firms that wait until a partner is ready to retire have already waited too long, plus 19 more key takeaways.
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the disruptors
with liz farr
erin daiber, founder and ceo of well balanced accountants, keeps seeing the same issue in firm after firm. a partner announces their intention to retire within a year or two, and the firm suddenly realizes no one is ready to take over. “firms are not starting that conversation soon enough,” daiber says.
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“they’re not thinking about succession planning as a strategy,” she explains. instead of treating succession as an ongoing process, firms see it as simply the point in time when a partner exits the firm. according to daiber, succession planning should ideally begin with hiring decisions and culture building so that firms can be confident that they won’t lose clients or staff due to uncertainty about what might happen as partners get older.
when succession planning fails, firms lose key employees before they even reach partnership consideration. “we’re losing them much sooner than that, which creates a big hole in the pipeline,” daiber notes. she identifies an inability to have difficult conversations as the root cause, particularly when dealing with founders who view the firm as their legacy.
on the client side, people notice that their cpa is getting older, but they haven’t heard about who might be taking over, so clients start to worry: “i’m going to get surprised, and all of a sudden have to go find a new accountant on short notice,” daiber explains.
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private equity has emerged as a solution to the succession problem, but daiber warns that this is a symptom of years of ignoring the real issue. “i see private equity as being the emergency rip cord for firms that have not done what they needed to do to have a succession plan in place that worked,” she says.
a strategic investment that many firms are failing to capitalize on today is ai, where daiber sees two extremes. some firms actively reject ai, burying their heads in the sand while falling further behind, while others rush to implement tools without a foundation.
“the biggest mistake i’m seeing firms make with that is that they’re implementing these tools without a strategy,” daiber warns. firms purchase chatgpt licenses for everyone, but unless they first consider what they want to accomplish with ai and how they will measure success, they may not notice any roi. “to prevent that, we have to start with the strategy and really think through, ‘what are we hoping to accomplish with this? what is our end goal?’” daiber explains.
as ai automates more of the work, some people, daiber believes, will think proactively and will do “more of the high-level strategic advisory work that they should have been doing but couldn’t because they were so busy doing the manual work.” in this case, the hours worked may stay about the same. other roles, such as bookkeeping and administrative tasks, will require restructuring. “how will we have those individuals spend their time when they’re not doing what they’re currently doing?” daiber asks.
automation and ai are expanding across the profession, forcing partner groups to consider discarding the billable hour metric. “and that is a hard stop for many firms because they have not yet gotten their arms around that,” daiber says. “how do we track our profitability and all of the other things that we worry about if we don’t have that hour?”
looking ahead, daiber sees private equity largely exiting the market, mid-sized regional firms reemerging, and cpas doing exciting strategic and advisory work rather than mundane data entry. in this future, cpa will stand for coolest profession around, “for those who are willing to embrace it,” she believes.
19 key takeaways
- there’s no silver bullet for retaining staff beyond the three- or four-year mark. some of the issue arises from staff not landing at the right firm for them.
- when firm leaders are unable to have difficult conversations about retirement and succession, this communication deficit often pervades other areas of the firm.
- leadership development requires more than cpe and webinars. meaningful skills can’t be acquired in a two-hour webinar.
- active leaders should be developing the next generation and ensuring they create and nurture a culture where people want to work.
- collect feedback from the entire team with a pulse survey. this helps ensure the firm is solving the real problems team members are having.
- the company picnic may be nice, but it doesn’t help staff who are buried in mandated hours while raising a family.
- pe solves the succession problem for retiring partners, but it doesn’t seem conducive to creating a place where young partners or managers want to work.
- pe’s interest in accounting firms is a signal that firm owners could get more value from their firms by improving efficiency. but with pe investment, firms are surrendering those efficiency and profitability gains to outside investors.
- pe also highlights the technological debt many firms find themselves in after failing to keep up with advanced technology.
- once an ai strategy has been developed, staff need training and time for experimentation. they need time to build custom gpts and guardrails for ethical use.
- ai initiatives require creating an environment of psychological safety so that people don’t fear losing their jobs.
- 80% of transformation initiatives fail because of the people side of things. inadequate communication and failure to secure buy-in are the primary culprits.
- successful change management requires systems thinkers at the decision-making table. these are the individuals who recognize how one decision ripples outward across all areas of the business.
- saly is incompatible with a rapidly evolving profession.
- with the pace of change today, firms need multiple strategic retreats each year, not just one.
- ownership of change initiatives should be delegated to younger people. this prevents bottlenecks and engages people who are eager to drive technological innovation.
- fear of the unknown is the key block to change in accounting.
- leaders need external input to see their own gaps. it’s hard to read the label from inside the jar.
- the best leaders create environments where people feel safe giving honest feedback, even when it’s hard to hear.
more about erin daiber
erin daiber is a cpa-turned leadership strategist and founder of well balanced accountants, where she helps independent cpa firms increase firm value through stronger leadership, smarter succession planning, and healthier cultures. a former ey auditor and financial analyst, daiber blends deep technical expertise with strategic coaching to help firms grow revenue, retain top talent, and scale sustainably. her data-driven engagements have helped clients achieve up to 50% annual revenue growth while reducing costly turnover. daiber serves cpa firms nationwide and is based in san diego.
transcript
(transcripts are made available as soon as possible. they are not fully edited for grammar or spelling.)
liz farr
welcome to accounting disruptor conversations. i’m your host. liz farr from cpa trend lines, and my guest today is erin daiber, founder and ceo of well balanced accountants. welcome to the show, erin.
erin daiber
hi, thank you for having me.
liz farr
well, when we first met some time ago, i just kind of knew that that what you were doing was going to be of importance to the accounting profession. so i’m just hoping to share some of your ideas with a broader audience here.
erin daiber
i’m looking forward to it. that sounds great.
liz farr
yeah. now in a call we had a couple weeks ago, you mentioned that you’re doing a lot of work in succession planning. so what would you say are the biggest mistakes you see firms making in their succession planning?
erin daiber
firms are not starting that conversation soon enough. i see what’s happening in the partner groups is somebody announces that they’re thinking about retirement in the next year, even a couple of years. and something you might be seeing in a firm if you’re maybe a little bit behind the eight ball, if you put yourself in that situation, is that you look back and say, uh oh, there’s nobody ready to take over. that tells me you haven’t started this conversation soon enough, and maybe haven’t been strategic enough along the way to build that internal pipeline. so firms are definitely not starting the conversation early enough about what that strategy looks like. i think if we even back up further than that, they’re not thinking about succession planning as a strategy. they’re thinking about it as a plan a definitive point in time or an exit, maybe a contract or an agreement, but they aren’t thinking about it as something that they work towards from the very beginning, starting even as early as who you’re hiring and how you’re hiring, making sure that you’re hiring for a good culture fit and somebody who’s likely to stick around long enough to be a part of your succession plan. so i think that’s really critical, and all of it really is based in conversation and communication inside of the partner groups. i think those are probably the three key things, key mistakes that i’m seeing in firms of all sizes,
liz farr
i would say i certainly saw that in the firms that i worked in, that i knew that one of the partners was nearing the contractual buyout age, but they weren’t really doing anything to ease him out of that role. so, you know. and then in another firm, there were a couple of people who were going to be leaving in the next few years, and they weren’t really doing anything to move their clients to other parts of the firm, to other people in the firm, and everybody, all the partners, all the managers, were already working beyond their capacity. so i don’t really know what happened after i left, honestly.
erin daiber
well, you bring up an interesting point. so on one hand, i would say that firm was ahead of the game in that they had a buyout age that was already in the agreement. a lot of firms today are struggling, actually, with the opposite side of the coin, which is they don’t have an agreement like that in place, and we’ve got partners that are sticking around a little bit too long, or that are holding on. it’s not so much about them being in the firm, because i do believe that people can still contribute and add value past a certain age, but it’s more about not letting go of the decision making capabilities, and this their role in driving the strategy of the firm forward. so i like that the firm had that had some kind of a structure in place. so that comes back to my comment about a strategy, really thinking through how we want this to go, but you’re absolutely right, then it doesn’t always solve all of the problems, because we still have to be actively working towards developing that next generation of leaders and also making sure that our clients are made to feel safe and secure that they’re going to be taken care of in the long term. because when we don’t talk about it, or we aren’t taking the actions that signal that we’re thinking about it, and we’ve we’ve got a strategy in place, people start to make something up about that. so on the client side, they make up this story that, oh my gosh, my cpa is getting up there in age. surely they are thinking about retirement, but they’ve not said anything to me about who’s taking over next. i’m going to get surprised, and all of a sudden have to go find a new accountant on short notice, which makes them nervous, of course, and not a great way to handle that relationship from a client service perspective, and then on the internal side, people make up that there’s no place for them, or there’s not upward progression, upward mobility here, and that’s where you’re going to see people start turning over. i’ve worked with a firm recently where they they didn’t have that agreement in place, and their managers were looking up there and saying, i don’t think that’s the group of people i want to work with. so even if the partner group had identified them as their next generation because of how that exit and transition was being handled, people were actually opting out before even stepping into that role. so it has to be strategically thought about. it has to be tactically addressed in the form of an agreement, like you said, but then we have to be actively working a plan, both internally and externally for the clients.
liz farr
yes, you mentioned clients being uncertain and also staff being uncertain. what other kinds of pain points are you seeing in succession planning?
erin daiber
well, those are, those are two of the main ones, because if we have uncertainty, there’s big risk associated with both of those. so we’ve got, you know, clients are our main source of revenue. certainly if we’re not making them feel safe, we have a retention challenge there, risk of losing those clients, and same thing on the staff side, risk of losing those, especially those key players who are identified as part of the succession plan, or maybe the next leader in line. i think some of the other pain points happen earlier on too, where firms are actually struggling to retain their staff and their technicians past the three, four or five year mark, where they maybe haven’t even made it to the point of being identified as a future shareholder, future partner, but we’re losing them much sooner than that, which creates a big hole in the pipeline, and then, of course, hiring that experienced talent still is sort of a like searching for a unicorn, so i think that’s a big pain point. and the other one that happens at the higher level inside of the partner group is just an inability among partners to have difficult conversations, of which the conversation about succession and retirement is one that is a challenging conversation when you’re dealing with people, especially when you’re dealing with someone who maybe is the founder of the firm. this is their baby, the thing that they built from the ground up. that’s a difficult thing to approach your partner about it being time to leave, or thinking about that exit strategy. and so what i see as a result of that is groups are just not having that conversation, or they have it without the people that need to really be a part of it. and so i think that’s a huge pain point that actually trickles through much of the rest of the succession planning process. so if we can’t have those difficult conversations effectively, we’re likely not going to have them in other areas of firm management either.
liz farr
i would agree with you right right there. now you mentioned, you know, firms not having, not being able to hold on to people beyond the three and four year mark. what are, what are ideas you have to get firms to not have that happen? how can we prevent that?
erin daiber
do you know what liz, if i had the silver bullet answer to that, i would be a multi zillionaire. i think, because that has been the question on the minds of firm leaders for years and years. the short answer is, there’s no silver bullet. there’s no magic pill or magic answer. it really has to be firm specific. so while a strategy may be working for one firm to retain their people won’t work for another? i really think it’s culture specific, just like there are, you know, there’s many companies, there’s many firms out there, there’s the right fit firm for everyone, and i think part of that challenge is that people aren’t landing in the right fit firm for themselves, perhaps from the beginning, or not hiring intentionally enough to hire for the culture that they have. so that’s kind of a longer that’s a longer conversation, maybe for another day, about the hiring practices. but once you’ve got your team involved, a couple things i have found really helpful for firms are one doing a pulse survey annually where you’re asking for feedback. so without that data, what firms are sometimes doing is sitting in a room, a couple of people trying to imagine what the problems are and trying to come up with solutions. the challenge with that is we might not be picking or landing on the right problems, the right challenges, and then we’re solving them, but we’re solving the wrong ones, and so the actual challenges continue on, and your team then is left with, well, this picnic is nice, but you know what i’m really struggling with is these mandated, incredible billable hours requirements, and trying to juggle that with raising my family. so the picnic doesn’t really solve it, and that’s sort of an egregious example. i know firms are doing a lot more than picnics, but if you’re putting a solution in place that doesn’t address the real issue, that can actually go, actually work against you, where it’s it comes off as a bit tone deaf or disconnected, and what are they thinking? this isn’t really the issue here. so to start you have to understand what the real challenges are, what your team needs, where the gaps are, and then you can be much more intentional in solving those whether it is through some kind of engagement initiative or training initiative, and that’s going to save you a lot of money down the road, because that way, you’re investing in a smart way and to addressing a challenge that actually exists. so that’s something that really helps with retention. the other is making sure you have active development programs in place. leaders today don’t want to stagnate. they want to move forward in their careers. they need conversation. so we need to have active leaders working in the organization to develop that next generation that are, you know, really being inspirational leaders and making sure you’re creating and nurturing a culture where people want to work
liz farr
so more active mentoring and targeted training and upskilling, not just tossing out the state society cpe catalog and saying, choose your classes from here. let’s go
erin daiber
correct. yes. and i would take it a step further, just because you brought up cpe to to actually separate the conversation about active development of people with cpe. we have cpe in our minds, sort of as a tick the box requirement, and a lot of the skills that really are going to be required to get your team from where they are to being active managers, active leaders, future leaders of the firm. you don’t learn those skills via a two hour webinar. so we need to really disavow ourselves of that notion that all of our leadership and development challenges and learning challenges can be addressed through a two hour webinar.
liz farr
it just can’t. 100% i agree with you now. what role do you see for private equity in succession planning
erin daiber
right now, i see private equity as being the emergency rip cord for firms that have not done what they needed to do to have a succession plan in place that worked. so whether that’s many of the things we’ve already talked about, having the agreements, having the right conversations, the difficult conversations, and then having the strategy, the active strategy, probably for several years prior to an exit pe swoops in. they’re like. the knight in shining armor on their white horse like no problem. we’ll save the day. we’ll buy you out the folks that didn’t have a plan and didn’t execute on a plan or a strategy. we’ll buy you out. you’ll get your money and you can go. the challenge with that is that it really doesn’t work out so well for the rest of the people who remain. it works out wonderfully for the people who are getting ready to leave, or within a couple years, are ready to retire. but i have yet to find a young partner, or call it a senior manager, experienced manager, somebody who’s getting close to that conversation about entering partnership, that is excited about the opportunity of working in pe so that’s that’s the role that i see them playing right now, is that they are coming in and saving the day. i also think if we look at it from a more positive perspective, and i’ve said this a few times in a few conferences, that pe is sending a signal to firms that is, you could be getting a lot more out of your business. that’s the message, right? they’re coming in and saying, i can pay a premium for your business and still turn a profit on it in a few years, which we know they’re going to do it through their own ways, right? they’re going to cut all the fun stuff, and they’re going to squeeze, pinch expenses and squeeze every revenue dollar, right? so they’re going to have their approach to it. but if we just look beyond that, they are signaling that we could be doing more. we could be running these firms more efficiently and more effectively, and be getting more out of it. and they then the firm leaders that are there now, could be enjoying the benefits of that.
liz farr
i agree with you. i think it does send a signal that the accounting profession is on to something that outsiders see as really valuable. you know, we’ve got this recurring revenue. we’ve got these clients who come back year after year, and we’ve got a level of trust with the clients that is not quite the same as you have with law firms, because a lot of legal work is one off projects you don’t typically go to a lawyer year after year after year, unless there’s something about the way you behave or the way your business operates that makes that a requirement. but typically you don’t.
erin daiber
yeah,
liz farr
so i think that that is something that accountants should be really thinking about strategically.
erin daiber
yeah, i’ll also add to that that you know, not only do we have something, we’re on the right track here in terms of how these firms run the recurring revenue all the things you just mentioned, i also think pe is serving a role for management groups who haven’t stayed on top of bringing their firm into the modern day. so i just had an example. i just had a conversation recently with a firm that is has taken pe and they cite the things that they cited were the ability to invest in technology, because they’ve fallen very far behind. so in other words, they haven’t been making those strategic investments every year to stay on the front edge, or close to the front edge, of technological advancement. so now they’ve got tech debt, what i call it, right technological debt, where they haven’t, they haven’t been making those contributions, so they’ve now got to make a big one to get up to speed. and they don’t have that, or don’t want to do that, maybe can’t get the alignment of the partner group to say, okay, we’ll forego some of our draws to reinvest back into the firm and modernize so in organizations like that, where we’re not staying on top of developing our people or modernizing our processes and our systems and our tech again, if we’ve dug this big hole for ourselves. pe also looks very enticing for those partner groups, but again, i’m going to keep coming back to the communication if they had been able to sort out their communication and sort of operational issues inside of the partner group. inside of the firm a few years ago, they may not have found themselves in that situation and could have had more options. most of the time, when i see firms excited about going pe it’s because they don’t have any other option.
liz farr
yes, yes, and and i, and i agree with you that for a lot of firms that haven’t really invested in tech, that pe can be super appealing, and not only for the technology, but the capital to bring in the talent that maybe they haven’t been able to attract.
erin daiber
maybe i know they they say that. i’m not 100% sure i agree on that side, although time will tell, i just i’m this is anecdotally. i don’t have data to support this comment, but i just haven’t heard the excitement about working in firms that are structured like that from the younger generation. so i would be surprised if that actually plays out that way, where those firms are all of a sudden now, you know, fighting off talent like you know, that are trying to bang down the doors. i mean, good for them. if that’s true, i would just be shocked if that’s how it actually plays out.
liz farr
that that is a good point, because i think you’re right. you know, that’s something that’s one of the carrots that pe holds out, but i’m not really sure, like you said, i’m not really sure that the young people will be excited to work in a company that is all about optimizing and squeezing profit out?
erin daiber
yeah, yeah, i don’t know. i like i said, time will tell, but that’s my instinct, is that that’s not how it’s going to be. but again, pe isn’t signaling to the staff, they’re signaling to the leaders. and so that is a great sales point to say, this is what, what we can offer for you. i know there’s a lot of layers to it, but i’m very eager to see how it plays out long term.
liz farr
yes, another thing that we talked about a couple weeks ago was ai, and how a lot of accountants are worried about ai, it’s going to steal our jobs. it’s going to ruin us, it’ll steal our data. what mistakes do you see firms making in their approach to ai?
erin daiber
there are many, but that’s common with any sort of change and unknown. so i’ll start with the i’ll start at the beginning. so one of the big challenges or mistakes that i see firms making is not embracing, or in some cases actively rejecting the concept of ai. it’s not going away. it is absolutely here and going to have an impact. so burying our heads in the sand and hoping it goes away is not a good strategy. and the risky component of that is that it’s moving so quickly and advancing so much every day, that the longer we keep our heads in the sand, the further and further behind we’re falling right. just a few minutes ago, i made that comment about tech debt, you’re going to have a really hard time catching up if you haven’t gotten curious or started to embrace it in some way. and there are absolutely firms that fall into that category still, so that’s one. so absolutely we have to find people in your organization who are curious about it. and if you’re the leader of the firm, even if you’re you know, getting ready to retire, it really need to embrace and be curious about the impact ai can have on the profession. then there’s the group of firms that have implemented some kind of a tool, whether that’s just a large language model, like a chatgpt or copilot, they’ve implemented something. the biggest mistake i’m seeing firms make with that is that they’re implementing these tools without a strategy. so we know we need to do something. so we jump into the deep end. we purchase a license for everybody in our firm, but we haven’t stepped back to say, what are we hoping that this will solve? what efficiency are we trying to gain here? how do we want our teams to use this technology? how do we see our firm using this three years from now? i think five years is way too far out for this conversation, because nobody knows where it will be in five years, but there’s no strategy behind it and so and and also, no policies often about use, ethical, use, smart and safe, use of the tools and protecting your data. so without that strategy, then what happens is, a few months down the road, we look and we look at our billable hours or our utilization, whatever those key metrics are that you track as a firm and notice zero change from the day you implemented chatgpt to the day you’re looking at it and then say, well, that didn’t do anything for us. we’re not getting roi out of this investment. so to prevent that, we have to start with the strategy and really think through, what are we hoping to accomplish with this? what is our end goal? and that really requires having people who are interested and curious and getting out there seeing what’s possible beyond chatgpt, because the technology has moved so far beyond that in terms of what’s possible for our profession. so we have to start with the strategy, and then we have to train people how to use it. we need to offer prompting training. we need to offer time for our people to experiment and play around. we need to train them how to create custom gpts that they can use for their specific use cases in a safe way, and then measure roi from that. so that’s a long winded way of saying that we need to have some strategy behind it. and i think to your i think in your question, you mentioned that people are afraid so we are typically afraid of things that we don’t know. so simply offering some awareness training and some insights, or letting your people go see webinars or conference presentations about this can be helpful to simply get you know, again, if we don’t know we’re probably making stuff up or believing some of the articles that we read online, which are may or may not be true, feasible, right? sometimes they’re a bit exaggerated. so we have to train them and let them know, and we also have to be creating that environment of psychological safety to reinforce for our team that our goal is not necessarily to replace them. i personally don’t believe it’s going to be replacing accountants anytime soon. i do believe it will change the role of people in our firm very quickly, starting at the bottom. so absolutely administratively, we can free up a lot of time on the admin side right away, without exposing yourself to personally identifiable information going out into the, you know, the deep, dark hole of open ai, administratively, bookkeeping and then staff level work really are the first ones that are primed for a lot of automation and a lot of agentic work. so we have to start thinking strategically also about, how will we have those individuals spend their time when they’re not doing what they’re currently doing? how we fill them up? how will we fill up their 40 hours a week, really? what does that workflow look like going forward? because that day is going to get here before we know it.
liz farr
that’s very true. and i and i think that, you know, a lot of firms tend to see, well, we have a problem, so let’s just go out and buy some technology and then throw the technology at the problem. but you first have to step back and think about, well, what do we want this technology to do for us? what is it we would like it to do? would we do we want it to take a lot of the data entry and a lot of the manual work off of our people’s plates. do we want to make their work more streamlined? do we want to use it to set up some streamlined new client and new staff onboarding processes, instead of just saying, oh, guess what, we just bought everybody chatgpt licenses, so have at it.
erin daiber
yeah. right, and then wonder why you don’t have roi six months down the road. yeah, yeah, yeah.
liz farr
the other thing is that if you’re just using the old metrics based on billable hours, you’re not really going to capture any roi from technology and automation, it’s going to be very difficult to see that, because those are based on humans doing the work manually, and when one person in the firm figures out automated ways to do things faster, well, they may get the same work done this year as they did last year, but in fewer hours. so that makes them look bad, because they have fewer billable hours, and so it’s not really incentivizing the right things. so i think we need to also create new metrics.
erin daiber
yes, that’s hence the strategy conversation that needs to happen, because there are downstream impacts. conversely, maybe those individuals think proactively and now are doing work that otherwise was falling off of their plates, or they weren’t able to do it more of the high level strategic advisory work that they should have been doing but couldn’t because they were so busy doing the manual work. so in that case, you also wouldn’t see a change in billable hours. it would stay the same. it’s just different types of work. but just looking at the hours themselves wouldn’t necessarily change. but you’re absolutely right. it does disincentivize efficiency those old metrics, so we do have to rethink and often, i think that conversation has happened in a million partner groups over the last year. you know, where they say, let’s take this on. and if they actually start to think about it, then they say, well, i guess we have to get rid of the billable hour. and that is a hard stop for many firms because they have not yet gotten their arms around. how do we do that, then how do we track our profitability and all of the other things that we worry about if we don’t have that hour? so this is too big of a problem. let’s deal with it later, and then here we are with maybe not as much action as they would have liked.
liz farr
yes, yeah. i just recently read a book by blake oliver, and one of the points that he makes in there is that when you change your revenue model from billing by the hour to value pricing or subscription pricing or fixed fee pricing, that decision has a lot of downstream impacts, because to be profitable, you have to think about what you are doing and how you’re doing it, and how you’re creating value for the clients.
erin daiber
absolutely, this is why you need people at the decision making table who are what we would call systems thinkers, who are really good at seeing how this one decision in an area of the business is going to affect all of the other areas. that’s why change management is so hard. that’s why a lot of initiatives in firms fail and in businesses, this is not limited to the accounting profession by any means, change management is hard making these decisions and being strategic about it is very challenging.
liz farr
yeah, well, that’s a perfect segue to my next question, which is about change management. we’re under a lot of pressure to make a lot of big changes really quickly. so what ideas do you have to make change management easier more appealing, actually lasting.
erin daiber
more appealing is an interesting way of looking at it. and so i think that actually speaks to the individuals in the room, the individuals who are responsible for driving change. we have to do our own development work, our own personal development, to get as comfortable with change as we can. if we are the leaders of an organization, and we are change averse, we are not doing that organization any service in this day and age. arguably haven’t been for a while, but maybe we’ve gotten away with it for some time, so we just all have to do our individual work to get comfortable with that and build the muscle of adaptability and really understand what you need to feel comfortable with change, or at least to be able to move forward in the face of your discomfort. you may need some coaching around that. you may need some other personal development, but that is that is the role of every individual leader inside of these organizations to make it more palatable, maybe not appealing. you may never like it, but we’ve got to get comfortable with it. to make it more likely to stick, we have to start doing things differently. i think the most common thing that i see, which, again, is probably not limited to accounting firms, but especially tough here, is that we’re so busy with other things, right? there’s always something else that can jump up on our priority list and take the place of some of these more strategic or difficult decisions or initiatives. so we need to probably be having if you’re not having one strategic partner retreat every year, start with one, but most organizations probably need to be having two or three, meaning you actually leave the office, you go off site. you’ve got a real agenda where we’re resetting our priorities for what is, what is changing? it’s it’s really not likely that one of those meetings a year will be enough. again, with the pace of change and the variety of change, we’re not just talking about technology. we’re talking about our processes, our revenue streams, our cyber security, our people, everything, and so that’s a lot to cover in one or two days, and it’s a lot of moving parts. so i think we have to start having those regular meetings and prioritizing that, prioritizing working on the firm, not just in the firm, and then we have to get better at delegating and letting other people own initiatives and run with it. that’s going to make this scalable. if you’re trying to run too many decisions through one or two people, they are going to get burned out with decision fatigue, or they’ll become the bottleneck in the process. so we’ve got to figure out a way to empower other people to drive these initiatives. it’s also a great opportunity to engage your team, i think specifically about technology. there are young people who are chomping at the bit for ai and all of the things that technology can provide. so let them, let them get involved, let them be part of that, that steering committee, or that the training team or something. so that’s going to keep these initiatives moving forward when it’s not all falling on one or two people to drive it. and then finally, as accountability, we have to be having those regular check ins. we have to have milestones. we have to treat this the way corporations have treated change management for years, where it really is a process. there are people responsible for it. there are people whose jobs depend on the modernization. if you think about like a tech startup, for instance, when they have project development plans, they have milestones they have to hit, their bonuses are based on that. and so maybe we need to think about really tying some of our metrics to modernization efforts and change management efforts as well.
liz farr
i agree with you with all of that, and i would say that some of the change management initiatives that i was part of, or that were, i would say more imposed on us failed because they didn’t really get buy in from people doing the work.
erin daiber
yes, i, i was just thinking about thinking about three different things that popped into my mind when you said that. but 80% of transformation initiatives do fail because of the people side of things, whether it’s not getting buy in, like you said, not bringing people along, or failing on the communication front so people tend to not buy in when they don’t know why. they don’t understand the problem that we’re trying to solve here, or they don’t understand how it affects them. so we can’t underestimate how much of change management really is communication and addressing people’s fears and feelings about it. if we don’t, we’re going to end up either with a failed initiative that can be very, very costly, or we roll it out and people aren’t adapting, they aren’t adopting the new process, policy, procedure, technology, fill in the blank and again, then you’re just not going to get the roi out of it that you expected exactly.
liz farr
i worked with a tech company, writing a book with them, and they told me about this failed implementation of a new purchasing tech that they were supposed to use for all of their purchase orders. well, they didn’t. they had some training, but then they didn’t really create a good form of documentation for it. so the people that used it every day, you know, okay, you know, i can get up to speed, but the people who used it once or twice a year really struggle, because then to figure out how to do it, they went back to this 200 page pdf that didn’t have really any bookmarks or links or anything. and so they were just like, ah, i can’t do this. yeah, can i can i get you? you know, you use this all the time. can can you do this for me? and so it, you know, the communication is really important, and it needs to be tailored to the needs of the people according to their usage of it,
erin daiber
absolutely and have the training provided. i think that’s a great argument for steering committee or a group of champions, if they’re it champion so that we can spread that around among a number of people, so it’s not just falling to a couple of people to ensure adoption at all levels. that’s also a great use case for some ai training videos that can be updated really easily, so that you don’t have to search through a cumbersome document. i think if we make it too hard, if we add too many friction points in the process, people are go, you’re going to lose them. we’re used to things being very handy, so if we can’t do that, in this case, to remind myself how to use a program, i’m just likely to ditch it all together, or find a workaround.
liz farr
yeah, yeah, or ask somebody over in the corporate controller’s office, can you do this for me? because i don’t get it, yeah, yeah. now, i’m going to switch gears on you and ask some of the questions that i ask a lot of my guests, and many of us learn the best when we’ve made a mistake. unfortunately, that’s the best way that we learn. what would you say is the most valuable mistake that you’ve made?
erin daiber
that’s a great question. i think this is kind of unfair, because at the time, i didn’t know, but in growing, in the process of growing my business, i was out here, i think, like many business owners just figuring it out as i went. and it wasn’t until several years down the road that i got some formal sales training, put some processes in place and some strategy in place for myself, to be fair to me, to give myself credit. if i had done that early on, i think i would have been overwhelmed and wouldn’t have known the right questions to ask. i wouldn’t have had enough context for it. but in doing that down the road, i realized in hindsight, where i was falling short in terms of the impact i could have been making for clients. so. so i have been guilty of selling a two hour webinar or a four hour webinar to a firm that ticked the box on some things, but it didn’t meaningfully move the needle on any initiative, i’m sure right, besides just getting somebody the necessary cpe, so that’s one of the things that sits with me still. i sometimes think back like, oh gosh, i could have done more to help that organization. luckily, i still work with many of them, so we have gone back and revamped and revised how we work together. but i think having that strategy, kind of taking my own advice and putting some strategy in my own practice early on would have been helpful, but i guess we get there when we get there,
liz farr
yeah, and, and i would say that sometimes, when you’re creating something that isn’t out in the marketplace already, like a consulting service like yours, it’s hard to figure out, well, what is it i’m doing, and who are my best clients? how can i help them, and what goals, what value can i bring to them. you know that if you if you don’t have any models for somebody else?
erin daiber
yeah, and i think i was, i wasn’t necessarily trying to model myself after anyone else specifically, but i really was trying to find my own flavor and my own path in the profession, what that looks like and and i think we’ve done that, but that just has to happen over time. i don’t think i could have done that from day one without the context or experiences. so i give that advice sometimes to young people who are getting ready to sort of hang their shingle out for an accounting firm and trying to figure out who their ideal client is, and it’s good to have an intention, but we also will have to pivot. over time, you will naturally learn what you’re great at, who you love working with, who you don’t like working with, and that’s the beauty of being in business for yourself, is you can pivot and change it up as needed.
liz farr
yes. one of the writers that i follow has created multiple successful businesses as a writer by paying attention to what his customers and his clients need and what they responded to and what helped them the most, and then focusing on those things.
erin daiber
you have to i think if we’re not doing that, we are missing the mark. that’s where you see these stories of companies going out of business because they haven’t effectively responded to the demands of their customers or shifting needs. and that’s absolutely true for me, my you know, my clients, the accounting firms, their needs have definitely shifted over time. and certainly for them, their client needs have shifted and are about to shift again, very significantly. so i think that’s an important lesson for anyone in business.
liz farr
yes, and i would say that you’re a model of that, because i remember the very first presentation i saw you give at a quickbooks connect, many years ago. is very different from what we’ve been talking about today.
erin daiber
yes, that was, i can’t even remember what that was about, but i’m sure it wasn’t succession planning. it wasn’t ai way back, you know, a number of years ago, things in the things and in the profession have shifted, and therefore the needs of the firms and the firm leaders have absolutely shifted as well. yes, they have
liz farr
now, what advice do you have for accountants who want to be better leaders?
erin daiber
that’s a great question. also, these are such good ones. one of my mentors says that it’s hard to read the label from inside the jar. so if you just think about that for a second, it’s that way with leadership too. it’s very hard to see our own gaps and development opportunities when we’re in it. we know we’re doing our best. we might be able to see some of them, maybe some of them have been reflected back to us, but likely not all of them, and not to the extent that we really need to hear it. so i think the best thing that someone can do who wants to improve is go seek feedback. if you work alone, seek feedback from your clients, from your friends, from your people who work closest to you, maybe professional colleagues that work outside of your practice. but we have to get the feedback. we have to understand what how others are experiencing us and our leadership in order to change it. so i think getting that feedback, we use a great tool that’s a 360 assessment that i think is great for getting not only the written feedback, but also measured feedback, so that you can develop a plan for getting better that’s very specific. we can target the areas where you’re going to get the best roi right, where it’s going to make the biggest difference for you. so asking for feedback, being a really good, active listener and active learner and observer, really being curious about your own development is key to being a better leader. and really, i think the people that are the best leaders are the best listeners. they’re not the ones talking all the time. they’re often sitting back, listening, asking questions. so developing those kinds of skills as well. and i would say, get a mentor, or get a coach, or have somebody who is your guide, right, someone who you look up to as a not so much a mentor, but maybe just as someone who you really respect their leadership and who you’re trying to model after. so you may not have a personal relationship to them, but who you can model your leadership after, and then add your own flavor to it. i think if we all took those steps, we’d be in a much better position,
liz farr
absolutely, and i love your analogy of trying to read the label from the inside of the bottle, because we often don’t really see the impression or the impact that our actions, the way that we try to lead, has on the others.
erin daiber
it happens all the time. it’s one of the things that i it’s very hard to, right. you really can’t get that feedback unless somebody tells you, but everyone, i believe, is out there trying to do the best they can with the tools that they have. and so i don’t believe that it comes from a bad place. if we’re having an unintentional impact on someone that is negative, but again, we can’t change it if we don’t know about it. so we have to be courageous enough to ask, and we have to be gracious in how we receive that feedback, even if it’s not the nicest thing, but really hold it as this is going to get me to my next level. and i guess the only other thing i would add about that is we, we have to create a space where people feel comfortable giving that feedback. so there are leaders out there who kind of put an unapproachable vibe out into the world. and if that happens to be you, you may not know it, but if that happens to be you, and then you go out and ask for feedback, you’re likely not going to get a lot back, or you’ll get all positive feedback. nope, it’s all good. everything’s fine. that doesn’t actually help you move forward at all. and that would make me, as a coach and as an outside set of eyes, question how you’re being with the team, that that’s all of the feedback you’re getting, because nobody’s perfect, even some of the best leaders still have areas where they could improve. so we have to be mindful that we’re putting out the energy of true receptivity and curiosity and and a desire to change and improve.
liz farr
absolutely, i agree with you 100% now, what are some things that accountants should stop doing immediately?
erin daiber
well, we talked about it a little bit earlier, but i say death to the billable hour, because that has got to go away. it is i get why it’s so deeply ingrained, but where we’re headed in terms of efficiency with these technology advances and everything else, it’s going to go away. so we better start thinking about it now how we want to strategically move away from that in our client service. so let’s stop doing that immediately. it’s a great time. you know, new year’s coming up, we can start fresh.
liz farr
yes, and not. to mention that it’s not always the most accurate of data, because there isn’t a single accountant out there who hasn’t fudged on their timesheet. somehow, sometimes it’s innocent, because you just forget what you did, and so you try and reconstruct it, so that’s not always really accurate. and then sometimes it’s well, you know, i spent 25 hours on this project, but it was only budgeted for 15 what can i do?
erin daiber
yes, it’s been an imperfect measure since its inception. we just need to agree that it was never great and that there is another way out there that is absolutely functional. if you’re not familiar with other ways that have worked, ask your peers, your colleagues, find somebody else who’s done it, learn from them. you don’t have to recreate the wheel,
liz farr
right, right? and that’s that can be a conversation for another day. totally. now, what blocks accountants from changing? what keeps us what holds us back?
erin daiber
bottom line, it’s fear. i think fear is at the root of all of it, whether that’s uncertainty about change, whether we’re afraid to fail, afraid to be too far out there and get rejected from the market, rejected from a client, every, almost every challenge i encounter in a firm. we could tie it back to fear in some way, so i’ll just bottom line it at that again, if we could support ourselves in getting better at navigating in the face of fear, firms could move a lot quicker.
liz farr
yes, i agree with you 100% there is something that is reassuring in doing things the same as last year. it worked last year. it worked the year before. let’s just try it again this year.
erin daiber
i’m going to revise my previous answer, which is death to the billable hour, which i still 100% stand behind, but also, let’s kill saly while we’re at it. this is if we’re still doing it the way we did it last year, with how fast the profession is moving, that’s a great signal that something has to change, that we should be discussing our strategy and at least revisiting the decision about how we did it last year to make sure and reaffirm that it still makes the most sense this year, but not doing it by default being out of laziness or a lack of time.
liz farr
yes, one of the auditors that i do a lot of work with, alan anderson. he’s an auditor consultant. he has a unique approach to teaching audit, he says, throw out last year’s work papers, or only let the in charge see them, no one else can, and so they have to figure it out from scratch every year.
erin daiber
interesting, yes, hey, i’m i’m all for it. if it’s again different and it’s intentional, i think that would start some firms thinking, gosh, how inefficient if we’re recreating the wheel every time. but at least the risk assessment and the overall plan should be looked at separately each year, because things change in the business
liz farr
things change in the business environment. things change in your geography. so the same approach, the same risks may not be there year after year. absolutely, yeah. now i want you to get out your best forecasting software or your favorite crystal ball, uh huh, and tell me. where do you see the accounting profession in 10 years.
erin daiber
10 years will be 2035, 36 gosh, really hard to predict, given how fast things are moving, but what i suspect pe will not be a significant player anymore. i think this will have played out. we will have seen some of the kind of roll ups, the second and third iterations of this firms trying to get out. and i also think you’re going to see people that have been rolled up into these mega firms roll off and start their own smaller firms. so i’m hopeful to fill back in that middle size, that mid range regional firm, band. we still have these very small micro firms, and now more and more of these mega firms, but i’m hopeful that in 10 years, we’ll have filled out the middle again, because there’s such a valuable place in the market for firms of that size. and again, there’s a place in a firm for everyone. and i think there’s a demand from the cpa, from the individual perspective, to work in a firm of that size. so pe will be out, or maybe, again, just a small presence, wherever they’re left after all of this, i think the work of the cpa will be changed for the better. i think it will be cool. in california. we’ve been playing around with the the term, i guess, or the tagline, cpa, coolest profession around. but i really think we’re headed in that direction where we’re taking away, or have the opportunity now, to eliminate, a lot of the mundane work that frankly, never had anyone excited to go to work for the data entry and stuff like that. but we’ll actually be able to give that opportunity to more and more cpas to have client interactions. be more strategic, be advisors, be technologists. i just i see all a lot of positives for our profession in the next 10 years, if, if we’re willing to embrace it, or, i should say, for those who are willing to embrace it.
liz farr
and i love that positive note that there is so much we can do for those who are willing to embrace it.
erin daiber
the key we just have to be those people who are willing be part of the group that are willing to embrace it in our own ways.
liz farr
yes, absolutely. and i think that’s a perfect place to end our conversation. erin, it’s just been delightful to have you on here. yeah, and if listeners want to connect with you, where is the best place to find you?
erin daiber
well, you can find me on linkedin, of course, you can also find my website wellbalancedaccountants.com plenty of opportunities there, if you’d like to use any of the links to schedule time with me. more than happy to do that. and we also host pretty regular, at least quarterly, small group discussions for partners and managing partners. so i’d invite you to join those. they’re free of charge. you can drop in we tackle hot topics and create forums for you to share with your peers and learn from your peers and hear about what other firms are doing out in the market. so that would be a great way for them to jump in also.