Solving the Staffing Crisis in Accounting Firms

In episode, Jeff Phillips, CEO of Padgett and founder of AccountingFly, joins Roger Harris and Annie Schwab to discuss the challenges of recruiting and retaining talent in the accounting industry. They explore innovative solutions including remote work, offshore talent, and domestic freelancers as part of a new "talent stack" for firms. The conversation covers practical strategies for attracting candidates, evaluating talent, and building effective remote teams, offering valuable advice for accounting firm owners struggling with staffing issues in today's competitive job market.

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• (00:00) - Federal Tax Updates Episode 35
• (02:19) - Introducing the Expert Guest: Jeff Phillips
• (03:48) - Global and Industry-Specific Hiring Challenges
• (06:02) - The Importance of Flexibility and Remote Work
• (08:40) - The Value Proposition for Accounting Firms
• (13:43) - Strategies for Effective Recruitment
• (25:16) - Building a Modern Firm for the Future
• (31:08) - Morning Routine for Business Success
• (31:28) - The Pitfalls of Reactive Hiring & Effective Screening
• (32:58) - The Importance of Selling to Top Candidates
• (38:23) - Leveraging Offshore and Freelance Talent
• (46:08) - Managing Remote Teams Effectively
• (53:03) - The Future of Hiring in Accounting

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https://www.padgettadvisors.com/our-team
https://www.linkedin.com/in/jeffaccountingfly

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Roger Harris
Annie Schwab

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The full transcript for this episode is available by clicking on the Transcript tab at the top of this page

All content from this podcast by SmallBizPros, Inc. DBA PADGETT BUSINESS SERVICES is intended for informational purposes only.

Creators & Guests

Host

Annie Schwab, CPA

Franchisee Operations Manager at Padgett Business Services

Host

Roger Harris, EA

President at Padgett Business Services

Guest

Jeff Phillips

Chief Executive Officer of Padgett

What is Federal Tax Updates?

CPAs, Enrolled Agents, and Tax Preparers can keep up-to-date with the latest federal tax information while earning NASBA approved CPE credits and IRS approved CE credits by listening to the bi-weekly Federal Tax Updates podcast. The hosts Roger Harris and Annie Schwab have over 75 years of tax experience between them, which has been featured in various media outlets including Wall Street Journal, USA Today, The Morning Business Report, Bloomberg Business News, and Accounting Today.

There may be errors in spelling, grammar, and accuracy in this machine-generated transcript.

Roger Harris: Hello again everyone. It's another federal tax update podcast. I am Roger Harris and I'm joined, as always by Andy Schwab who is in hot and warm Dallas, Texas. How are you doing, Andy?

Annie Schwab: Hot and warm is an understatement, but I'm doing well. Roger, how about you? Yeah, well.

Roger Harris: It's about the same in Georgia, so it's. I think it's hot everywhere, but that's okay. It's summer. That means [00:00:30] fall is just around the corner. Um, we've got to talk a little bit about today. You know, as we've talked and talked to other firm owners both inside and outside of Paget, there's there's one consistent message of problems you're dealing with, and that is the inability to find or recruit retain qualified people. Now, I guess that's always been a problem in this industry. I think maybe Covid made it worse and magnified it, but, um, it's a real challenge for a lot of people [00:01:00] in our industry, and we are fortunate in a lot of ways to have a guest speaker today, someone that we know very well who is, uh, an expert in this matter. So, Andy, why don't you introduce our our special guest for today's podcast?

Annie Schwab: Absolutely. It's my pleasure to have Jeff Phillips here today with us. He is the CEO of Paget. But more importantly for this topic today, he has many, many years before Paget, he started a firm called [00:01:30] Accounting Fly, which is a recruitment company that matches accounting firms with US based candidates both full time and part time. Um, he's helped more than a thousand people. Um, find a good match. Um, helped with hires. He's also a thought leader. He is a frequent speaker and has been named one of accounting Today's 100 Most Influential People. Um, for his leadership in accounting talent. So Jeff, welcome. Thank you for joining us. Taking some time out of your day. [00:02:00] Um, we're glad to have you.

Jeff Phillips: Hey, Annie. Hey, Roger, I, I work with both of you on a daily basis, but it's fun to hit the pause button and talk about such an important topic that doesn't always come up running, Paget.

Roger Harris: Yeah, it's kind of interesting to be. This is the first time I think we've had you on of our podcast, which kind of makes me wonder what we've been doing for all this length of time.

Annie Schwab: We've been talking about IRC. That's what we've been doing.

Roger Harris: Yeah, yeah, I guess, I guess that's it. So, uh, yeah, this is a great topic to to have you for our first podcast And [00:02:30] you know, I kind of speculated, you know, about COVID being a contributor to the difficulty and hiring. But why is it so hard? Why are so many people struggling, uh, to find key, uh, and, and the talent they need to run their firms?

Jeff Phillips: I'm going to I'm going to start globally and drill down to our industry. But by 2030, so five and a half years away globally, there will be [00:03:00] 50 million more knowledge worker jobs than there will be people to fill them globally. And we have known that is going to be an issue for about ten years. There's a great book called The Coming Jobs War that was written by the Gallup organization 15 years ago that predicted this. So that's the theoretical, you know, issue. And then you drill down in the accounting profession. Roger. The there there are just [00:03:30] simply more jobs today than there are people to fill them. We are running at pretty much 0% unemployment. The technical number is 1.8%. But what that means to me is everybody that wants a job in our profession has one, right? So when you have someone quit and you need to replace them, everyone's employed. There isn't a, you know, a you don't put a help wanted sign out on your accounting firm anymore and somebody just drops in. So the strategy has [00:04:00] to change. Then you drill down into, I think what's really affecting tax and accounting firms, which is over the past ten years, we've lost our value proposition for talent a little bit. And there's a there's a lot of there's a lot of noise being made in the industry about, you know, energizing the pipeline. The AICPA is driving towards. How do we change the value proposition for accounting? If I own a tax or accounting firm, or I think about our owners [00:04:30] in the United States at Paget, they don't really have time to care about how long it's going to take to affect the pipeline.

Jeff Phillips: They need solutions today. And so what you and then when you drill down even further, because we've surveyed candidates, what we have found is that the value proposition for recruiting people revolves around compensation and being market competitive, meaning you need to pay people because they have other options, especially if they're good. So [00:05:00] pay is critical. And the second one that is a non-negotiable now is flexibility. You know, I'm I'm working with Andy Schwab, who lives and works in Dallas. I work in Pensacola, Florida. We have a corporate office at Padgett in Athens, Georgia. You know, we're a 60 year old company that's that's embraced this because we have remote employees, remote leaders in the in the company. And that's because the talent in our profession has, has, has [00:05:30] said, I want to work where I want to work. So the options for employers is ignore that or embrace that. Right. So if we know that we have 50 million empty jobs globally, and we know that we have more people in the we have more jobs than we have people to fill them in the accounting profession. And we know that everybody is employed. The next time you have to hire somebody, we're going to have to do something different to fill that next role. And it's non-negotiable. It [00:06:00] five, ten years ago, I was saying the same thing, Roger. And sometimes people would laugh at me at conferences. You've got to embrace flexibility. That's not how it was for me coming up. Well, there's a saying that that that helps me understand this and helps me teach this, but the race for talent is over. And the talent, one.

Annie Schwab: Way to put it.

Jeff Phillips: Yeah, that doesn't mean that it's hopeless. It just means in order to get what I like to call a predictable [00:06:30] and reliable hiring machine, we're going to have to change our approach. Change is.

Annie Schwab: Hard. Change is very hard for firms like us that have been around. We embraced it. We moved forward with it. But there's a lot of companies that are fearful, um, nervous, uh, you know, all of the above.

Jeff Phillips: Change is very hard. We're probably a more change averse industry. That's okay. We can look to the more change friendly industries, like companies [00:07:00] in the tech sector who've been embracing remote work. Their entire companies, you know, half of all websites are built on a platform called WordPress, which is owned by a company, um, that is fully remote. This is a company that does billions of dollars of revenue and powers half like half the websites. There's no office. It's fully remote. Now. I don't know if that's what Padgett wants. 60 year old accounting franchise or local tax and accounting firm, but we can learn from them and make [00:07:30] great teams and and offer flexibility and work and, and build better companies because of it.

Annie Schwab: I do I honestly think that the accounting firm accounting industry is struggling more than others, mainly because, well, let's just say if you call yourself an accountant, that's not so exciting, so sexy, right? If you're coming out of business school, being a financial advisor sounds a lot better, but you're also not dealing with the extra hours for [00:08:00] the CPA exam. Um, there's been chatter, I would say. I know Roger and I spoke about this once before, but, you know, to sit for the CPA exam, you have to have that extra year of school 150 hours. So it's just another reason, um, when we're low on talent for those students coming out, graduating to pick something other than tax or accounting and to go more finance or, you know, advisory type thing, I know I had to get the 150 hours to sit. I [00:08:30] kind of feel like everybody should have to do that. But on the flip side, we really there's good talent, and if they're not going forward just because of that extra year of school, maybe should consider that.

Roger Harris: Yeah. The whole supply and demand is out of whack in our industry right now. And yeah, and you're going to have to probably remove some of the hurdles to, to increase the supply of, of candidates. I did want to comment on, on how our industry is adverse to change. You guys know this, but the listeners don't. Last year, I moderated [00:09:00] a panel of doctors forums on practice management and getting ready to take off and start that again next week. And hiring always comes up and the questions from the audiences, and unfortunately, some of the response of the panelists all focuses on hiring locally and people still coming in offices and and and looking for solutions. I mean, one of the answers last year by one of the panelists was, well, you should go recruit the junior colleges. Well, that's something we did 35 [00:09:30] years ago. You know, to your point, Jeff, as an industry, we have to accept the fact that the world around us has changed. And the advice that we gave ourselves or others 20, 30 years ago is not going to work today.

Jeff Phillips: I still think you should go to the junior colleges. Well, yeah, it's a tried and true practice, but it's not. It's necessary, but not sufficient. Right. And can't be your only strategy. It can't be your only strategy. I keep hearing even inside [00:10:00] firms and pageant, which are, you know, local community based accounting firms that key people are leaving. And I'm hearing that outside of Paget and kind of in my role as an advisor to accounting fly now. And so what that speaks to is, is not only is it hard to find people, right. That is a challenge. We're in a season where good people are leaving firms. They're leaving our profession and it yeah, we're stuck in a tough [00:10:30] spot right now for sure. And that the people leaving makes it harder because, well, we're sort of coming from this angle of the podcast of I'm growing, how do I fill more seats? What's also happening is, you know, our profession is growing, firms are growing, but we're losing people. So not only do you have to backfill and cover that work where the person just left, and so you can't you can't pull that out of a junior college. You need someone who's experienced and job ready today. But you've got to accommodate for the future and your growth, [00:11:00] you know.

Jeff Phillips: How often do we talk to Paget about the concept of enterprise value? Like what is my firm worth. And there are we know that there's a handful of factors that drive what the firm is worth. You know what I mean by that is when you when you ready to retire, what is your exit value? What are you going to get for that firm And the link to recruiting is if you don't have a predictable, reliable recruiting operation where you can fill a job and [00:11:30] to backfill, or you can accommodate growth, that takes your value of the firm down. It means that they're going to buy for the client book and they're not buying on value. So that affects your multiple. So there's a lot of implications to to talent not to mention the least of which is this is how we make money. This is how we serve clients, this is how we grow, is because we have to be good at finding people, putting them into slots, getting the best out of them, managing them, and growing a business. So there's a lot of implications around [00:12:00] talent that are that need to be taken seriously.

Roger Harris: And to your point, what we've seen this in pageant, something I've never seen before and I've done this many, many years, is people are valuing firms in some instances higher based on the talent that they're buying. They'll come in and say, I will pay extra for this firm because of their staff, the talent that's there, uh, where before it used to be, you know. Well, everybody in that firm was could be replaced. And now [00:12:30] you pay extra for a firm who has good quality talent that is in a good environment and will stay. Yeah.

Annie Schwab: Okay, Jeff, what's the what's the magic answer here? What? I know you have one at least some advice. Let's say like what should firm owners do. How do how do they how do they snatch up all the the good people keep them and and then, you know, still be profitable paying high, high wages.

Jeff Phillips: No silver bullet, but definitely a [00:13:00] better system than than probably what owners listening have currently. And I mean, I think I think you have to start with the goal, I think during recessions and when you could put out a help wanted sign and people would come in that the objective around hiring was how good can we be around evaluating talent? You still have to be good at evaluating talent, but right now the goal is how can I get candidates and what's the system I can implement to predictably and reliably [00:13:30] get candidates? So you can't get this done any without leaning into the idea of remote work. You just can't. I agree. Um, there are. And this is where COVID did us in a way a disservice, but also was a blessing too, because it showed us that we can probably hire remote. So let me define remote work. I don't mean, you know, if your office is [00:14:00] in Tulsa, you let your folks work home a couple of days a week. Although I think you should do that. What I mean by hiring remote work is you're going to open up your job candidate universe to the United States and globally. So your next hire may not sit next to you in the office. They may be in Arizona, they may be in Florida, they may be in another state. And so getting comfortable with that is going [00:14:30] to be the prerequisite here to have success. And there's a lot more to do there.

Jeff Phillips: But you've got to get comfortable with the remote where we are. I think as a industry, a lot more comfortable than we were in 2019. Yet I'm still seeing a lot of pressure on employees to return to the office. And I get that. In fact, I get every anxiety and owner has about hiring remote people. We we need to talk about how to be helpful around this. But here's the case for hiring remote back [00:15:00] to Tulsa. Let's say you need to hire a CPA. You know, there's probably 600 CPAs in Tulsa, Oklahoma. I don't know, I'm literally just making that number up, but. Right. Yeah, but I know there are 670,000 CPAs in the United States, right? We know that there are 1.2 million people that identify in the labor category of accountants in the United States. Okay, so just flipping the switch and going, what if my firm opened up my job search to America, [00:15:30] and I went from 600 option options to 670,000 options, or 1.2 million options, if it doesn't require a CPA. So you're going to open that job candidate search to the United States. And what that leads to is what might have taken you two years to find a tax manager position shortens that search to 45 days. That's our that's accounting flies. Average time to fill a remote job for a client. [00:16:00] You will find a better player for the position than you might in Tulsa because you're so limited.

Jeff Phillips: Remember in Tulsa we're at 0% unemployment basically, right. So we're going to have to give people something attractive to get them to talk to your firm. Well, letting somebody work from home in a professional, structured way gives them the ultimate option that they are looking for. Now, here's the evidence that I can give you that this is a reality [00:16:30] to two pieces of evidence. Um, eight years ago we had accounting fly ran job postings on all the major job boards for the exact same job as for a CPA firm based in Atlanta for a tax manager role. So we did we did the we wrote a job description and put it on all the job boards in Atlanta. And then we we made the job remote and did it nationally. We got ten times more applicants for the remote job. No big surprise there. Accounting fly. Fly. We are getting 1000 [00:17:00] applicants a week. Because the machine that they built at accounting fly was remote only. You can only find remote work at through accounting fly. So 1000 a week. So you can't convince me there's a staffing shortage in accounting. If we're seeing 1000 applications a week, we? The evidence is clear that people want to work remotely. You're giving them a progressive perk to that, that that changes your employer brand and makes you attractive. [00:17:30] And so that's that's the case for best player for the position shorter time to fill. And you change your employer brand immediately.

Roger Harris: And I think what you're touching on there is one of the challenges we have in our profession is we are their best friend, and we're very positive and do a lot of great things when we're trying to hire them. And then we forget that once we hire them, that we have to have that same mentality and attitude towards their work environment, how many [00:18:00] hours they work, how much we pay them, what benefits they are. You know, your job of hiring and retaining employees doesn't stop when you hire them. You have to manage them and give them the flexibility and the benefits to make that job something that, uh, they want to maintain. And at times we, we forget about our employees once we hire them. And that's, that's a, that's a we're not as good at managing people as we need to be as an industry. And I think we have to eliminate the idea that our badge of [00:18:30] honor used to be bragging how many hours we work during tax season.

Annie Schwab: I was just about to say that.

Roger Harris: That That has to end. There's no honor in. There's no honor in not seeing your family for four months, right?

Annie Schwab: You can't say we'll only make you work 60 hours a week during tax season. That's not going to get you anybody.

Jeff Phillips: It's not going to get you anybody. There's a firm. I live in Pensacola, Florida. There's a firm in about 40 miles from here in Fairhope, Alabama. That is a is a traditional CPA [00:19:00] firm. Right. And one of the projects that they did starting around 2018 was they decided and this was progressive, I'm very excited about what they did, was they decided that they were going to reverse engineer their entire firm so that no one worked more than 40 hours a week all year, including busy season. And it took them years to do that, and they accomplished that goal. And it's a great case study about about how to reposition a firm. I mean, people want to work [00:19:30] in accounting. People want to serve businesses and people and use their unique skill sets. It's a noble profession. I'm so passionate about this profession, and we all are. But it was their move to limit hours, knowing that that would be a game changer for recruiting talent. So they were able over a number of years to engineer that. And it has significantly increased their their turnover, which is how we measure, you know, who is leaving the firm voluntarily, quitting for other opportunities. [00:20:00]

Jeff Phillips: And it's enhanced their ability to recruit very good talent into the firm. So anyone saying that is impossible is not correct. It's it's so doable. And you know, any like you mentioned those hours. So what's happening is college students are looking at going into management consulting, investment banking big four accounting. And the money's worse in the accounting [00:20:30] and the hours are worse. So which one do we want to give on. And so I think I think that's a major problem that we have to shift as a brand that doesn't solve like the listener's problem. Like I just got a text from, from a friend who owns a firm. They just lost a key tax person. Um, and it's, it's throwing them for a loop. They need to fill that position. So how do we do that? I want to talk about that. But but but yeah, it's we're not doing ourselves a lot of service here when we're not getting giving the talent what they want or [00:21:00] to Roger's point, then having a good system to manage and care for and develop and retain really good people. And absolutely, I'm asking.

Roger Harris: You this or any or both of you, but, you know, once you recruit them, other things have to change. The technology we use, the client interactions. I mean, we have to be you know, hiring is not just the end all be all. Then we have to have the internal systems. We have to have the client training or understanding of [00:21:30] how our systems work. And and that's, you know, you can't do one without the other.

Jeff Phillips: It would be like signing on a new client and not having an onboarding system or the product that you are supposed to deliver to the client. The same thing is true for people. You you are selling people and trading their one career to work for you, and then you show up and you're a mess. You know, if your turnover is higher than 20% annually, um, which is a good indicator of [00:22:00] if you're a mess or not. Yeah. Um, then you know that you've got some stuff that needs to be addressed in the management side.

Annie Schwab: I totally agree, and I do think that it takes time to change your mindset, to change your your workflows. Standardized workflows will become crucial when you start having, um, various remote employees, you know, for certain security, technology, networking, all of that kind of stuff needs to probably be revisited before you, [00:22:30] you know, jump forward and then what happens, you know, how do you keep that employee engaged, you know, how do they feel working for you? Do they feel like they're part of the community? Part of the firm? Um, you know, monitoring progress. There's so many things that need to be considered. But I will say it's possible. It's. We have firms that are completely remote, um, very productive, very profitable. And I think it takes the firm owner sort of a minute [00:23:00] or so to understand that they might lose a little bit of control over this employee or, you know, their fear of maybe this employee won't be productive. Um, or maybe this employee is now going to be talking to clients and you feel like a disconnect or something. I mean, there's some emotional changes that probably need to to be addressed too, by the owners.

Roger Harris: I think you need to to understand that you may need help in doing this because, yeah, you're going to have to change things that maybe [00:23:30] you aren't thinking about. For example, you can't pay people more by new technology and charge the same fees you're charging today in a different work environment. So it's going to it's going to impact your pricing. It's going to impact your hiring, your benefits, your salaries, your technology. It's it's but it's part of bringing your firm up to, uh, a modern firm that will have value when you get ready, because you're not only building [00:24:00] a firm to get people to work in, you're just earlier point. You're building a firm that someone will buy later on. Because one of the advantages of having your own business is I hope you're building equity. But if nobody wants to buy your firm, you have no equity, right? You have a job.

Jeff Phillips: You have a job. Unless you were building systems. A business is a system of systems. And how we it's it's kind of like, um, like a sausage factory and what goes in, [00:24:30] you know, goes out. And it all starts with, what are we charging our clients? And you cannot afford good people if you're not charging the right amount, so you won't get good output if you're not charging enough, and hiring good people and having good systems to manage them. One thing I wanted to address about about I still think the, you know, what I think about is like, where do you start, you know, and what can someone do? And, you know, I want to I want to talk about [00:25:00] that. But but I think one place you start, if you can get comfortable with hiring remote. And even if you're not. But but I'm telling you, you'll lose here if you don't is. We got to find people. We we know that probably 20% of your firm will leave annually. All right. That is our industry's average. So you've got to have a system to backfill and to grow. And this is a this is a machine that you've got to build. But there are people out there to help you do that. And [00:25:30] so like the the where do you start is develop sources, you know, so you start with your employees, you know, the top source of hires.

Jeff Phillips: And those who stay the longest and are the most productive are referrals from your existing staff. So we want to have a machine for repeatedly asking staff to refer other staff to us. If you like working here, tell your friends and then pay them. Pay that staff, [00:26:00] reward them. If somebody is hired, you want to tell your clients, I'm always looking for good people to serve you better. If you know anybody, we are always hiring. You know it's okay to say that even if even if you're just building a pipeline of people, that you're building relationships with, that when you do have a need, you can pursue them. I mentioned accounting fly earlier, accounting fly as a service to the profession for free. You can log you can sign up for an email that we send out, [00:26:30] uh, every week. That is essentially some of the best scrubbed candidates and vetted candidates that that company sees every single week. So you get a live look at what the candidate market looks like, what they're asking for, salary, what their skills are. If you want to hire one of them, you call accounting fly. But it's a really nice. It's called always on recruiting. It's just something where you're you're you are building a pre-built source that they went out and figured that out for you build relationships. It's fantastic [00:27:00] because.

Annie Schwab: I get that question all the time, you know, what's the going rate for a tax manager or a senior manager? Somebody with ten experience, ten years experience. And that's a hard answer to give. Location matters. You know, all these different things matter. But that's, you know, if you're thinking about hiring or just kind of want to get a better understanding of what the industry is, that's fantastic. Yeah.

Jeff Phillips: You just sign up and receive. It's like getting, you know, a sneak peek at the market every single week of who's out there. And if you see someone you [00:27:30] like, great. If not, you're learning about who's out there. The last one is, um, is local recruiters. So there's a lot of fear in our profession about working with recruiters. I understand that, but you know what they're good at? They're good at finding people and vetting them and handing them over to you. So. So, so like, why wouldn't you outsource that expertise? I mean, your clients are could probably do their tax returns, but they're outsourcing it to someone who does it better than you for a fee. [00:28:00] Well, that's the recruitment industry at large. So yeah, if you're if you're in a location you want to hire a tax manager in Toledo, Ohio, it's going to take longer than if you go remote. But it could happen. So build a relationship with the local headhunters and tell them what your hiring plan is and what you're looking for. And so build sources that feed you leads and then be ready to to capture them, evaluate, sell them. The last one is there's a lot of job boards indeed ZipRecruiter [00:28:30] post jobs six months out of the year tax manager and just bring in candidates that you can talk to. And even if you are not hiring today, you can build a relationship with somebody so that down the road you can recruit them. So like have a little spreadsheet of candidates that you really, really like. The longer you have time to build a relationship with them, the shorter the recruiting cycle will be. When you're ready to pull the trigger and hire somebody.

Roger Harris: Just like we.

Roger Harris: Spend a lot of time in Paget talking about building a marketing strategy [00:29:00] to help get clients. You're talking about having that same strategy and same discipline to build a marketing strategy for hiring people. A lot of the same tools, you know, in terms of consistent marketing, consistent contact, asking for referrals, all that works in hiring, just like it does in client acquisition.

Jeff Phillips: What do we tell pageant owners who spend the first hour of your day working on your business? Put that hat on and work on the business. This is a this is a 40. This is a two day project [00:29:30] in that, you know, first hour of the day working on the business of lining up sources. And guess what you'll have at the end of this, you'll have a more valuable firm because you've taken steps to make hiring a machine. We have a saying about reactive crisis hiring post and pray. You know you go to indeed and you post and you pray that the right candidate comes along. I got news for you. The right candidate is not coming along on the job board machine. It's especially if you need them [00:30:00] today. Now you can use those job boards to your benefit to build a pipeline and build relationships with those. But that is the system around around sourcing candidates that we ought to build to make hiring predictable and reliable.

Annie Schwab: So how do you screen them when they come in? Do you have recommendations for screening? Yeah.

Jeff Phillips: I mean, they.

Annie Schwab: Always look good on paper, right? You get these employees, the first interview goes well, the you know, the initial resume [00:30:30] looks great, but how do you find that person that's going to be a fit? Is there a screening tactic?

Jeff Phillips: Yeah. My my recommendation is screening is is is to when you think about candidates probably fall into two buckets. There are some candidates that are really good interviewers. There are some candidates that are probably not really good interviewers. And neither one of those necessarily is a predictor of success in the firm. Right? Right. In fact, it's sometimes it's the better interviewers that are [00:31:00] pulling the wool over your eyes. Um, so selection has two, two parts to it. Um, one is evaluate, make a good decision and due diligence, and the other is sell. You got to sell the candidates because if you evaluate them and they're good. Guess what? Other firms are interested in hiring.

Annie Schwab: Them, right.

Jeff Phillips: Yeah. And that's the one you want. So you're going to have to spend time with them selling them. So you know, a [00:31:30] couple of tips around evaluating is the resume is a good indicator of what they've done in the past. But it's not perfect. So we want to do two things. I mean, we want to ask questions with them about getting them into the mode of storytelling about their jobs so that you can pick up key stories like they've used your tax software. What problems have they encountered that they had to overcome in your tax software? I worry a lot about people saying I know ultra tax and the first day of the job they don't. Yeah. [00:32:00] Um, we have that a lot. And so you're going to have to uncover that with, with trying to do situational interviews with them and tell me a story about this. Tell me a story about a challenge you overcame in QuickBooks and Xero and Ultra Tax. Those stories will help you get a good picture. Secondly, I would go through their resume and ask them the name of their manager. At each one of those jobs, they're not going to probably give you the manager. If they're at a current job, that's okay. And [00:32:30] I would ask them to connect you with those previous managers.

Jeff Phillips: You can ask the manager, would you hire them again? It's a simple indicator. And most most people will give you a yes or no answer. And that's a very good indicator and background for you. There's a third. There's a really good testing service that we are experimenting with at Padgett called account tests. A guy named Giles Pearson owns account tests. And so that is putting about [00:33:00] a 40 minute test for a candidate to go through personal tax returns or an entity tax return. There's also some personality testing. So I'm a big believer in these because it gives you another data point on a candidate. And at the end of the day, you're going to have to trust your intuition on these things. But the more data you can collect, the better the decision you get. And if you start to see in your intuition is telling you that this is an A player, we're going to want to move quickly into selling the candidate, all right. And that selling is building a relationship with somebody. It is spending time with them. [00:33:30] And if you look over on the whole there's two big principles here. One is speed. We want to move quickly because that communicates to the candidate that that you take them very seriously.

Annie Schwab: Seriously.

Jeff Phillips: Right. Um, not responding not speed is going to destroy the search. So this has to be owned by someone in the firm to make this move along.

Annie Schwab: Makes sense.

Jeff Phillips: All right. And, um, and so if you if you go through that, that process quickly and you build a relationship with them, you're going to want to minimize [00:34:00] the time with candidates that are not a fit. So like first interviews are 15, 20 minutes, because that way if they're if they're a player on your decision tree, they're going to be moved into the they're a good performer potential slot. We want to build more time with them, and we want to weed out bad performers quickly and trust your guts on that. Trust your gut intuition. So then you move into selling. Okay. And that is building a relationship with them, having them talk to other people at the firm and, and, you know, and then [00:34:30] you move to an offer. So you've got to find what's unique about your business. And, and I would something I have always done and I built a startup. And being in a startup is brutal. Um, and there's a lot of negatives to working in a startup. And so one of the things that I would do during the interview process was I anti sold them. I told them how bad it was working here.

Annie Schwab: The strategy to get them to come work for you.

Jeff Phillips: Well, what I found was it drove away the people that that didn't have the stomach for it. But if somebody [00:35:00] was interested at the end of this, they they usually led to being pretty high performers. And so I think it's it's important to have that honest conversation because you're trying to build like buy in from the candidate. I know people are cringing hearing me say that, but you know what? I'd rather save you the frustration of having to start the search over again and and not have that false security of hiring the wrong person.

Annie Schwab: What's expensive? I mean, the process of the searching and the interview, not only time and money, [00:35:30] but, you know, then then once they come in, you have to train them. And if you're if they're not going to work out now you've spent time recruiting, training, um, all of the above. I hope you.

Jeff Phillips: Are. And if you are, um, yes, it's very expensive and it it it takes an emotional toll on the owner of the firm.

Jeff Phillips: It's it's I can.

Jeff Phillips: See that it's terrible. And, um, it really it hurts. It's devastating. It's probably the best word and like. Well. And no one will ever be perfect. You're going to bat 400, [00:36:00] 500. You're going to you're going to be right about half the time, wrong half the time. And you've got to be pretty good at firing to to be good at hiring. So if somebody isn't on your team, that somebody on your team that's not a good performer, you've got to be willing to let them go to make room for the a player that you want so essential to your success. But it is hard.

Roger Harris: Oh yeah.

Roger Harris: Barring you know, if you never fired me body to your point, you're probably not good at hiring because, you know it's [00:36:30] not fun. You have to. But you also have an obligation to the rest of your team to get rid of a non performer that's hurting them. Uh, you're the staff that you are keeping. Expect you to, to get rid of the problems that are potentially causing they're causing. So um, before we and we've spent a lot of time about hiring, uh, where does offshore fit into this? Is it a viable option? Is it something? Where does it work? Where does it not [00:37:00] work? Is it a stop gap? Is it a permanent solution? We hear a lot about it. So where does it fit in to this discussion?

Jeff Phillips: I think it's a critical part of the discussion. So backing up just a little bit, your old org chart looked like a pyramid, right? You had the partners managers and seniors staff. I wish I had a visual aid to describe this, but I'm going to do my best just to talk [00:37:30] through it. You're your new org chart. Is is a diamond that that sits on top of a triangle and or a pyramid. And I'll explain what I mean by that. What's in the diamond is, um, your permanent full time staff, your leaders, your producers, the tax manager, accounting manager. These are people that can be inside an office, or they can be remote, but they are permanent leader level positions in the company. And what makes hiring easier [00:38:00] is by embracing those two little slivers on the other side of the diamond that would write on one side is offshore talent, and on the other side is domestic freelancers. So let me answer both.

Annie Schwab: What does that mean?

Jeff Phillips: So one, these are both ways to fill jobs at your firm, predictably and reliably. And they are both ways to increase your bottom line and [00:38:30] increase talent in and out of the organization. So on one side is offshore. So there is great economic opportunities for hiring offshore. We're talking about hiring, um, accountants, early tax prep work, payroll setup, sort of predictable and repeatable tasks inside the firm can be offshore in the Philippines, in Mexico and South Africa and India. And by the way, the big four [00:39:00] have all built massive campuses in India. And a lot of the tax work is being done in India. They're building universities in India to build the pipeline of talent, to do the job, to do the job at great economic benefit to the firm. So why can't small firms do that too? So offshore you can run an accounting program for small businesses, offshore feeding work to the accounting manager who could be, you know, inside [00:39:30] the diamond and a full time remote or or or or local, um, resource who's presenting the work to the clients? So that's offshore. Freelance is really cool because 30% of the US labor market identifies themselves as freelance consultants. Now, what do I mean by that? They won't take your full time job if you offer it to them. They are small business owners that have built a specialty in a skill, [00:40:00] and that that you are able to easily find them and let them plug into your firm.

Jeff Phillips: So let me give you some examples. One is project based work. Um, like I don't like tax season, right? So we all need more capacity during tax season. Tax season is tough in the United States so you can hire a remote freelancer who knows your software and who is competent at coming into a firm delivering a season's worth of work and [00:40:30] leaving. So you're not paying a full time staff to do this, right? You're doing something from May to April. You might have a CFO that that goes on maternity leave for three months. So you have a project based or, I'm sorry, an interim freelancer that comes in and does the work to to backfill the work because you don't have that person anymore. You might need you might have a client that you don't need the capacity of a full time bookkeeper, but you need ten hours a [00:41:00] week. So that's a another example of a freelancer again, remote. But they come in and out of the firm and there are vendors in the accounting profession that just serve accountants that offer the process and connection to offshore talent and to freelance talent. Right. So when you start, I call it the new talent stack. It all predicates. It's all predicated on hiring remote staff and being okay with that. But you can fill just about any position [00:41:30] if you have the setup for hiring domestic or offshore remote staff, whether that's permanent, whether that's freelance or whether that's offshore.

Annie Schwab: I went to several conferences over the past year or two, and there's been an enormous increase in the number of vendors and sponsors that have booths that are offering, you know, whether it be, you know, accounting, bookkeeping or tax prep or tax review. And some of them [00:42:00] are by hour, some of them are by project, some of them are, um, where it's like you're they're almost getting a remote employee that you have. You know, the relationships are different among all of them, but there's a new one popping up everywhere.

Roger Harris: There's a lot.

Annie Schwab: And so it's it's hard to there are I can see the benefits You know not having to pay a full year salary if you only need half a year's worth of work. Um, but then I [00:42:30] don't know what are the downsides. What what's the concern? What's the.

Jeff Phillips: Yeah. Well, there is one other benefit, which is, is, is that it's not just economically advantageous. I mean, you're getting the work done and you're preventing your existing team, your your your core team from being overworked. Right. What's what started this conversation was it's hard to find people and people are leaving. Well, one of the reasons they're leaving is because we're working them too hard. Right. So so [00:43:00] having the offshore support or the freelance support reduces workload on your team, increases their capacity, increases their life balance, all in an economically friendly way that that works for a $400,000 tax firm. There are risks. I think that one just transitioning to a remote world has risks. You don't see them every day. How do I know if they're productive? [00:43:30] There are risks around. There's more turnover and risk of people just kind of dropping off the face of the earth, or flaking out or ghosting. Absolutely.

Annie Schwab: I've heard that term several times.

Jeff Phillips: You've got to deal with that. Like I said at the beginning, every anxiety you have about remote work is is justified. I do believe that there is there are proven systems to manage all of them, but there they are legitimate. The answer [00:44:00] is always what is your three year hiring plan? Who do you need to have in your seats now to three years? What are you going to do to build a system so that you can replace when you lose people? When it comes to offshore you. What's funny is the answer is always the same, but I'll use offshore as an example. An offshore team needs to be a part of your team's culture. They need to be involved in your team meetings. They need to have one on ones with [00:44:30] their manager. They need to get swag from your firm. They need to feel like they are a part of this firm and not a throwaway resource on the other side of the world. So we do that. We eliminate some quiet quitting. Secondly, really clear scope and standard operating procedures do not get into offshoring until you have a written down way of how we do accounting, how we do tax, how we do payroll. Once you have that written down, then you can delegate that work to an [00:45:00] offshore team and assign ownership of it inside your firm to help run that, that part of the business. But that is true for your staff. That's full time and that is true for your freelance staff. That comes in how here is how our firm does tax returns. Here is how we log into our software. Here is what we do on Mondays. And we have a stand up. And so just some basic SOPs written down checklist style, and thinking clearly about what everybody is going to do is, is always the best strategy. [00:45:30]

Roger Harris: So I guess you have what you're saying is the good old days of drafting an ad for the want ads and the phone ringing is over.

Annie Schwab: Who even gets the newspaper?

Roger Harris: Yeah, yeah. You know, it's it's we all have to change, you know? And I find it funny. A lot of people get comfort in being able to walk down the hall and see someone sitting in an office for eight hours a day and saying, yeah, they're doing a good job because they're physically here. We have to judge now based on the work got done, [00:46:00] do I really care where you're sitting and how you're doing it and how long it takes you? We have to judge on the completion of the work, not the fact that any sitting in an office eight hours a day and I can physically, visibly see her. So that must mean she's doing everything I need her to do. And it's okay. But that's the way a lot of us grew up.

Jeff Phillips: You know, I, I built a company that that focuses on filling remote jobs. And I am the first to say, Roger, [00:46:30] I'd rather be in the Athens office with you today because we have lots on our plate, and it's just easier and better if I'm in your office or you're in my office in Athens and we get it done. Um, I do prefer it. I prefer being in an office, but I also get excited about how you can fill a job remotely and then build really good teams, because the benefit is, um, if there was ever a category of job that required long periods of intense [00:47:00] focus, it's the accounting profession, and you don't necessarily get that in an office, right? You get you get constantly interrupted. And there's good in that interruption that that serendipitous communication, problem solving, building relationships. And so but what you have to do is, is you're allowing your team to have large, long periods if you're doing it right, of uninterrupted focus time. And then there's time in the day for meetings. You know, I have office hours. I got this from Cal Newport, [00:47:30] which is a great blog about and podcasts about remote work.

Jeff Phillips: There's a 3.5 hour chunk of my day, Tuesday through Friday, where everyone in the company, franchisees, you guys just call me and I'm always available. It is my time to talk to people. And so batching that time helps us communicate better and gives us time to have those conversations. But then it gives me the morning to work on important projects. So I try not to be in meetings in the morning because. [00:48:00] Because meetings are tough and they could be a drain and I've got projects to do. So we kind of batch our time. So I work remotely, but that's how I manage my time. That's how I encourage people to manage their time inside businesses so that there's there's meeting time, there's task time, and there's sort of project deep work time. And I think whether you are engaged with remote work or not, that's a better way to manage your time and to work as a team than to, um, running around an office and meetings all day.

Annie Schwab: There's so many technologies [00:48:30] now out there that, you know, even just the calendar links or the teams chats or there's ways to, you know, I don't know, workflow, time management, um, employee reviews. It's it's crazy. There's so many little tips and tricks that you can use to help, you know, to figure out time slots or what works better. Meetings in the morning. Communicate this to your clients. Send them the link to book. You know, stop getting on the phone and saying, hey, are [00:49:00] you free at 3:00? You know.

Jeff Phillips: My two, my three favorite tools in remote work. And they're just good, just good work practices. One is agendas. I don't need to call Roger every time I have a question. I have a Trello board called agendas, and any time I talk to him, I've got a list. I'm not going to bug him with a text or a call every time there's an issue. If it's an emergency, I'll call him. Obviously, I mentioned office hours and it's a great way to manage [00:49:30] remote work. So those are a couple of examples of just how we how we can perform remote work in any. There was a third, and I can't remember because you made such a great point. I was I got sucked into what you were saying.

Annie Schwab: I love teams and I like I like teams for communicating with with the groups. But any types of those, I even I do a lot of on zoom, on any kind of video thing where you're talking to clients, talking to, you know, like you said, I'm in Dallas, but a part of my team [00:50:00] is in Orlando. Part of my team is in Chicago. And when we get on, on the camera together, it, you know, really makes you feel like you're part of it. It does, let's say close the distance gap. Um, having those visual tools.

Jeff Phillips: You reminded me of my other two favorites. Yeah. So project management software to me is the is the cornerstone of a modern accounting firm. And there's 50 [00:50:30] great products in the market that do that. But what it gives you is it takes you from I can't see you. So I must not be able to trust you to what Roger said earlier is now I can oversee a system and I can see who's getting their jobs done. What is the pace? Where the bottlenecks. And you know, we have an owner in Paget who uses a software and can tell you in 30 days if the hire is going to work out or not, just by looking at his carbon board, which is, which is one [00:51:00] of the project management softwares. And so he's a better firm because he's not spending time micromanaging, managing by walking around. He's running a system and he can tell if people are doing their responsibilities or not.

Jeff Phillips: We're not.

Roger Harris: So we can't use the final seconds to kind of wrap up in the sense that what I think, hopefully the the listeners are hearing is that we're going to have to change the way we have traditionally looked at hiring [00:51:30] and get more comfortable with maybe something that in the beginning is going to be uncomfortable. And I want to refer to something that Jeff said earlier, how much he wanted would like to be in Athens to meet face to face. But here's something I know if it had been a requirement that he'd be in Athens, he wouldn't be in this position today. So we would have lost out on an opportunity to have someone as talented as Jeff. If we didn't embrace the fact, which [00:52:00] was new to us, we're almost a 60 year old company, and all of a sudden our CEO was going to be in Pensacola, Florida, where we have space in Athens, Georgia. But if we didn't embrace those changes, I don't know. Well, we probably wouldn't be interviewing Jeff. I don't know who would be in this box right now on the screen. So it's going to work out. It's going to be better for your firm to, to make changes to employ systems that will work for people. There's talented people [00:52:30] out there. There's people who will work for you, but you have to make it attractive for them to want to work for you.

Annie Schwab: Roger, you'd have been here all by yourself. Because if you wouldn't have let me work remote. I got married and had kids and moved to Dallas. I mean.

Roger Harris: I would have been interviewing myself today.So.

Jeff Phillips: Well, that's one of the things I love about your podcast, is that Paget has such a care for the accounting community, and we are going through change just [00:53:00] like the rest of the profession is, and we're talking about it, and we have an audience that we're trying to help, just like we're trying to help the the owners who are franchisees of Paget. There's just always incredible advice here. And and hopefully this was another example of some good advice that we provided.

Roger Harris: Yeah.And Jeff, here's the biggest softball question you'll ever get in your life. Uh, this was a lot for people to, uh, comprehend in about an hour. So if [00:53:30] they want to learn more, where do they go?

Jeff Phillips: Well, if.They want, if I think the softball is if they want to learn about accounting fly. Is that.

Roger Harris: That's one. Yeah. Okay.

Jeff Phillips: But if they want to learn about remote hiring, I would I would start at Accounting Fly's website one. You can sign up for the free list of weekly candidates. You can receive content about how to build remote organizations. Um and and I'm on Twitter [00:54:00] at Jeff Phillips underscore a little line at the end. Um, and on LinkedIn. And I would say, too, whether you're evaluating offshore recruiting businesses or freelance businesses or you have a hiring problem, one of our values at Pagés, we want to talk to anybody and everybody that owns an accounting firm. So put my contact information in the show notes. And, and I have an open invitation for anybody watching this or listening to it to reach out to me for a 15 minute conversation about try to help them in their current situation. [00:54:30]

Annie Schwab: And we'll all be at the conferences, the IRS forums.

Roger Harris: I'll be on forums.

Roger Harris: And some other conferences and and again, we can help you with those other parts. Again, once you hire them, you've got, you know, you've got to have systems. You've got to have all the other parts that are relevant. So Jeff and all of us will be happy to help you with that too.

Annie Schwab: So I'll be in Dallas at the IRS forum. Raj will be at everyone.

Jeff Phillips: Yeah, I'll be.

Jeff Phillips: In Chicago, Dallas and Orlando. So come to our booth. Come say hi. We'd love to tell you about Paget. [00:55:00] Hiring is one of the ways that we help firms thrive. As part of our system, firms can convert into the franchise and receive all the benefits while remaining independent. And hopefully that comes across in these podcasts with all the all the great benefits that Paget offers firms.

Roger Harris: So hopefully we'll see. Uniform. Yeah, we got some good giveaways.If you like coffee.

Roger Harris: Yeah yeah yeah we you will you will see the first to our knowledge, you know, until somebody tells you you're not first you claim to [00:55:30] be first. We have the first accounting branded coffee.In the world.

Annie Schwab: It's good and it's a good one.

Jeff Phillips: It's a good one. We're. If you haven't been to Athens, Georgia, and tried Jittery Joe's coffee, that's our partner and our Padgett coffee. Come see us at the IRS form and we'll hand you out. We'll give you some hand. You out some.

Roger Harris: All right. Well, folks, thank you so much. First of all, Jeff, thank you for finding time for this, Annie. As always, thank you for helping with this. I promise you that [00:56:00] for all of you that listen today, we appreciate it. We hope you enjoyed your hour with us. We hope you'll tell other people about the Federal Tax Update podcast, and we will see you soon with our next version of another federal Tax Update podcast. Thanks, everybody.