off and people love it. and our employees are happy. and,
dom (50:40.461)
yeah.
tim petrey (51:06.49)
ultimately see the payroll business is something that has no upper bounds, has basically unlimited growth potential. it’s a much more scalable business. we’ve built a great foundation of systems and processes and the right things for training and onboarding and all that fun stuff. and it’s been a fun journey to build that business, it’s really, it’s kind of my baby. so i’m excited about how it’s come together and i’m really excited to see what the next 10 years looks like that business.
dom (51:27.566)
that’s cool.
dom (51:35.096)
that’s cool. there’s some people i follow, like sean puri, in the more kind of traditional like business world. but like, he talks a lot about like, if you have this business that can employ kind of the alternative workforce, and, you know, like, if you can hire a bunch of stay at home parents, and they’re going to be really happy about doing the thing you’re doing, and they kind of find meaning in in the work that you’re giving them. he’s like, the your
business is destined for the moon, right? and i think this was in context of like, it was like user testing or something like that, but it kind of works here too. and i just imagine like, you know, if you’re talking about in some of the lower cost of living states, like if i’m calling a payroll provider and it’s just a bunch of people like from the south with like the warm accents and everything, like i’m delighted, right? like, and, they’re so invested, like that’s cool.
tim petrey (52:21.404)
yeah. heck yeah. right. well, because the most people that you’re interacting with and we all do this like, and i’ve gotten like super hypersensitive to it now. it’s like, you know, when i go out to eat or i’m going somewhere and i’m interacting with a service based professional and they’re like miserable. they’re like, they don’t even want to talk to me. i’m like, why aren’t you in the service based business? it just makes me, i don’t want to spend my money here. if i, if i have a service based professional that
dom (52:46.85)
yeah.
tim petrey (52:49.604)
is mad that they’re doing service focus things, you know, so to me it just seems so simple. it’s like build something where people love their jobs and they’re going to give that kind of a warm reception, you know, and when you call and you call your payroll, it’s hey, how you doing this week and what’s going on? is that issue resolved that we talked about a couple of weeks ago? how’s your wife? how’s your kids? you know, like it’s just, it’s such a refreshing kind of change of pace to the, you know,
the hustle and bustle of our world. that’s like, you know, i envision everybody being in like new york city and just keeping their heads down and, know, not talking to anyone. it’s nice when people are actually kind and enjoy talking to you you just, you feel better about interacting with those kinds of business.
dom (53:26.765)
yeah.
dom (53:35.542)
yeah, yeah, absolutely. well, i love everything you’re up to, tim. i really appreciate you joining me on the pod. and, know, i’m really grateful for having this conversation and, you know, having you on board now. so, yeah, thanks. thanks. thanks for joining me. and thanks for being involved.