Latest / Transforming: Tales of Business Evolution / TfP 022. Developing Talent and Embracing Change

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TfP 022. Developing Talent and Embracing Change · Transforming: Tales of Business Evolution

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[MUSIC]
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FEMALE_1: Welcome to Transforming:
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Tales of Business Evolution,
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where we delve into the dynamic worlds
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of business transformation.
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Each episode is designed
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for firms of any size and scale,
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exploring both innovative long-term planning
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and day-to-day operating practices that help
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organizations adapt to a changing landscape.
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Join us each month as we hear from leaders in
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the public accounting profession
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sharing their experiences
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of reshaping their business models and inspiring
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you to explore new ways to evolve your own organization.
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Let's dive into this month's conversation now.
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Erin Hartman: Hi, I'm Erin Hartman here with
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the Firm Services team at the AICPA,
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and I'm joined by Cheryl Rhode,
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who is one of the founding shareholders
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of West Rhode & Roberts,
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a firm in California.
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We are here live at Engage,
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the 10th anniversary of Engage here in Vegas.
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We're happy to have you with us, Cheryl.
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The reason I wanted to have you on
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the podcast was really to talk about the fact that
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you have a smaller firm that focuses on audits,
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which is rare these days.
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I want to talk to you about that.
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But first, if you want to tell us
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a little bit about your firm.
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Cheryl Rhode: Hi, Erin, thanks for having me.
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Erin Hartman: Sure.
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Cheryl Rhode: I appreciate it. My name is Cheryl Rhode.
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We are a small firm,
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West Rhode & Roberts out in San Diego, California.
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We started our firm, as you mentioned, in 1997.
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I have one partner, Chris Roberts,
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and then we have about 12 staff,
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which is professional and
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administration staff that work with us.
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We are tax and audit firm,
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but I would say probably 75% of our business,
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as you mentioned, is really audits.
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We do a lot of attestation work and
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a lot of audits for tax exempt entities.
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Erin Hartman: Like I said, I want to get into that.
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Before, I love what you've told me
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just as we've been talking about Engage,
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talking about recording this here.
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Cheryl brought two of her employees with her to Engage,
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and I'd love to talk about that because largely
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we hear firms all the time talk about they
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want to bring their people. It's expensive.
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What if my people don't get anything out of it?
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It's a large event.
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Tell me about that and the fact
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that you have brought two of your people here.
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What do you want them to get out of it,
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and how do you make sure that that happens?
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Cheryl Rhode: My partner and I decided that
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we would bring two of my staff.
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One is our director of audit,
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and one is our tax manager.
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The reason for that is that we felt that they needed to
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understand what is outside of our firm
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and get exposed to national speakers,
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try to start building their own network.
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Yes, Engage is expensive.
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But I look at it as more as
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an investment in my firm
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and in my staff for the future of
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our profession and the future of my firm.
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The more that I can get out of them,
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and the more they can learn
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versus just me coming back and saying,
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this is what we saw at Engage
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or I saw this particular person,
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it's much easier for them to sit through and have it.
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Like, yesterday when they saw
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the Ryan Reynolds when he was here,
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they were so amazed and they were so happy.
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I think it's a very big morale booster for them, also.
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I think that'll carry back for their staff or
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lower level staff that they're
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very excited and engaged about Engage.
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Erin Hartman: You get more buy in like that as well.
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Cheryl Rhode: Yes.
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Erin Hartman: Tell me about what map
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you laid out for them ahead of time,
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of what your expectations were.
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Cheryl Rhode: My expectations were more
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to not just have them focus
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on A&A or tax because we get plenty of that CPE already.
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My expectation was I really want them
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to look more at the emerging leaders.
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Some of those sessions, I had them select a few.
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I made them select a few that related to clients,
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how to deal with clients, how to talk to clients.
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Also, a lot of AI.
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AI is very exciting in our firm right now.
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We're doing a lot with AI,
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so they needed to see that we weren't alone,
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and we're not the only ones that are
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essentially starting in on this AI journey.
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Erin Hartman: Right. So you let them pick some
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of the sessions they wanted to go to,
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and then you also had some sessions
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you want them to go to.
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Cheryl Rhode: Correct.
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Erin Hartman: Which I think is a great way
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to make them happy,
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make you happy,
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make sure everybody gets something out of it.
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You also mentioned software,
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and I know we have a lot of vendors here
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that you're looking for various software
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for various paths in your firm,
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and you ask them to take
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a look at those while they're here as well.
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Cheryl Rhode: That is correct.
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One of their duties while they're here is also to go
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to the Exhibit Hall and come back
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with a couple of different billing softwares,
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some research softwares,
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some different animation for our audit work papers.
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Then there they're going to be the ones
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that are going to request the demos,
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not me, and they need to own it
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so that they can decide which
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is really going to work best for them.
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I have to have them buy in,
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and it's much easier to get them to buy in
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if they see all the different vendors and
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are able to communicate with them.
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Erin Hartman: I think that is awesome and
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just a great best practice for
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other firms to think about, as well.
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One other thing I want to talk to Cheryl about is
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she is in one of our PCPS networking groups.
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She's the chair of one of
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our small firm networking groups.
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Cheryl, you've been in the group for three-ish years?
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Cheryl Rhode: Yeah.
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Erin Hartman: Tell us.
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Cheryl Rhode: I'm new to the group. [OVERLAPPING].
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Erin Hartman: She's new to the group.
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Some of these groups have been together for 20 years.
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Cheryl Rhode: Yes.
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Erin Hartman: I will tell you what I love about them all
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is they are so different.
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Again, these are a PCPS networking groups.
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We have several groups based on firm size.
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They're all very different
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just based on where people are and
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their practice and the type of practice they have,
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and everybody's different.
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But what I love about these groups
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is the trust and respect.
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You might never do
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what the guy sitting next to you is going to do,
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but you respect what he's doing,
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and you want to help him for no reason
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but to just share what you know about the profession.
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That's what I love about these groups.
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But can you talk a little bit about
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what you've gotten out of this.
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Cheryl Rhode: Great.
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Erin Hartman: When you were looking for and
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what you got out of it?
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Cheryl Rhode: What I was looking for, I think,
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as a small firm, you're on a little island sometimes.
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You don't have other firms to benchmark against,
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to do best practices.
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What I was looking for was a group that I could
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join that we basically could share ideas,
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share best practices,
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share what worked and what hasn't worked
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so that I don't have to make the same mistake as
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maybe another firm has made.
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What I ended up having
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in joining your groups is I now have a whole network,
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not only just professionals, but friends.
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They're good, good people.
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We get along really well.
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When we have these meetings, we meet twice a year.
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It's important that we show up both times of the year.
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It's a commitment. It's not like it's,
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I'm just going to go once and never go
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again or maybe once every three years,
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because then you don't really get to
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know the individuals that are there.
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You can share ideas and be open.
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For me, it has really helped from
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the standpoint that we talk about succession.
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We talk about best practices,
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we talk about billing.
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We talk about what workpapers are good,
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what workpapers are not.
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We share a lot of different information.
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For me, it was extremely, extremely helpful.
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Erin Hartman: That's what I love that we're able
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to bring people together,
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especially like you're saying small firms
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that wouldn't know each other.
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Cheryl Rhode: No.
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Erin Hartman: Otherwise, just to help lift each other up
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and make each other better.
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I always say that these groups,
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I think are beneficial,
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especially for small firms,
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just because they don't have that person to talk to.
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It can feel like you're on and I, you're alone.
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Really, normally, if you know somebody,
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it's your competitor down the street.
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Cheryl Rhode: Correct.
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Erin Hartman: Who you only want to talk
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to about this, but so much.
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Like I said, I'm glad you are a part of a group.
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I'm glad you found one that's working for you.
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I just think they're really
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one of the best benefits we have for [inaudible] PCPS.
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Cheryl Rhode: Big shout out to my group.
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They're great group. [LAUGHTER]
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Erin Hartman: That's what's great, like, even
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just being able to talk about,
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like, software with each other,
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because that other person
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isn't trying to sell you the software.
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Even there's no inherent interest
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of the other person. [OVERLAPPING]
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Cheryl Rhode: They have. There's no benefit.
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There's no benefit for them
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to try to sell me the software.
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But if it's working for them, then I would love to know.
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If it's working for me, then I would love to share it
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with them because sometimes things just don't work.
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Erin Hartman: Right.
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Cheryl Rhode: It's so expensive to implement
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a software in any firm and
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especially in a small firm so it's nice to know
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when something is actually
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working from the software standpoint.
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Erin Hartman: Right.
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But also, I leave those events
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and feel so energized.
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For one thing, it helps us to be able to figure out
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in real-time, what firms need.
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Cheryl Rhode: Right.
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Erin Hartman: And what's going on in your firms.
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But also, I just leave so energetic and excited.
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Like, we talk about all the challenges,
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but the energy and excitement for
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the future that all of you have and all the groups
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have is fantastic and it's great to be a part of it.
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Cheryl Rhode: We appreciate that you're part of our group.
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You also come what we also get from
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the AICPA is they give us a little AICPA update
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so we know when we get he first hands on
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what's really happening in the AICPA and
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what's new and what's coming up, and we appreciate that.
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At least I appreciate you.
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Erin Hartman: Yeah.
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But no, it's great to
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hear the energy for the future.
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Cheryl Rhode: Yeah.
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Erin Hartman: From practitioners.
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I do want to talk about the fact that,
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like we said, you're a small firm.
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You said you're about 75% audit.
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I don't know if you made
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a deliberate decision to become an audit practice,
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or tell us about that story and how
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that still stands to be what you guys want to do.
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Cheryl Rhode: I think it was a deliberate decision
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because both my partner and I, that is where we started.
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We started in audit.
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That's our background. This is something that we did.
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We've just essentially expanded our practice.
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But the reason I think we stayed in it
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is auditing is so to me,
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it's an amazing thing to do.
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You meet a lot of different people.
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You see a lot of different policies,
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procedures, controls that are in place.
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We have been able to essentially
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stay in auditing because we know our lane.
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We're not a jack of all trades.
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We do not audit everything and everybody.
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We specialize in tax exempt entities
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and really employee benefit plans. That's what we do.
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I do not try to dabble in
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a little bit of this and a little bit
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of that because I think
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that you have so much requirements
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and your peer review will not
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go very well if you start dabbling
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and the amount of CPE that my staff has to maintain.
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In order to do that, I want them to
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focus exactly on what our client base is.
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For us, that's basically
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tax exempt entities and employee benefit plans.
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That's where staff focuses on their CPE.
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Erin Hartman: What you're saying,
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what I hear from that is,
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like, you're staying in your lane.
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You've got a strategy. You're sticking to that.
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You're not afraid to say no to clients.
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Cheryl Rhode: No. We're not even
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afraid to say no to clients that we
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don't think that are going to meet our needs.
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There's a lot of small not-for-profits that
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don't have policies and procedures in place,
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and we just don't have the capacity to hold their hand.
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Therefore, we have audit fee minimums,
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and we essentially tell them,
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I'm sorry that unfortunately,
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you're not going to be able to maintain
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the quality that we need in order
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for us to give you a good audit.
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Erin Hartman: By doing that, it keeps your firm focused,
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but it also helps your staff.
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Cheryl Rhode: Correct.
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Erin Hartman: Because they know you're
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looking out for them.
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Cheryl Rhode: Yes.
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Erin Hartman: I would love for you to talk a little bit
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about retention because like I said,
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we talked about these two employees
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that you've brought to Engage.
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Just talk about your
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learning and development plans for your staff,
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because I believe, as you mentioned before,
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they know what to expect.
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They know what their goals are.
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They know what they need to achieve to
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one day own a part of the firm own the firm outright.
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Cheryl Rhode: Yes. That's our goal.
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That's the ultimate goal I think,
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for any partner is to have
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another partner that comes up like
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you can basically have somebody a manager,
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turn into a partner,
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and then you can write off into the [inaudible].
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Erin Hartman: [OVERLAPPING] That's the best.
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Cheryl Rhode: What we do with our staff is
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we essentially because of our audit practice,
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they have to have CPE,
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regardless if they're certified or not.
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All of our staff essentially
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we make them sign up for the AICPA Webcast.
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Erin Hartman: You ask her to plug that.
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Cheryl Rhode: But we do that when it's on sale.
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Erin Hartman: Okay.
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Cheryl Rhode: Because every year, there's a yearly sale.
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Erin Hartman: Okay.
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Cheryl Rhode: Then that way,
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it gives us during our downtime,
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it gives us the ability to have the staff essentially
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do CPE that is required for us to maintain the audits,
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and then essentially be
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in accordance with our peer review.
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What that also does is it shows staff
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that they're trying to get us to improve.
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They're trying to help us.
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They're trying to educate us in a way
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that not just on-the-job training.
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We have a pretty good retention rate I would say
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for our staff that have
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been there for a long period of time.
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But I think with anybody,
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the younger staff, it's a challenge. Right?
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Erin Hartman: Right.
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Cheryl Rhode: Just to get staffing is
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a challenge to have somebody
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the younger staff do not want to work as
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much as we typically have worked in the past.
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Our firm has modified our schedule.
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We do not have a large amount.
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We do 80 hours a week.
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We try really hard to do
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a really good work life balance for our staff,
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which has helped our retention.
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Erin Hartman: Right.
13:45
Cheryl Rhode: Because we recognize that they
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have other things outside of life of work.
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Erin Hartman: Right.
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Cheryl Rhode: We just try our best to keep them.
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But there are times that they have to work
13:54
50 hours and they're not exactly thrilled by it,
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but I don't I mean, the work is the work,
13:59
and we try not to bring in too many clients.
14:02
We will say no to clients.
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If we don't have the staffing,
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then we don't just someone says,
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Cheryl, we'd like you to do this RFP,
14:10
then we will basically decide no against
14:12
that RFP if we don't have the staffing in
14:14
place that essentially can
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provide the quality work product that we wanted.
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Erin Hartman: The profession is what it is,
14:21
and I think we all know that there are times that
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there is a crunch and you've got to do it,
14:25
and there is a lot of compliance involved,
14:27
but it sounds like you're doing a lot of
14:29
things as much as you can to make that work.
14:32
Can you talk a little bit about recruiting,
14:35
as well because we hear often that it's really hard,
14:39
especially for smaller firms to recruit.
14:42
What do you do for recruiting effort?
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Cheryl Rhode: Chris and I graduated from
14:45
San Diego State University,
14:46
so we alternate years
14:49
that we sit on the San Diego
14:50
State Advisory Board for Accounting.
14:53
Sitting on that Advisory Board
14:54
has given us the opportunity to
14:57
essentially go out mentor students,
15:01
not staff, mentor students in
15:02
addition so that we can see,
15:05
is this somebody that we really want to
15:07
bring into our firm before they even graduate.
15:09
Erin Hartman: Right.
15:09
Cheryl Rhode: Before we even bring them in as an intern.
15:11
We also put our younger staff in charge of going to
15:15
the career fairs at
15:17
San Diego State and a couple of other local colleges.
15:20
Because we feel that
15:22
the college students really are more
15:24
approachable to our younger staff, not to us.
15:27
They're intimidated by us we're older.
15:30
We would rather have our younger staff
15:32
go out and try and sell
15:33
our firm versus us trying
15:35
to convince a younger person that,
15:38
you want to come work for West Rhode & Roberts.
15:40
Erin Hartman: Yeah. That makes a lot of sense.
15:42
Now, on the Advisory Board,
15:44
how involved do you guys get with knowing
15:46
what type of curriculum changes
15:48
that the school is making?
15:50
Cheryl Rhode: They tell us what they're having,
15:52
what they're doing.
15:53
Erin Hartman: Right.
15:53
Cheryl Rhode: We get an idea of the
15:55
number of students that are
15:56
involved at particular coming in as accounting.
16:00
At San Diego State, that number has
16:02
dwindled so the competition is lot more fierce,
16:06
because the big four take a lot
16:09
of individual accounting students,
16:11
and then as local firms don't get the number because
16:14
of the fact that there's a smaller number of
16:16
people that are just graduating in accounting.
16:18
Erin Hartman: Right. Do you think that
16:21
that's helped though,
16:22
especially just that relationship with the schools.
16:25
Cheryl Rhode: Yes.
16:25
Erin Hartman: To be able to have them approach you
16:28
and be like, Here's this candidate.
16:30
I think they would be great at your firm.
16:32
Cheryl Rhode: Yes.
16:32
Erin Hartman: I love what you were also talking about
16:34
the mentorship program and getting to know
16:37
these people more than just an interview too
16:39
because you just when
16:41
you know someone over a period of time,
16:43
and you know them a
16:44
lot better than if you sat with them for an hour.
16:46
Cheryl Rhode: They come to our office for
16:48
coffee so that they see
16:50
what it's really like to work in a firm.
16:51
They come to our office.
16:53
We'll take them down the street for coffee.
16:56
We'll talk about what's happening.
16:58
They'll tell us their schedule, where they're at,
17:00
what they're doing, as far as their schooling.
17:04
Then we just see what
17:06
their personality is like more than anything.
17:07
Did you get open up a little
17:09
bit better than just an interview?
17:11
Erin Hartman: Talk a little bit about AI.
17:13
I know you've talked about it a little bit,
17:15
but just your opinion,
17:17
really, what do you
17:18
think it's gonna do for the profession?
17:20
As it's all the buzz.
17:22
It's all anybody's talking about,
17:23
but I would love just your thoughts on.
17:26
Cheryl Rhode: It is.
17:27
Erin Hartman: Already changing
17:27
the profession and what you think?
17:29
Cheryl Rhode: It's definitely changing the profession.
17:32
I think it's a game changer, personally.
17:34
I think that the efficiency
17:36
that we are going to gain and that we
17:37
are gaining already in our audit workpapers, is amazing.
17:42
Even the efficiencies in our financial statements,
17:45
we're utilizing AI almost as a second proofer.
17:48
This AI is so powerful.
17:51
We put our financial statements in AI.
17:54
We have a closed system that we've invested in,
17:57
and it'll basically proof.
17:59
I'll tell us if we're missing a comma or a period.
18:02
This crazy stuff that this AI can do.
18:05
Then we're just looking at doing different things from
18:08
a consulting standpoint also
18:10
that we are just getting started in.
18:13
But I think AI is definitely a game changer,
18:16
and it's going to make our audits
18:17
way more efficient than they are now.
18:20
It's also an education tool for
18:22
our staff because realistically,
18:24
AI, they can put in a question.
18:26
Like, I don't understand why we have inherent risk
18:30
or control risk high for
18:31
this particular section of the audit.
18:33
Then, it will basically give them
18:35
a description of why they think it is.
18:38
Probably better than what I could tell it.
18:40
Erin Hartman: More eloquently?
18:41
Cheryl Rhode: Yes.
18:42
Erin Hartman: No, I think that's great.
18:44
I think it's interesting to talk about.
18:46
I feel like at first, we were just talking about AI.
18:49
A year ago, we're talking about AI.
18:51
It's going to make things more efficient.
18:52
But I think what everybody's realizing is that
18:54
efficiency is going to turn into
18:56
allowing us to be able to spend
18:58
more time and dig deeper with AI into being
19:02
able to analyze and consult
19:04
and do those things better than we
19:07
ever have been able to in the past.
19:09
Cheryl Rhode: I agree with you, 100%. Yes.
19:11
Erin Hartman: Cheryl, this has been fantastic.
19:13
I would love for you to share with
19:15
us your thoughts on the profession.
19:17
What are you excited about in the next five years?
19:20
What you would tell
19:22
a young person going into the profession now,
19:24
what should they be excited about?
19:26
Cheryl Rhode: I think it's forever changing.
19:28
You're never going to know
19:29
everything there is to know about this profession.
19:33
You are always constantly learning, and it's unique.
19:36
It's different. And you basically
19:37
can meet so many different new people,
19:39
and you can learn so much from a lot of people.
19:41
It's just forever changing. It's never the same.
19:44
When I graduated from college,
19:46
I never thought that as an accountant,
19:49
you would be able to meet or you'd have to
19:51
talk to so many people, but it's marketing.
19:53
It is FaceTime.
19:55
It is all of these different things
19:56
that when you're in school,
19:58
you don't recognize or realize that that's what's there.
20:00
Erin Hartman: Thank you so much for being here with us at
20:03
Engage with all the energy and all the excitement.
20:06
Appreciate you being here and look
20:07
forward to hearing more about your firm in the future.
20:10
Cheryl Rhode: Thank you, Erin. I appreciate it.
20:14
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Transforming: Tales of Business Evolution.
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20:45
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