Latest / The Accounting Podcast / The CPA Workload Dilemma: Can We Do Better?
Transcript
- Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding! Blake Oliver: [00:00:00] This is a bonus episode of The Accounting Podcast I'm Blake Oliver. Today's conversation is a little different. I sat down with Carla McCall, former chair of the AICPA, for a very candid discussion about the CPA shortage, workload, firm culture, and what national leadership can and cannot do to fix what's broken in our profession. We don't agree on everything. In fact, we disagree on some pretty fundamental points. But that's exactly why this conversation matters. Let's get into it. Carla McCall: [00:00:31] This came from an editor who sent me an episode because you picked on council in AICPA, and she said to me, Carla, you should consider doing his podcast because they don't understand, you know, everything that council does and the AICPA efforts. She sent me a link where you guys were talking about Nasba needs an audit. The Chicago Teachers Union AI the CPA exam, how AICPA is asleep at the wheel. A lot of stuff. I got lots of opinions. Blake Oliver: [00:01:02] Where do you want to start? Carla McCall: [00:01:04] Well, I mean, it's interesting. Like, I can't speak for NASCAR. I know nasba enough as chair, as immediate past chair of the AICPA. They run, you know, very differently. I'm not inside there. So you know their data and how they keep their data. I have no opinion on because I'm not I don't know them as well. But, you know, there was some comments about us not not serving Main Street America. Our firm is about 80 million. Half is dedicated to the not for profit space we used to do municipalities and such. And we don't do them anymore because they're a mess. So when you get into, like the the teachers unions and some of the government municipalities, they're a disaster. They don't they don't they don't spend enough on finance. They have crappy bookkeepers and they takes forever to get audits completed. So we got out of the business a long time ago and I, you know, and so, you know, and to make an assumption like it's our fault versus their fault is pretty bold, in my opinion, because I think there's a lot more probably to the story. Should they be behind five years? Absolutely not. But saying that it's like because of a CPA shortage and all of that, I don't think is is accurate necessarily. Blake Oliver: [00:02:20] Do you think there is a CPA shortage? Carla McCall: [00:02:23] So yes, I do. Just given, you know, even the growth of our own firm. And I think just the looking at the history of the demographics of the United States, it's not getting I mean, humans aren't reproducing. I mean, we're not reproducing. Birth rates are down. Immigration law changes. So clearly there's a reduction in labor force. Other countries are outpacing us in that. Do I think that we could do a better job attracting people into the profession? Absolutely. And that was part of my platform as chair. Like when I talked about sustainability of the profession, I was I, you know, traveled around the country and around the world, quite frankly, talking about, gosh, you know, we need to tell a better story. You know, we need to be more transparent with our people about earnings potential. We need to be just less dodgy and stiff. Um, we need to get out of our own way. Stop complaining about the the hours and the seasons. We need to get creative about how we work. We need to break norms. I think I was a pretty good poster child for that, because I didn't grow up in the same way as other people actually think. I made Barry a little nervous, um, at times, but we just didn't need to be more real and connect and and really listen to the youngest generations and what they're looking for and, and pivot. Blake Oliver: [00:03:42] So you said something there about and I think I've seen you in print talking about this. You said we need to stop complaining about the hours. Carla McCall: [00:03:52] Yeah. Blake Oliver: [00:03:53] What do you mean? Carla McCall: [00:03:54] Well, because all we do is when we talk about what we do, it's like, oh, I grew up in this. I've been in this profession a long time. And how many hours someone worked was considered a badge of honor. And. Oh, I haven't worked 80 hours. I work 90 hours. Oh, we have mandatory Saturdays. All of this stuff. And it's like there's smarter ways to work. You can smooth out seasons. Not everything has to get done by the deadline, necessarily. There's ways, creative ways to leverage. I mean, today technology is great way to leverage. But prior to that, there's lots of creative ways that we could have leverage, that firms could have leveraged work. We created a project specialist team. They're not CPAs. They're not sometimes not accountants. Um, some of them came from early childhood education, but they're freaking smart people. And you could teach them to do things. And so just thinking creatively about how to how to how to make the work not just smoother but more exciting. So being able when I stepped into a managing partner seat, I had the authority to start to really shift our mindset and thinking about who's a good client, who's not a good client. I was sitting in a coaching session recently and they were talking about clients and calling. I said, Jen, really? Are we still talking about this? Like still today? Like this. It's crazy to me. So I think the leaders that have that sort of view about and, and are bold enough to just do something different and be creative and think about, you know, how to keep, you know, all your team members engaged, you know, are more successful and have more staying power than those that just don't, are turning either a blind eye or not really focusing on that because their head is in the work. Blake Oliver: [00:05:40] I like the idea of making accounting more interesting and more engaging, but I want to stick with this idea of the hours because from what I see, surveys of young accountants, students, people who leave the profession, it's the hours That drive them away. That's one of the top things that drives them away is I'm asked to work too many hours for not enough pay. Like constant overtime. 50, 60, 70 hour weeks are still the norm at large accounting firms, where most students go when they graduate. So like, is that the situation at your firm? Like what are the average hours at your firm? Carla McCall: [00:06:22] So our hours are lower than most, you know, um, when when I was transforming the culture here, when I stepped into a managing partner seat, the culture was very traditional. It was run by a traditionalist, the managing partner. It was all about hours. I wanted to change the culture, to be human first. So there's a lot of things that I put into place over my tenure here over the last 10 to 15 years. Um, just about flexibility, being human. Open calendars, like people have lives like my career is not my number one priority. My family is. And for some people it's family, faith, pets, whatever. Like how can we just get over ourselves of not being able to work in your personal life, to your business life? Uh, we went to flex PTO so people get 30 to 40 days a year. Take it however you want so we don't formally close. Previously, we only closed on Christian holidays. We have lots of different faiths in our firm. We don't make people put in Non-billable time. I never tracked it. I didn't report on it. Nobody looked at it. You know what it was? It was a race on Monday morning by 9 a.m., who didn't have 40 hours because they didn't do their timesheet, and I would get a bitch list from my finance department saying these people didn't do their timesheet. Carla McCall: [00:07:37] Whatever time is an input and output, uh, it is. You have inefficient time. You have people who eat time or pad time, depending on what their motivation is. If they want a bigger bonus, they eat it. If they want to hide, they had it. And yet our entire profession revolves around realization and the billable hour, which is dumb. It should be on performance and output and how to get a formula of profit per per person. So if I were to sit with someone and they want to earn more money, I could say, well, you're working with X number of clients this year, here's the total revenue. If you want to like earn more, here's three things that you could do that are performance based versus just an hour. So we've been we're we're in the process of that. You know when I talk about this around the profession I talk about you can't flip a switch because I get you know, we we realize when we started on this journey, we had didn't have good data. We had antiquated systems. We had a, you know, get a new practice management system. Now we have to figure out, okay, how can we measure like the work as it moves? Can we measure like the time reduction of how long something lives here? Can we attach people to the revenue over the course of a year. Carla McCall: [00:08:52] And so, you know, we do have billable hours budget. So I tell people, you probably will never get rid of hours. It just won't be the main act because you need to. You know, when I talk about our the professional services firm, you have, you have people to deploy and you have clients to serve. Right. And so there's this constant balance. Our goal is always to just be you'll never be equal, but not to be like this. Right? You don't want to be significantly off, but you'll always have people come and go. You'll always have clients come and go or have new things happen. And so it really is about sort of getting the right data and KPIs, because obviously managing labor, labor is our biggest cost. So managing labor is critical to the success of a firm. You have to figure out other drivers that focus on the performance and the results. And so we are, you know, sort of playing around with different KPIs, upgrading systems, all that stuff at the moment. Blake Oliver: [00:09:52] You didn't answer my question. Carla McCall: [00:09:54] Yeah. Okay. So the hours. Blake Oliver: [00:09:57] Yeah. What are the average hours for a typical staff accountant manager, director partner at your firm. Carla McCall: [00:10:04] So I could tell you what our our billable hour targets are, but. Blake Oliver: [00:10:10] Well, what I want to know is how much they're working, how much they're expected to work, you know, to be in the office, like, because to me, like, that's the number one thing that these people are complaining about. Carla McCall: [00:10:22] So our staff are about, I think, probably around 1500 billable hours a year. That's our goal. That's the only goal we give them. We don't say 40, 50, 55. It's based on the projects in their schedule. We'll work from anywhere. We don't have any office mandates. Um. Blake Oliver: [00:10:38] So but like, how many hours are they working over the course of a year? Carla McCall: [00:10:43] I couldn't tell you. I don't we don't track non-billable time, so I don't know. I mean, we don't get we typically the people who leave our firm leave not because of the hours they leave, because at least what they're telling us in their surveys. You know, we do surveys 30 to 60 days after they leave because you never get the truth in an exit interview. They're leaving because they either want to try something different. They got lured away for maybe an extra 10 or 20 grand. Though we tend to be high in our salaries, when I look at IPA, we're on the higher end of that lower end of billable targets and higher billable hours, but higher end of salary. Or they want to go into private, you know, or sometimes it's a spouse, you know, spouses, schoolteacher has summers off that kind of thing. And they want just a different blend. Blake Oliver: [00:11:37] So it sounds like you disagree that it's like the workload. Well, from what I, from what I read, when, when, when when accountants who leave the profession and like there's a lot of them, right. Who leave when they leave they cite lack of work life balance as like one of the I can't remember exactly what it is, but it's like one of the top two reasons. Carla McCall: [00:11:59] Yeah. Blake Oliver: [00:12:00] So that's why I'm asking these questions about ours, because it ties directly to why people are leaving. Carla McCall: [00:12:05] Now I get it. And I think ours and work life balance is a problem in the profession. We try and do things a little bit differently. Blake Oliver: [00:12:13] So but that's what I want to know is like, what is the AICPA doing to address the overwork issue at big firms? Staff at large firms, they work like 60 to 80 hours or more per week. Carla McCall: [00:12:27] Well, the AICPA can't manage how companies run their businesses. I mean, even now with the influx of private equity, we're only going to see that get worse. Blake Oliver: [00:12:36] Well, the AICPA is the organization that represents all the CPAs in the country, in the world, right? Sure. So like they the AICPA determines how we should behave, how we should run our firms, how we should act ethically. Carla McCall: [00:12:55] You're so cute how we run our firms like they have the saying what they can do well. Aicpa does. Blake Oliver: [00:13:01] And we can't do. We can't do sham audits, right? Aicpa has some say over that, right? Carla McCall: [00:13:05] Of course they do. Blake Oliver: [00:13:07] That's how we run our firms, right? That like that has something to do with it. Carla McCall: [00:13:11] But, you know, I guess I mean, what what AICPA can do is they we talk about trends, right? What what we're hearing, we do a lot of surveying, not only of CFOs but of, of of students and firm leaders. We keep ahead of what's happening in the profession in order to help people think about how they can change their business model. So like PCs has all these toolkits about business model, strategy, human capital technology to help firms that don't have the time to think about how to change their business model. Right. But we can't force them to do it. Blake Oliver: [00:13:45] No. Well, actually, I'm sure the AICPA could do something about it if they wanted to. I just doesn't seem like the council wants to like, because. Carla McCall: [00:13:56] What would they do to. Blake Oliver: [00:13:57] The council? Like, what I'm saying is, like, people in your position have been talking about this for years, for decades. Barry Melanson talked for decades and decades and decades and never did anything about it. He never nothing changed. The situation only got worse over the last 20 years, right? Like so. It's all talk, no action. And I'm not saying I know what the answer is, but it doesn't seem like anyone in national leadership is really interested in changing the situation, which is that these firms bring people in and work them over 40 hours a week substantially, and don't pay them for it. Carla McCall: [00:14:39] I mean, you know, you can't. There's only so much you can do to direct private companies and their decision making and their leadership. What we can do is tell them the stats, and that's what we have done. You know, as far as the attrition, you know, people not coming into the profession where the leak points are, what we could do to improve it. And P&G had that whole white paper on that, you know, of things that people could do in order to support pipeline and get people to stay. But at the end of the day, people only stay in companies if they have the right culture, their values align and they feel valued. And AICPA can't force companies to to make people feel good about their companies. I mean, we don't run the firm. Blake Oliver: [00:15:23] I'm not saying to force them, but I'm saying like AICPA could encourage firms to adopt reasonable workload expectations, but they don't. They don't. Carla McCall: [00:15:34] Well. Blake Oliver: [00:15:35] I've never seen it. I've never seen anyone at AICPA or, uh, or Nasba ever talk about this issue the way that I'm talking about it. It's all make the work more interesting, right? It's the work load is never addressed. Addressed. So that's why I'm talking to you about it. And that's why I, you know. Carla McCall: [00:15:59] Yeah. I mean, I guess, you know, in my, in, in my chairmanship when I traveled around the country to different state societies and different groups, I said, listen, everybody's goal should be how to make more money in less hours, right? At the end of the day. And how can you do that? Well, we could leverage technology. We can find creative ways like project specialist teams. We have to talk to our people. You know, what are you know what? Blake Oliver: [00:16:21] If firms paid overtime, then they'd have an incentive not to work staff more than 40 hours a week. They'd they'd pay a financial penalty for doing so, like in other industries, you know, groups that represent doctors advocate for the welfare and benefit of licensed medical professionals and doctors. Yeah, right. The AICPA represents CPAs, and therefore seems to me that it should be advocating for the well-being of all CPAs. And most CPAs are not partners. They don't run firms, they work in firms and they work at companies. And the number one complaint of CPAs, if you listen to them, is work life balance issues. So if we want to make a better world for CPAs, yeah, we should focus on that. And I don't see it happening. Carla McCall: [00:17:13] Okay. Blake Oliver: [00:17:14] So you know, like what are we going to do about it? You know? Carla McCall: [00:17:19] Yeah, I guess that's a I mean, it's an interesting question because I feel like we have been talking about it. So I guess we have a different we can agree to disagree on that. Blake Oliver: [00:17:27] But no, we haven't been talking about it. Not about overwork, not about like more than 40 hours a week. Nobody wants to address that issue in accounting because it would reduce the profits of the firms. Well, it's an issue. Don't touch. Carla McCall: [00:17:42] Yeah. Well, I mean, in professional services, if I have a client going through an IPO, I mean, you that's what you do. I mean, you have to help the clients. You're your the. In certain cases. Blake Oliver: [00:17:53] You could hire more people so that they don't have to work, you know, 60 or 70 hours. If you hire one more person, you could everybody could work a reasonable workload. Carla McCall: [00:18:04] Yeah, I guess, but sometimes these things come up. It's not like, oh, let me go find a body and hire someone in the moment when going through something significant. Right. Blake Oliver: [00:18:13] But that's not that's not fair because this overwork is a systematic issue that occurs every year over and over and over again. It's built into the business model of these firms. Carla McCall: [00:18:23] Yeah. And I think that that some of that is because of this, this minimum sort of minimum hours mentality, if I look at our firm's billable hours are actually quite low billable hours. Now, what people do with the other 600 hours because we're not forcing them. They have yes, they have PTO and they have other things. But sometimes, and this is just my view, not AICPA. I'm speaking as Colonel McCall in this world of Zoom. Right. And we're remote. We'll work from anywhere remote. And there's Zoom. There's this fatigue that happens. So even though they're not maybe like we, you know, they're not completing what they need to complete, but they're overworked. But the work doesn't show for it. It's weird dynamic. And I the only thing I can sort of infer is that there's this sort of video zoom fatigue, this remote work, and people feel exhausted even though they're not producing what they used to when they were in person. Blake Oliver: [00:19:25] I've really loved speaking to you. Carla McCall: [00:19:26] Thanks. Blake Oliver: [00:19:27] Thank you. Carla McCall: [00:19:27] Bye bye.