Culture as a Competitive Advantage

Today, our guest is Dan Hood. Dan is editor in chief of accounting today, which I’m sure you all know, Dan is a repeat guest on The Unique CPA and I’ve been very fortunate, he and I recorded one on Accounting Today, a week or so ago. And it’s always a fun time talking to Dan. So Dan, welcome to The Unique CPA.

Thanks for having me back. It’s always fun. 

Yeah, believe me, I was just talking to my wife this morning, I said, yeah, this is gonna be fun. I get to talk to Dan Hood again this morning. And she knows who you are. So look at that—you’re famous in the house. 

Wow, that’s weird! But okay!

So today’s fun conversation we’re gonna have is, you know, you and I go back and forth on different things. You know, we’ve talked mental health before, which is so important, burnout in our profession, and how to avoid it. But we both have gotten passionate about culture in the accounting world, and what is a culture, and defining culture, and creating culture, and everything around culture. And so you and I were having a little bit of discussion before we went on, and you had mentioned that, I think there’s this trend, and this is, you know, you and I both, but you had mentioned this, this trend towards yes, let’s get something in place that makes us a good firm, a decent firm—we’re treating people correctly. But that’s just the base of a culture. And then so but that’s a spot where, you know, too many people maybe stop. I mean, I think even before that—some people say, alright, our culture is, we only work half days on Saturday, so we have a good culture. You know, we have 11 holidays, and you get three weeks vacation—we created a great culture. And that’s not where it stops. 

And so I know you have some ideas on this, but what do you think the next step is? Or how do we get to the culture where we’re actually—and the whole point of this is, we need to attract people, we need to train people, and we need to service our clients. So what your thoughts on it? What is next? What are we missing?

Right. Well, I mean, as you say, there’s that sort of table stakes of culture that needs to be part of every culture, every business culture, no matter what business it is, no matter what kind of firm you have, you’ve got to have those basics of treating your employees decently, you know, the workplace flexibility, sort of all the things that we know, go into attracting and retaining talent—they’re the basics of that, right? You can almost think of them as they’re not even really culture, they’re just good recruiting and retention tactics to keep people on board, keep them happy. It’s treating them like decent human beings, right? And respecting their, you know, that they have lives outside of work, and all those sorts of things that go into it. 

But the thing is, when you put those all together, if that’s your culture, if that’s where your culture stops, right, then every firm is the same and every business is the same. Now we know, as you say, there’s a lot of firms where it’s, you know, our culture is that the beatings will stop until, you know, “I haven’t physically punished an employee in years, our culture is great.” If that’s, you know, if everybody just stops at that basic level of, you know, good recruiting and retention culture, then everybody looks the same. Right? Everybody takes a week off between Christmas and New Year’s and everybody takes Fridays in summers, and everybody’s, you know, caring about people’s career development, and everybody’s, you know, getting their family involved and all that sort of stuff. 

And these are great and important things. The problem is, if everybody’s doing them, right, then everybody’s the same in your culture is no longer differentiating. It’s no longer setting you apart. Right, ow, if you do all those things you’re set apart because a lot of firms don’t do them at all. 

Correct. 

But it’s really, it just means that sort of, people just show up at work, and they work, and we pay them. And that’s kind of it right? I don’t mean that they’re terrible, awful, horrible places, just that they haven’t really given any thought to that element of keeping people on board. When you do that, you differentiate yourself from that vast mass of firms and businesses of all kinds—that just don’t really have cultures at all, they just sort of were just a place where you come and work. That’s it. 

When you get to that level of having done all those things, putting all those things in place, you’ll be ahead of people. But more and more firms are doing that—more and more good accounting firms are doing that. Then you reach a point where culture—and this is what I think culture really is, its sort of biggest expression—is the point where you go beyond just the “I need to recruit and retain staff” thing to, I want to recruit and retain the right staff, for my team or for my firm or for our firm, however we want to put it. And then you start looking at the things where you can use culture to differentiate yourself. When you start thinking about, listen, there are a million different ways you can run a business successfully. There’s a million different cultures you can have at a firm. And when you start thinking about what each one of those can be, that’s when you start being able to differentiate yourself from among all the good firms, right? All the good firms that do all these good, basic, cultural things. We all look the same. I want to be different from them. But I obviously don’t want to give up the other stuff. 

Right. 

So what do I add to that? And it’s all kinds of questions. One of my favorite examples of this, because it’s kind of hard to wrap your head around. But it’s a whole bunch of things about the attitude the firm takes to everything. And I’ll give you an example. This is just one for firms to think about. And there’s no judgment here, every answer to this question is correct. And the question is, you tell a client that if they deliver you something by nine o’clock Friday morning, you will have a deliverable produced for them by five o’clock Friday afternoon. Right? You tell them that—that’s the promise. This isn’t a deadline driven thing, there’s no timeline for this. You just say if you deliver it to us at nine, we’ll get it back to you at five on Friday afternoon. 

Okay, we all know this is what’s gonna happen is, the clients gonna deliver it to you at four o’clock on Friday afternoon, right? So the question—and this is the cultural question. The question is, there’s three—there’s probably more than three, but I’m gonna make it three for this—there’s three possibilities. You say, okay, we’re gonna start working on this right away, and we’ll get it to you as soon as possible. We said it would take eight hours. So you gave it to us at four, we’ll deliver it to you at midnight. We’re going to have a bunch of people stay late through Friday night. Now, in a good culture firm, you may do that. You may say, listen, it’s so important to get this out for the client, we want to do it, you will obviously reward those people heavily, your staff, for staying, and we know it’s a ridiculous thing. But we got to get this for the client, we’ll give you days off next week, or money or whatever, we’re going to recognize this achievement, we’ll shout you out at company meetings, because we love you. That’s all good stuff. 

Second thing is you say, well, listen, we’ll get it to you by first thing Monday morning, we’re gonna work over the weekend. So it’s a little less crazy. It’s not like we got to give up your whole Friday night and stay till midnight. But we do need you, you know, everyone do a couple hours on Saturday, or maybe a couple hours on Sunday. And we’ll knock this out, you know, in between soccer games, and, you know, birthday parties and whatever else. And again, you’re going to reward those people and recognize them, because you have that good basic culture that cares about your employees. And you’re gonna say, okay, we’ll get it to him first thing Monday morning. That’s another kind of culture, right? It’s not the single definition of a culture, but it’s another aspect of your culture. 

Then there’s a third one that says, when you go to the client and say, this is great, thank you for delivering this. But you know, we needed it by nine to deliver it to you by such and such time, what’s going to happen is we’re going to treat it as if we got it, you know, first thing Monday morning, you know what, we’ll probably get to it a little earlier than five o’clock Monday afternoon, maybe mid-afternoon. But we do need the time to work on this, and you don’t need to say this to the client, but our staff doesn’t work on weekends. 

Right. 

So that’s a third kind of cultural aspect. All of those are perfectly fine. All of those are perfectly decent cultures, and treat your employees well, and care about your clients. And I would say any firm could be proud to say any one of those things, but they’re all different, right? They’re very different in terms of how you treat your clients and how you treat your staff and who you prioritize. And again, in all cases, you’re treating, you’re respecting everybody, you’re giving everybody the love and care that they need, right to make you a place they want to work with either as an employee or as a client, but you’re shifting little things, you know?

Yeah.

You think about—no one can see, me I’m moving invisible knobs on, you know, like a record producer’s thing—you just up the mix slightly here and tweak it there. And those are important cultural questions. And then you can you can have that same kind of what kind of firm are you on a thousand other aspects of the firm, and you kind of need to the more you think about your culture, the more you want your culture to differentiate yourself, you need to think about those things. 

So we were talking before, and I gave you an example of like, what kind of things do your staff enjoy? Are they outdoorsy? Or are they, you know, they like camping and hiking and fishing? Or are they athletic? They like, they’re all into sports? And they run marathons? Or are they more into movies and TV shows everyone likes to talk about what they just watched? Or or or. Those are only one of a thousand different aspects of culture. But that’s the kind of thing that the more you talk to firms, you see, I’ve taught firms who are like, well, we’re kind of everybody likes this, or everybody likes that. Now, those are not usually choices. Those are usually things that just sort of happened, because the guy who hires always ends up getting in conversations about how he’s running a marathon this weekend. And if people say, oh, I run all the time myself, he’s more likely to hire them. Not intentionally, but just because you hire people you like, and who you want to work with, and who resonate with you, for one reason or other. 

So those kinds of cultures sometimes happen accidentally, just by unconscious hiring decisions. But you can also at some point, start to think about, well, wait a minute, this is a small part of our culture that’s important. Because if everybody loves to run, then we can do that, everyone loves being outside. That’s how we do our company retreats, or that’s how we reward people, you know, or whatever. And then there’s a million other things: How entrepreneurial are you? Right? And in what way? Are you the kind of firm that’s like, we’re going to try, you know, we’ve always got a little bit of money set aside for anybody who wants to try some crazy new project. We’ll give it to you, you know, when you try it, we fail fast, we fail forward. We do a million, try a million different things, and you know, a hundred of them will stick but those hundred are going to be great. Or are you kind of firm that says listen, we’re entrepreneurial, but we look at a hundred ideas, and then rapidly discard all but two, and then we plan very carefully for those two. And that’s all we’re doing this year, is rolling out these two entrepreneurial initiatives—two new things and we’ve planned them and thought them through so carefully that they’re gonna be successful. 

But both of those are valid cultural approaches to things. There’s all those hundreds of thousands of different aspects of what a firm culture is. Most of them are at most companies everywhere, not just accounting firms, but every business, those are accidental, they just happen because it’s either the owner if it’s a small enough firm, or the department heads sort of unconsciously decide what it’s going to be like. And often what happens is that firms or companies, every department has a different culture, right? Has the culture of the person who’s doing most of the hiring, or most of the, you know, just sort of setting the atmosphere around the unit. But when you start to think about that, you start answering all those thousand individual questions, right? That can become a conscious culture. And then you start to say, okay, so who am I going to hire? I’m going to hire people who are comfortable with a lot of craziness and a lot of uncertainty and they’re comfortable with, listen, if you try 10 projects, and nine of them fails, are you okay with that? Does that work for you? Some people will go, oh, man, I really, I don’t like failure, you know, and that’s fine. Again, this is all none of this is—these are all equally valid approaches. Some people are very comfortable with yeah, we’ll try 10 things, nine of them will fail, who cares about that, the other thing is gonna be great. And some people might need it, you know, I like to plan and like, make sure things are gonna work. And I’d like to be part of a success, I don’t like to be part of a failure, both of those totally valid. 

But when you start being able to pick between those, because you know what your firm is like, suddenly, you’re building a team that’s sort of turbocharged. And not only people going to stay with you, because you’re decent to your employees, and because you care about their growth. And because you care about their families and all those basic foundations of what a good culture is, what you care about them specifically, not not just because of who they specifically are, right? Because they resonate with you, and you’re the same kind of team, and you approach problems in the same way. 

Now, we talked a little bit about this before, you made a good point, which is, you don’t want everybody be a cookie cutter clone of it. But you do want people to fit within this range of a team so that there’s no friction, and there’s no people who are like, I just can’t do this, I cannot be part of nine failures a year just to get to one.

Right.

Which is totally valid. Right? Again, no judgments here, this is just, they need—that person should be happier at a firm that is carefully planning out two initiatives, that it’s putting all its money behind, and that it sure is going to be successful. They be equally successful, it’s just how they get there. So I always say—I’ve been rambling for a long time—but that’s, I think you get to that second level of culture where you’re suddenly you’re able to differentiate yourself in a really valuable and meaningful way.

Yeah, so during that whole discussion, well, it wasn’t a discussion. 

It was effectively a rant.

Oh, I rant all the time. So during that rant, I was thinking, okay, because I have a hard time defining culture—it’s like, I can’t put it into a sentence or two or anything like that. It’s like I can see it, I can understand that. It’s good, because people enjoy being part of it, people are having fun. To me, this is culture, again, defining’s hard. But I was trying to put what you were saying into our experience. And so our experience is, when you’re saying, hey, every department might have a little bit different personality, or even culture—and I can see that with us. I mean, you know, marketing is a little different than project management, is different than business development, that’s different than the, you know, administration. But the thing that I see is, everybody gets along. Everybody has fun. 

Yeah. 

And so fun—does that define culture? No, that’s just, you know, we’re being good to people. But fun is a culture, I think.

Yep, absolutely. And you guys have fun—I’ve seen your team. I’ve been at your conference. I’ve seen everyone how your team interaction is—it’s fun. And it’s, you know, it’s fun, but you get the stuff done. And that’s what matters, right? Sorry, I’m jumping in again. Why am I ranting?

No no, well, okay, I’ll jump in. I’ll rant for a second. 

Yeah. 

But you can jump in anytime you want. And so, from that standpoint, the different personalities, even though everybody gets along, you know, some people do like art, and some people like music and some people like outdoorsy, I hike and I camp, and some people like reading books, whatever. So everybody has—we’re not all the outdoorsy, all the sports, all that. Now, but there’s some common thing that we all have that makes us this cohesive unit that works well together. We don’t lose people. I mean, that’s a sign to me there’s a good culture. 

Absolutely. 

I still can’t define it. And you and I—and it wasn’t going this way, but I mean, you and I talked a little beforehand. So a friend of mine, ChatGPT and I were collaborating, and Chat and I went back and forth for a few hours trying to define culture. And I don’t think this completely goes with what you were saying, but I think it can fit into there. We came up with one sentence. And I like it, it helps me define what creates a good culture. But then when you were just talking there, I’m like, okay, well, maybe this doesn’t completely fit. 

So I want your opinion, because you were talking about some stuff that is rules. Our rules are, we have one of three rules based on when our client got us this data and how we’re going to get it back to them. But what I had found talking about ChatGPT, sidenote, ChatGPT is good for this stuff. There’s things you can use it for, things you can’t, but working collaboration on non-client data is, you know, getting ideas are good. So we came up with this sentence: “Weak cultures are based on rules, and strong cultures are based on relationships.” But that doesn’t completely fit with what you were saying. So I don’t know. I want your thoughts on that.

I think that’s—I think that’s absolutely 100% true, I just don’t think it’s everything. That is, it is an important descriptor of cultures, right? As you say, if you have to tell people, “This is how you act,” right? If you have to set a rule about it. Sort of we talked about earlier, the “no jerks” rule, having no jerks, which is actually what it’s kind of like if you have to have a rule about no jerks, right? It’s not really a rule. It’s just we don’t put up with jerks. It’s not a rule. No one needs to say, “Hey, remember, rule 37! No jerks!” No one’s ever saying that. They’re just like, we don’t put up with this. Right? That is the culture is we just don’t put up with these people. 

The flip side of it is, well, of course you care about what happened in somebody’s life, you know, something sad happened, your dog died or something like that. Of course you care about that. Because you don’t have to have a rule that says, “Care about your employees personal lives,” you just care about it because—and then this is the thing, I think that goes to your firm, right? As you guys just naturally do. I know you well enough, I think I can safely say, you’re just a decent guy, and you’ve thought about the way to express that at work, right? You’ve thought that through. You haven’t said well how do I keep people? What are five things? Well, I could care about them. Okay, that’s a good, that’s rule number one, we’ll care about people now. Like, that’s not how it is. It’s an expression of you, and your partners and the people you work with. Right? And it’s a virtuous cycle, right? Because you care about people. And so you hire people who resonate with you, because they care about people, and they like working together. 

And at that point, I talk about, you know, hey, maybe you’re all athletic, we’re all you’re all outdoorsy, or you’re all this, it doesn’t really matter, because you’re all the kind of people who want to get along and enjoy just working together, right? I’m guessing and I don’t really know enough about the company, but you know, it isn’t a cutthroat corporate culture, where people are desperately climbing to the top and stepping on people as they climb up the ladder, right? That’s just part of the unconscious expression of your culture, right? Is that because you hire people who don’t feel like their career climbers, or you know that they’re going up the corporate ladder or cutthroat style.

They know they’re going to be rewarded. So whatever that reward is, if we can do good—good? That’s not right. If we do well, as a company, everybody gets rewarded. And everybody knows that. I mean, there’s been certain things in place where we’ve done that, and so yeah, I agree. I’m sorry, go ahead.

But that’s the thing, is they know that they don’t need the rule. They don’t need to go and say, hey hey hey, I did well, rule 737 says I get rewarded, right? They don’t, because they know that’s going to happen, right? So as you say, and that’s the relationship, they know, they trust you and they trust your partners, and they trust everybody, you know, every all the managers that they work with, and that sort of stuff, and reverse, right? You trust them and the managers trust them, and everybody trusts that, yeah, we’re all gonna get this done, because that’s what we do here. And you don’t need to have the rules about it. 

So I think you’re absolutely right, I think ChatGPt, and you are onto something about that. But yeah, but I don’t think it’s the most important—I think it’s an important part of culture, but I’m not sure that it’s the most important. It should describe any good cultures. But it doesn’t necessarily mean that it’s the basis of a good culture. Because in some cases, what’s going to happen with a culture is that you step back and say, what do we have here? You know, even if you’re looking like our firm works really well, why does it work well? And then you take a step back, and you say, “Okay, you’re not looking, you’re not gonna end up describing a bunch of rules.” 

Right, right. 

You’re not going to say, well, we work well together, because we have a rule about, you know, asking everybody about how their weekend was or, you know, pursuing their you know, John Garrett’s What’s Your ‘And?’, we have a rule about, you have to pay attention to, out there outside the firm and making sure they feel comfortable talking about, you know, what they did over the weekend, and that kind of thing. You don’t have you don’t step back and go, oh, well, those are the rules, you look back and say, well, these are our relationships, this is how we interact, and that’s what makes our culture strong. And then you can identify how your relationships work, and this is the thing about, you can have all kinds of wildly dysfunctional relationships, but they’re relationships. Does that make them better than rules?

No.

If you have a bunch of dysfunctional relationships, I think your culture will be better off having some rules, and then you can move through the rules to get to okay, these rules are all sort of unconscious expressions about how we have a relationship, and then you have better relationships. Yeah, it’s not going to be in a good culture. You’re not doing it because the rules say you have to, you’re doing i, because that’s who you are. Yeah, at every level as individual employees and as a firm and as managers and that sort of thing

Yeah. So now you’re gonna have to go back and now define the relationship. Okay, so what’s the relationship?

Well I think that’s a good point, you know, that’s, that’s an excellent, you know, of the six or seven things that a good culture is, one of them is, it’s about relationships, not about rules. 

Yep. 

I think that’s absolutely true. It’s not about going to somebody and saying, well, you broke this rule, talking about managers being cruel to people, the beatings will continue until morale improves. If, you know, if you have to go to someone and say, you shouldn’t, you know, be mean to an employee—let’s leave out beating, because that’s actionable—but let’s just say yeah, don’t be mean to somebody, don’t be cruel, you know, don’t belittle them for a bad work performance. If you have to go to somebody and say, you shouldn’t belittle them, you know, that person is reporting to you because it violates, you know, one of our cultural rules, well then shut down your firm, that’s terrible. You should go to them and say you shouldn’t belittle employees, because it’s mean, and it makes them feel bad. And that’s not nice!

Right!

You shouldn’t! And it creates an uncomfortable, you know, it makes everybody unhappy when you are mean to this one employee, you know, if you have to go and say, Don’t do that, because of this rule. That’s different. That’s terrifying, right? That’s not what a good culture is. But you may, at some point, need to establish some rules around behavior. You know, it’s unfortunately, sometimes people do need to be sort of reminded of, yes, this behavior is okay. This behavior is not okay.

And I honestly don’t know if we do that. I stay out of all that now. So maybe we have more rules in place that I think, because I just go out and talk to interesting people like you, but a couple things—man, I can go a couple of directions based on what we just said. One, you said, and you said it over and over, was the trust. And I think that’s something we have in place that I think is important is just trust, don’t micromanage. I think micromanaging is a culture killer. And so trust, you know, people know what they need to get done. And they can get it done. And we do it. We allow it to do it on their timeline. And obviously, the client has a deadline. And we all know we have to meet a deadline. But whatever, whenever, however, that you meet that deadline, get it done. And we’re trusting that it’s not going to happen, we’re not going to stand over your shoulder. So I think trust, what you think, but I think trust, goes to the next step of yes, this helps create a culture that people enjoy being part of, I don’t think many people like to be micromanaged. 

But here’s the wrinkle of of the next level of—right, that’s absolutely right, I think that’s a great, you know, table stakes kind of thing. Absolutely. You’ve got to trust your employees, you shouldn’t be looking over the shoulder all the time, you shouldn’t be doing keystroke logging on them and saying, well, there was 13 seconds there where you weren’t working. What were you looking at on your screen? And you certainly don’t want to be the you know, “I don’t like the way you, I don’t like the little stroke you put across, the line on your seven. That’s weird to me, don’t do that.”

But on the other hand, you know, there’s a cultural thing that says, how much do you, does your firm, insist that everything be done in the same way? How standardized are your work processes and work product? And that’s a cultural thing that can be listened to with us, we totally trust you to get it done however you want, we don’t need you to show your work. I mean, obviously, again, all of this is if there’s, you know, compliance reasons why you have to show your work, then you have to show your work. But in all kinds of areas there aren’t, right? You can reach your conclusions and your results and your deliverables, kinda in some cases, however you want, right? 

Now, at some firms, they say we have very specific processes and very specific results that we need, and we want to see them in this way. That’s a perfectly fine culture. And then some say, go out and do what you want, you know, just as long as you come back with the right result. And those are two different cultures, you can do either one. If you do the one where we want it to be exactly the way the firm wants it to be, then you have the cultural requirement to train everybody to that. 

Yeah. 

And to explain, and that’s not micromanaging, right? 

Correct.

That’s saying, listen, and we like it for this. And you should be able to say why we want, why I’m leaning over your shoulder and training you on this for these first two or three iterations of this task, whatever it is, because we want to make sure everything looks the same so that any partner at any point can step in or any employee can step in on this engagement. If you, god forbid, get hit by a bus, we need all of our we want all of our clients to be workable by all of our staff. And so we need it done this way, so that anybody can jump in at any time. So I’m going to be annoying and, and maybe micromanage you just while I train you, because we need it done exactly the same way. And other firms perfectly reasonably may say, well, we don’t do that. We just, you get it done. And that’s fine. And if we need to jump in, if you go again, god forbid, get hit by a bus, you know, we’ll figure it out. We’re not worried about that. Because we’re all really smart people, we all know how to do this. So if we need to jump in, and we can unravel what you did, or we’ll just do it over again.

Right.

But that’s and those both of those things are “trust you,” right? Both those cultures, trust your employees. One says, I’m going to teach you how to do it, because I know you know how to do it the way we like to do it, and then I can trust you. And importantly, I trust that if something goes wrong with another engagement, I can throw you in there like that, because I trust you know our methodology. So there’s a lot of trust there. But it’s a different kind of trust. And that’s a different culture. And then the other one says, you know, as long as you get it done, we’ll trust you. We know you know this stuff. 

You see what I’m saying?

Yeah, I like it.

So I think that you go through the first level of culture, which is building that point of, you know, we love you, we trust you, we respect you, we value you. And then you go to the next level of saying, and we want to work this way with you.

Right. And I love what you just said because everything you’re saying you’re getting me thinking because what we’ve done, I think over 16 years we’ve been in business and more so probably the last six or seven years, we’ve really built this base of culture— defining it’s tough, but we built this base. And we’ve grown pretty rapidly, and you know, we’re getting close to 80 people now, and when they’re 80 people, you do need to have some processes in place so we are standardized with what we’re delivering. And so one of our you know, I stepped down from the executive leadership about six years ago… Oh, funny. That’s when culture I guess I just said started improving. Maybe I was a problem!

We didn’t want to—this is an intervention. This isn’t a podcast.

Oh, thank you. Oh wait, here comes my family. No, I’m out! So now that we’ve grown fairly rapidly over the last six years, keep coming back, same timeframe—it is where executive leadership is installing EOS, Entrepreneurial Operating System. And through part of that is creating these standard procedures. So one of the rocks, and I don’t really understand EOS—I probably should, but I don’t like to do things people tell me to do, which is bad, this might be an intervention!—is setting one of the rocks this quarter, I think the next six months, or whatever it is, I think it’s a 90 day cycle that these things go around, is documenting all of the processes for all the different services that we’re doing. So yeah, so going back to my, you know, “rules weak, relationship strong,” we have a relationship built that’s strong. Now rules are in place to continue that strong culture, because now we’re all on the same page. And we’re delivering something that the clients are happy. Now, within those procedures, in my mind, still you do what works, you know, the deadlines and all that, we’re not going to micromanage. But now we do have a standard process in place. So this conversation is helping me define culture more. So I appreciate that.

That’s what I’m here for. A lot of this stuff I just think about in the back of my head when I’m trying to come up with a column. And so I don’t often get a chance to sort of field test it this way and get a cause to get it question because it’s a, because this is a super nebulous topic called Shelter is something nobody really understands. I mean, I’m sure there’s experts out there, who you could pay them a thousand dollars an hour, and they would come and tell you, but I don’t have a thousand dollars to spend on that, so my time here is free. 

But it’s interesting that you talk about, right, the cultural question becomes bigger as you grew. And that’s one of the things that happens, right? It’s very easy when it’s, you know, the owner and four or five employees or two partners and ten employees, right, it’s fairly easy to not think about those things, right? Because they’re people and they work together, we all work together. But as you start to grow, and as you start to expand, and you start to realize that you as an owner, or you as a partner group can’t touch every single person and or make every single hire and oversee every single training, that’s when you start to think about, okay, we need to have a little bit of a culture. And it’s, I won’t say it’s not really rules based, because it’s not, but it’s, you sort of say, as you start to define your culture, it may look a little like rules. It may look a little like overseeing a rule, but you’re not, you’re really just describing, these are how our relationships we’ve had in the past worked well. We want to keep that going. So it’s really more it’s not rules so much as it’s a blueprint for the relationships we like to have, right? We’ve been having these great relationships in our small group. And as we’re growing and expanding, we realize it’s harder to create those relationships, because you’re not sitting with the same group of you know, eight to ten people day after day after day after day after day and working with them. Because there’s 80 of you. So you’re not all working together. 

So you start thinking about okay, well, what are the things that make these relationships work? And how do I, you know, expand those to a group of 80 people? And some of that will look like rules, but it’s not really rules, it’s how do I recreate those relationships? And how do I follow that blueprint? So let’s call it a blueprint, instead of rules. It’s still rules, but…

No, you’re right. And so it’s almost, culture sometimes sounds like it’s based on the personalities of the people that you know, started the firm. And that culture can go the wrong way if it’s somebody—if you’re somebody that loves working 80 hours a week, and you hire everybody that’s in their 30s and they like a better work-life—well, hopefully everybody likes a better work-life balance. I’m stereotyping now. I do—at 61, I want a good work-life balance. But if your personality is work, work, work, client first, nothing else matters, it’ll matter when I’m 65 and retire, and you hire people that aren’t doing the same, you’re not going to build a culture that’s going to fit to your personality.

Right, right. See, and this is one of the things I think about, and I want to throw this out to you to see what you think of it. I have this notion, right? This idea that—because we all you know, and we talked about the sort of basic building blocks of what goes into a culture and caring about people and flexibility and work-life balance and caring about their family and their life outside of work. But I have this notion that you could, in theory, have a successful—any business, but let’s say it’s an accounting firm—have a successful accounting firm, where the culture is, you will work 80 to 100 hours a week, we hire young people fresh out of college who want to make a ton of money, very quickly, they will work 80 to 100 hours a week. You will wear business attire all the time, all we care about is delivering for the client. Right? If the thing comes in at five o’clock on Friday, you’ll work till midnight on Friday to get it done. Because that’s what we do. We work hard all the time for our clients, we work crazy. We serve twice as many clients as anybody else in the same amount of time. 

And again, all kinds, all the things that we think of us are the basics of culture, like I said, no, you got to wear a business suit, a suit every day, suit and tie, even if you’re not seeing a client. You’ve got to do X, Y, and Z all the things that we sort of spent the last 20 years doing, right? But at the same time, you will make a huge amount of money. You will be—when you leave here and you will because you’re gonna burn out after five, ten years because this is a burnout environment—

Right, right—

And we know you will, we plan for that, we expect that. You will be able to work anywhere else, because they’re like, well, those guys have twice as much experience as anybody else from you know, they only worked for five years, but they have ten years of experience. And they’ve worked with great clients and they’re and they work, we know they work. Even if they work half as much as they did at the other company, they’ll still be working harder than anybody we have. So you’ll be able to get a job anywhere you want. 

Plus, while you’re here, listen, we have a gym on site. And we have a concierge thing that takes care of your dry cleaning and getting you food and we serve you, we have a chef in our—we treat you like kings, which because you’re working a gazillion hours a week, you’re making a ton of money, you’re building up a great résumé, I have this notion that you could have a firm whose culture was that. Like that literally, got rid of all the things that that most firms have been building into their culture to be like, we’re a nice firm, but that you could run a successful business that way. Obviously, you’d be turning people over all the time, and that comes with some costs. But do you see what I mean? That’s and it’s just a thought experiment that I’ve been sort of running in the back of my head for for a couple of years is that because then that violates a lot of the things we think about culture, but could it be so?

So I was thinking the whole time, yes, you can create that, definitely. You have to get there, you know, you have to get the right personality to come in, they have to be this type A that, you know, is a go-getter and wants to, you know, whatever their success is money, and their success is, you know, setting the foundation that maybe in five years, I can slow down. I don’t know if people have that, if you have that personality, if you have the slow down personality in there, and I can see you do it. I just don’t see how it’s sustainable, because the constant turnover, you’re always going to be getting new people, and you just that the cost of that. And what I think I’ve heard 50 to 200% of one year salary is you know, the cost of replacing somebody? But I guess if you’re pumping out the work, and you’re working the the hours of two people, you know, that brings that down, that cost to replace.

Right? I mean, people are leaving after two or three years anyways. So again, I’m not suggesting—I don’t think anybody should have that culture, I think it would be—I don’t think it would be long term sustainable because of those issues. 

Right.

But I think it’s something to think about. And because the point is, it’s saying, you can think differently about your culture, once you get it isn’t just work life balance and flexibility.

No, I get it.

And think sure, we say those are the foundation. But you can go beyond that, to have any kind of culture you want, as long as you’re not actively driving away, you know, clients and staff, as long as you’re getting the work done on time, accurately and correctly, and people aren’t leaving. So anything—you can do anything up until the point where they leave.

So let’s talk about that for a second. Because in my mind, I’m looking at creating this, and my personality is not that culture—that is a culture. I agree. And you can define it, and the culture is not about—I’ll take that back. I was gonna say it’s not about the employees, but it is somewhat, because “we’re going to take care of you,” what you just said. We’re going to take care of you, we’ve got a gym, we’re gonna feed you, we’re going to give you—

You’re gonna get filet mignon every night.

And so it is, but that’s not a culture I could thrive in at all. But let’s talk about, and I don’t know, if we should pivot now. Yeah, we can keep going for a while. Once you set that base, and whatever that culture is, in my mind, my culture is completely different than that. But that is a culture. Once you set that base of whatever the culture is, you’re defining who you are, defining how you’re going to work, what does that affect then? I mean, a firm growth, I think, comes after the culture is in place. I was gonna say, attracting employees and retaining, but in one culture, in some cultures, it’s the attraction maybe and maybe not the retention in that culture we just defined. Once you get the culture in place, what’s the next step? What’s the benefits? What does it affect within that company or that firm? 

Right, right. And I would say just one quick thing, right? Yes, there’s retention and right, we’re getting rid of retention, but we’re not we’re actually saying we need to retain these people for—and you’d have to figure out the time you’d say this will work, if we can retain them for six and a half years, or we can retain them for five and three quarters years. That’s the point at which, you know, we get to this level of turnover, and this is how much it costs to recruit a new person, right? You could probably figure out the math, or someone could figure out the math on that. And then leaving is only a problem if they leave before, like I said, whatever it is, 7.3 years or 2.5 years, whatever the number is, you only need to retain them that long. 

Again, that’s a terrible, I mean, I don’t think most normal people would like that. But what happens though, is if you’ve got a culture where—a more normal culture, let’s say—but where you are recruiting and retaining engaged people who like to work together, who work together well as a team, right? All the there’s all kinds of benefits that naturally flow from that. I mean, obviously, happy client, happy employees are happier serving clients, everyone, all of us have been to some service provider, whether it’s a McDonald’s, or a financial planner, or an insurance sales, anybody, or any kind of employee, where we’ve, you’ve dealt with someone who was surly and unhappy. And we all know what that’s like, as a client experience, right? It’s kind of a thing where like, even if you don’t mentally think it through to say, wow, this person is really unhappy, this must be an unhappy place to work, this must be a badly run company. It may not be that maybe just that they’re just a surly employee. But either way, we’ve all had that experience of going, “I don’t want to go back there. I don’t want to work there. I don’t want to work with people who are unhappy, I don’t want to work with people who are, I don’t want to work with people, where if I call one person at the company, or at the firm,” and again, this is because I think that’s true of any business, “if I call one person, they tell me one thing, and if I call another person, they tell me a different thing.” Or, “If I work with two different people, they do things totally different.” Or “they never communicate with each other, like I’m hearing once again, hearing one thing from one person, and then somebody else says, I said, well, I sent that, you know, I sent that document to Bob two weeks ago, why don’t you have it?” And I think we all know what it’s like to deal with companies or businesses where the teams don’t aren’t cohesive with the teams that work together. They don’t communicate where people are unhappy with their work. Or even just even the basic level of there’s a lot of turnover, so I never know who I’m talking to. 

Right. 

I used to always deal with so and so. But she’s not there anymore. What happened? Oh, yeah, no, we fired her for embezzlement. Wait, embezzlement? No no you’re fine. I think. I don’t have access to your account. But so, you know, we all know that there’s clear client retention benefits and client service benefits to a happy team that works well together. And they can in whichever way it works well together, we talked about, there’s a bunch of different ways you can work well together. Whatever way it is, that translates through to the employees, or that translates to the clients. 

The other, one thing I think—this is a huge benefit of it is—is the ability to change going forward. Right? Because, and this, a lot of this comes down to trust. The accounting profession is going to be changing, everyone keeps saying, right? It seems like every period, it’s going to change 10 times as fast as a change in the period before. So you know, in the next 10 minutes, it’s going to change more than it did in the 60 minutes before that. And then it’s going to get down to the point where change is just it’s every second, you’re constantly changing. But that requires firms to react to that. And to respond to that, or in some cases, hopefully to get ahead of it, be proactive about it—which means people are going to be doing a lot of new things. And that it’s a million different ways, right? It’s new services, it’s new software, it’s new client bases, it’s new workflows, whatever, everything’s going to be new all the time. That’s an exaggeration. But you know what I mean, right? There’s a lot of change coming, people need to be ready to do it. 

A culture that enjoys working together is going to be able to change and do that much more readily, than a thing where everyone’s pulling in different directions, where people aren’t on the same page, where people don’t really enjoy working with each other, where when I go to work with a different group, if I, you know, I may never touch marketing in my department, because we don’t really do that much marketing. But suddenly, we’re offering a new service line, and we need to work with marketing or business development to sort of get it off the ground. Obviously, that’s an exaggeration, you’re always going to try to work together. But you’re going to, at some point, you will have to work more together with one team or another. And if you go into that team, and they do things totally different from you, and they interact differently, they’re much more collaborative, and they like to free associate and talk things through and spend a lot of time, you know, beyond the sort of back end, you know, ideating things and you’re like, no, no, we just want to do these three things, let’s just do them. These two groups come with different cultures, right? You’re not going to be able to interact as effectively or efficiently or as quickly or as nimbly, as you are if we all approach problems in roughly the same way. 

You don’t want a cookie cutter approach, right? As we said, we don’t want everybody to be, I keep going back to when you think of the original expression of culture in the accounting profession, right, was the “androids” from Andersen? 

Oh, yeah. 

Right? Literally the people at Anderson were all so much the same, they called them androids. Which actually, I mean, given the enormous success of Arthur Andersen, right up to the end, it obviously did something for them it was but you don’t want it to be cookie cutter. But you do want to win two groups work together, right? To have to come together to work extensively together on a project. You want them to be able to share a certain set of operating principles. Again, not rules. But you know, just a here’s how we work together.

Yeah, it goes back then to what Chat taught me, is that the rules—yes, there are rules in place, but flexibility within those rules, I mean, especially with this pace of change, he just said, if we don’t have flexibility within whatever our, you know, strict or loose rules are, then we’re going to fall behind. And so I guess that’s where the relationship so I’m gonna go back to the…

I think it is an important descriptor of a good culture, but I don’t think it’s the sole descriptor.

No, I agree.

But again, it’s that kind of thing, if like, if you have to say, well, our rule is that when two groups get together, they have to, you know, spend at least half an hour being ideating and blue skying, that’s a terrible rule. If you have to have that rule, then that’s not cool. But if you have two groups that say, well, you’re right, you always spend a half an hour blue skying before doing things, yeah, so do we. Great, perfect. We’re on the same page. Let’s do that. It’s not a rule. It’s just we’ll do it, because that’s how we do it. 

Yep. Alright, Dan. So that honestly got me thinking a thousand different things. And the way we’re looking at culture, I think overall is the same, but coming at it from different aspects from, from how this can all work together. But bottom line is, and I think we agree culture is one of the most important things to a firm, and for its continued growth in that. 

Yeah.

So I guess, for a wrap, what would you say that, the importance of this and how we work with it?

Well I was thinking about it, there’s still the line about three blind men looking at an elephant, right? One’s got the tail, and one’s got the leg, and one’s got the trunk, and each one thinks it’s a different thing. And I think that’s what we’re coming around from different aspects of what culture is, and it’s so big. And it is, and that’s why it’s so important. It’s hugely important, because it affects everything you do, and how you do it. 

And so you reach these points where you need to identify these little layers and levels of culture and what it means to you. It’s important, right? Because it’s all about how you get your staff working to serving your clients as best they can. And it’s, the more clear you are on what your culture is like, the more clear you are on the kind of relationships you want with your clients and with your staff, the clearer those things become to everybody, right? The more efficiently and effectively and happily, everybody works together. And I, you know, I’m saying I’m just gonna leave it at efficiently and effectively, but that’s not really it. I think happily, we may come up with a better word than “happily” but it’s important to bring that element into it. Because a happy team, and this sounds so stupid as I say it, but it’s true—a happy team is more effective, and is more efficient, and works better together and keeps clients happy. Everything is about a frictionless team, that’s not just frictionless, but it’s turbocharged, because we’re all working together, and we don’t have to worry about different relationships with different styles impeding us moving forward. We’re all sort of aligned, we’re all on the same page, and we’re all happy to be where we are, we’d like working with the people we’re going to do, we’re just going to be much more efficient and effective. And again, that’s going to make us happy, and that’s gonna make us more efficient and more effective. It’s just a beautiful virtuous cycle.

No, and I agree with that. Because one thing we’ve started doing recently is just, like sharing the goals with everybody: here’s where we are right now financially, you know, from a setup standpoint of the organization. And here’s where we want to go. And this is the goals and everybody’s on the same page. And, and it’s almost like, hey, you know, we’re competing in a game. Now, we’re not competing against anybody else. It’s just a matter of, we want to do this, and we have this great staff in place, and let’s all get on the same page, and let’s get to whatever the financial goal is, the revenue goal, the number of clients we touch, and it’s nothing more about that. It’s really what our goal is to have an impact, a positive financial impact on, oh, I’m gonna get this wrong, on 10,000 taxpayers by the year—maybe it’s the next 10 years. I can’t remember. 

But that’s an idea that okay, now, what’s a positive impact whether we do it? Alright, now, I’m gonna go on another tangent. We need to wrap up. But I think you just mentioned the goals in place and having everybody kind of, you know, getting to that same, not end line, because there’s never an end line, I actually am a big Simon Sinek Infinite Game fan. I love that book. And so there’s not an endgame. We’re not competing against anybody else. But we’re at least having goals in place. 

Alright, well, Dan, that was my little rant at the end. This was a great discussion, I had a great time—every time I get an opportunity to talk to you, it’s a lot of fun. And there’s no way I can end this without what I do at the end of every show, which, you and I have done this before. But we just talked about all this culture and its importance and all this, and they know the last time you were on I asked this question, but whether you’re you’re outside of work passions, which I think is important to bring into work. And I know one of yours I think we talked about last time was you’re on a trivia team. And we can go over that again, because I know you had a competition, but anything else you want to talk about your outside of work passions?

Let’s see. No, I mean, the trivia team is pretty powerful. We just finished as we said, we just finished up and we came in second in the city, in New York City, for trivia, so we were pretty proud about that. But that’s, that keeps me going. They I mean I we were talking about what kind of culture like I you know, the culture that I would fit wouldn’t be one that reads audiobooks. I tend to read a lot, which is why I’m good at trivia. 

Yeah. 

But that would be sort of my big outside interest, just boning up on trivia—well, I don’t read just trivia. I read an awful lot.

Yeah, you’re just reading encyclopedias to understand everything. 

Like atlases, that kind of thing, you know.

Nice! Alright, so! Second in New York City. 

Yes. 

That’s a pretty big deal.

We were excited about it. We were pretty pleased with how it turned out. 

Well, congratulations on that. And thanks again for being on the show. And I’m sure it won’t be too long that our paths will cross again. 

It’s always a pleasure. Thank you, Randy.