Support in a Changing Landscape

Today, our guest is Grace Horvath. Grace currently serves as vice president of services of CPAmerica, which will change in January when she takes over the role of president. CPAmerica is a national nonprofit association serving independent CPA firms. Grace has driven the strategies for delivery of services, resources designed to increase firm growth, profitability and sustainability to members since 2011. Actually, 2011 I think is a year after I first got involved in CPAmerica, so I’ve known Grace quite awhile.

I’ve known her so long, I was really surprised when I was reading the bio she sent over today, because I didn’t realize the strong background she has in sales and business development, which I think is huge in any role in any business. But I think really, in this role she’s about to take over as well. And the history she has in charitable and volunteer organizations, including the Rotary Club.

And so Grace, I could go on and on, in fact, I may. But before I do that, welcome to The Unique CPA.

Thank you, and you can go on as long as you want.

Right! 

That way they’re listening to you rather than me.

No, nobody wants to listen to me, they can do that all the time. It’s time to listen to you! 

So a couple things before we jump into maybe the main topic, if there is one, because we decided this is going to be freeform, and we’ll see where this goes today. But before we go into that, I want to talk about this sales and business development, because I honestly didn’t know this. I mean, I consider us good friends—I’m hoping you do too. 

Yeah!

I’m surprised that I didn’t know all this background with you. I mean, sales, and luxury retail, and working for a publisher of trade magazines, mixed use residential developments—that’s an area where I’ve had some history as well—and then all of the accolades and everything you’ve received from all the work you’ve done with Rotary and other clubs and organizations. So I was surprised by that. 

But this sales portion is where I wanted to talk about first, just because that really got me. I mean, how do you feel that that’s going to be a big help to you taking over this president role of CPAmerica?

I do. I do. I mean, that is where I got started when I was going to college. I don’t know, I think I have told you this, and it’s very, very ironic—I started as an accounting major.\

Oh, yeah, you did.

Yeah, that lasted one semester. I got mono and almost flunked out, and when I came back, was buckled down a little bit more seriously, and was really super turned on to English literature, which I ended up getting a degree with honors in English Lit. So that was—it’s nice, being very educated and erudite and being able to talk, you know, philosophically about where writers are coming from. But is that going to get you a job? No.

Right, right.

So I put myself through school while working in sales, and I just loved it. And I really had my eye on where I wanted to be in sales: I wanted to be in cosmetics. I was very young, and this was very fun and glamorous—not to date myself, but you know, this was in the 80s—and so it was, it was just a lot of fun.

And I was doing very well. I got married, I had a child, so I was slow going through school. And my point is, it gave me a nine-year window to build my sales career.

Wow.

And where I was in my career in sales at the time I graduated from college, I was already making more money than my professors.

[bctt tweet=”I said, you know, “I can always continue to be a learner, and study and enjoy literature and humanities, but I really liked my sales career. This is fun, it’s exciting. And there are no limits to what you can do.”” username=”TriMerit”]

Right. Yeah.

And I contemplated going on to a master’s because I really, really was very, very passionate about academia, but when I took a look at the long term potential between the two, I said, you know, “I can always continue to be a learner, and study and enjoy literature and humanities, but I really liked my sales career. This is fun, it’s exciting. And there are no limits to what you can do. Just depends on what you want.”

Right? And I personally look at sales as education. And so you saying that you’ve always been, you know, interested in academia. I mean, that’s how, I mean, that’s personally, I went into sales a year after I graduated—I was a computer science undergrad, went into sales, and I was awful at it, because I was selling rather than educating—rather than finding out you know, what people’s needs were. It took me forever to realize that.

But I’ve used that knowledge that I gained, and how bad I was, going forward, and I’m assuming that you know, you being a fan of academia would agree with that?

Oh, yeah, absolutely, absolutely. I’ve never “sold” anything.

Right.

You don’t really have to sell anything. I was very fortunate in Miami where I started my career, to be exposed to opportunities where I was working for this luxury retailer, a subsidiary of Louis Vuitton, Moet Hennessy. And so you can imagine this sales training. And I was very, very young—doesn’t really matter how young I was—but suffice to say, for the people who could afford to buy this product, we had to be really good at what we were doing, because why is this somebody in their—somebody mature, you know, like we are today—going to let some 20 something year old, tell them, or think that we could possibly understand what they need or know.

So we were trained backwards and forwards on understanding the need: Get to the need, talk to the client, figure out what it is they need. And what was really, really imperative was, we had to understand where there really wasn’t a need, that we needed to move on.

Mmm hmm.

Because you weren’t going to create a client, you weren’t going to create a repeat customer, you weren’t—all you were going to be doing was taking somebody’s money, and that was really not what we were doing. I mean, right, at the end of the day, the company’s there to make profit. But you know, from a much bigger perspective, what you want to do is make those customers happy and enjoy what they’ve done and want to come back to you.

So it was always about helping, discovering what was going to make—give somebody what they were looking for. And that was—oh my God, the training that we went through on that, it was constant.

But that’s really what you do now. I mean, now the last ten years, you’re identifying areas that firms need help with, and then figuring out ways to solve those needs or help those needs.

Right.

And I think we should probably get into some of those needs. Because you’ve been doing this for ten years now. You are taking over the head honcho roll in another two months. And so you’ve seen what these needs are for firms for quite a while now. And I think one of the biggest needs that we all know exists is the employment issues. You know, everybody—it’s not just our industry—but our industry has had this for a long time. And it’s now catching up to everybody. So you’ve identified—you’ve obviously, you’ve identified those needs.

And I know “you” as an organization started a program about seven years ago called Next Gen to help with those needs, but what do you see going forward? What are you seeing going past—I mean, expand on Next Gen, and then how that you think is gonna help or other things, you’re looking to do help with employment issues that are going on.

Next Gen was a very intentional creation here at the Association. We recognize through our close work with the Association and through our members, that recruiting and retention, leading to succession—all these things, as you know, they go hand in hand. And you know, when you’re really trying to solve a big problem, you want to try to go to the source of that problem. And succession is one thing, but where does that start? If you’re not getting people from the get go, and keeping people, and developing people, and giving them the skills they need.

So we developed Next Gen to be introduced to successful seniors and managers at a time when we know full well that they’re thinking about leaving the profession. They’re technically proficient at the least, excellent at the best, but I would tell you that most of the participants in our Next Gen do not understand how a firm operates. They have no clue what it means to be a partner. And they certainly are—they have a very slim awareness of the much bigger rewards that you get from pursuing a career in public accounting: the relationships with the client, obviously, you know, from a partner level it pays—it can pay very well, it’s—I feel like we’re somewhat of a recession-proof profession.

So we put together a program to help teach them and help give them the opportunity to see what a long-term career in the profession looks like. And teaching them, “How does the firm make money? Why are these metrics that you’re being constantly measured on—why are those things important?” And it’s amazing how eye-opening it is.

[bctt tweet=”We developed Next Gen to be introduced to successful seniors and managers at a time when we know full well that they’re thinking about leaving the profession.” username=”TriMerit”]

I have to tell you—it’s pretty funny. It’s not funny to the firm, but maybe It’s good in the long run—that some people have attended Next Gen and said, “Yeah, you know what this profession is not for me.”

Right.

But you, know better now than down the road, when you’ve got somebody taking up a seat that could be open for somebody who is passionate about it.

The majority of people who participated in Next Gen have gone on to become partner, and they began to pursue that—I think they were more coachable, they had a greater understanding of what it is they want to achieve. I mean, you know, you always have people that say, “Well, I want to be partner, and I just need you to give me a checklist. What is it I need to do?” And a lot of what they get out of Next Gen is understanding that it’s not a checklist, so much of that is nuanced about approaching this as “I want to be an owner of this business.”

Right. So Next Gen is for that, but it’s once we have people in the firm as well, right? I mean, so that’s identifying the key people within the firm that we want to retain, and then we want to make sure—which a lot of times there’s gonna be everybody in the firm you want to retain.

You want to retain everybody. But you know what we say? So when we launched Next Gen, it was very interesting. This association, when I got here, was very—we were very connected to the managing partners, we were very connected to the heads of tax, the heads of audit. You know, we were very much a top layer resource for leadership in the firm.

Yep!

And when we were developing this program, probably our biggest challenge was how to get down to this level of manager because we didn’t even know who they were!

Right.

So going through leadership, we had to explain and say, “Who qualifies, and why do we want them to do this? And it’s, you know, this is, you know, when you’re recruiting people, and they’re at, ‘Hey, what kind of career development path do I have?’ well, we have this program, Next Gen, so on and so forth.”

But we would say to a firm, “Look, here’s the criteria. You’ve recognized this person as a superstar, you think that you’re going to see—you think the potential is there for them to become part of your bench strength. And if this person leaves the firm, you’re going to be really hurt. And so this is a great way for you to invest in these people.” And I think our firms do approach this with the people that they select to attend, as a demonstration of the firm’s willingness to invest in their long term career.

Yep, that commitment to that employee, that this is what we see, and we want to educate you on how you can continue to grow with the firm, and what that not only how you can but what that means to you, too.

Right.

Which like you said, I’ve heard that many times—people don’t understand what it means to be a partner.

Right.

And so I think teaching them what it means to be a partner is huge.

And so when you originally started that, I think you and I talked—I think it was you and I talked—and because I saw that you were doing this, and I was like, “You don’t have any sponsors there. I’d like to sponsor that.” Because that is the future leaders of these firms—at least that’s the goal. And honestly, in the seven years, it’s been so fun to watch. They, like you said, watch some of these people that I met in Chicago at the Westin Hotel, I think it was seven years ago, now be partners in the firm. So it’s just so cool to see that progression and to see that happen. So I think that’s a great program.

Let’s talk a little more about employment in general. So Next Gen is getting you there, helping you keep the people that you need to keep. How about just getting people in general? That’s been tough. But I think one barrier that has changed right now that we’ve seen through the last year and a half is that geographic location of where your employees are is not as big a deal as it was in the past. And so have you seen that at all? Or do you think that’s going to be something that you’ll need to address as an organization, or that will continue with firms, the fact that we can work remote now?

It’s not going away. I don’t think it’s going to be a fit for all firms.

Right.

I think it depends on where they’re located, it depends on what types of services they’re involved in, depends on what their long term goals are. But I think it does provide every firm the opportunity to at least fill some spaces. I mean, there’s just—if you’re located in a mid-size city anywhere in the U.S., and you’re trying to expand a particular part of your firm, and you’re limited to your geographic location and trying to attract your talent, it’s just—it’s not reasonable. And modern technology has allowed us to get past that.

The challenges—and I know you hear this from everybody you talk to—is “culture” and “what does that mean?”

Right. Oh yeah.

And it’s not just “Hey, what are we doing for the company picnic?” and, you know, the chatting in the hall. It’s how are these people becoming ingrained with the values of the firm: Accountability, client service. How are they getting that sort of learning through osmosis that you and I were used to?

I mean, going back to my early career in sales, you know, I was working alongside veterans, and just being there having conversations, listening to them, watching them, which happened, just because I happen to be in the right place at the right time. And it’s difficult to make that happen in a remote environment.

It is. 

It puts a challenge on us as employers to think differently about how we’re hiring, because you’ve got to look for different traits. Because there’s no way that you can say that, “Oh, if we just continue to do things remote, we’re going to really lose the quality, we’re going to lose the culture.” I don’t believe that, I just believe we have a lot of work to do in how we’re cultivating people, the traits that we’re looking for, and our approach to training, and our long-term engagement.

Mmm hmm. No, I agree. I mean, there’s certain aspects to the industry where, you know, you need to be there. You need to be in front of the client, although you can do Zoom in front of the client, but there are certain times where it’s important. But then there’s certain activities that can be behind the scenes. And that is much easier.

But I guess that brings me into another thing, then: how about outsourcing? I know there’s some firms in CPAmerica that have used this, you know, outsourcing and tax and accounting to, you know, I know, India is a big area for that. That’s kind of been remote now for a while anyways. Do you see that as an aspect to solve employment issues and continue to grow? Have you thought about that at all?

Somewhat. What I hear amongst the member firms is there are quite a few who will tell you right now that they’re not even really taking new work, because they don’t have the capacity to do it. 

Right.

Then you also look at the declining number of graduates in accounting. And out of those number of graduates, the competition for going into small to mid-size firms, versus big four. And so that pool starts to dwindle—so small that it’s difficult for them to get people in the first place. Outsourcing helps remedy that, and I think it frees up their capacity to offer different types of work, and maybe hire different types of people, and it just takes some of that compliance work off their plates. And that’s also an opportunity for them to develop the people that are in the firm, to become more advisors, and to have—to do more interesting work. I’m not saying that compliance work is not interesting, but—

—No, well, to me it’s not!

Some people think it’s fabulous. 

Some people do and that’s why there’s roles for everybody.

Well, I just think outsourcing is a real benefit to increasing efficiencies in the way the firm operates.

And I think so too. And you said this, and it makes sense that you outsource these activities that, you know—well in reality when you’re outsourcing, that’s not a partner track activity anyway.

Right.

I mean, those people that aren’t partner track. But now you’re retaining these people that have these strong skills, that are on the partner track, and are going to be the next generation of owners because you need that next generation of owners, otherwise—and we’re seeing this a lot—otherwise, you’re going to have to merge in with someone else, which has been happening in the industry for years. I started in public accounting in the late 80s, and it was something happening then. And now it is happening.

So now—and I assume you as an organization or is an association that are affected by M&A Is that how, you know, how is M&A affecting your firms, and affecting you as well?

As I said to you earlier, M&A keeps me up at night. It also is the thing that’s gonna keep me employed. In ten years, we have—the association has gained 45 firms, and we’ve lost 39. And it’s just the way it is, and two thirds of those—two thirds of the ones that have left us—were because they were acquired.

Right.

And we know our firms very well. I mean, we’re a very personal organization. So we are very closely involved in our member firms, and there are some times that you understand what’s going on in the firm, and you know what’s coming.

Right.

You know that it’s unavoidable And then you see other firms, on the flip side of that, who are able to capitalize on that environment, and create opportunities for themselves to sustain in the long run.

So there’s the downside, and honestly, Randy, sometimes why, when a firm has to sell, you know, it’s great, and we congratulate them, because they now have a solution for something that, you know, needed to be solved. But it’s sad, you know? I was having a conversation with a firm recently, and you know, where one of these partners just said, “I feel like I’ve let the founders down.” But this was just the best decision for everybody involved. So you know, whereas it’s a solid business move’ I think it’s—we shouldn’t underestimate that oftentimes, it comes with a lot of emotion.

Oh, yeah, for sure.

For these firms. We, as an association, just like many of our member firms, we maintain a pipeline. We have a full time business development person who works the profession for us. And one of my primary responsibilities is to make sure that that pipeline stays full, and that we identify and recruit member firms that are a good fit for the organization, because we know we’re going to keep losing firms.

Oh yeah. It’s just inevitable and you guys do a very good job of—I know every year I get introduced to, you know, three or four more members, it seems like, and maybe I’m even under estimating that that count, but, uh—

—it’s not that bad.

Okay! Every once in a while I get introduced to a new member.

There you go!

It was very good!

Yeah, you have a great group—nd I’m not saying that just because you’re sitting on the other side of the screen—you do have a great organization. And I’m really looking forward to continuing to see its growth under your leadership, although it seems like your leadership has started unofficially already, but officially on January 1.

So I think this stuff you went over today—I think the importance of Next Gen, the importance of training up the poise that you see as the leaders, will help with many things. One of them is keeping that emotion out of having to merge with another firm, just so that you can buy out the partners, because if you have that group coming up, I think that’s big. So I’ve always been a big fan of Next Gen.

And so anything you want to wrap up on, anything we missed, anything the thing you want to point out, any the key things you’d like to tell to the millions that are listening today?

The top 5% of all podcast listeners in the entire world.

Apparently! That’s what I’m being told. I don’t know what that means, but that’s—apparently we’re there.

You know, I’m really—it’s been nice knowing you, because you’re probably gonna be too busy to come work with us anymore.

Well, my ego’s already big, so this is just gonna make it worse for everybody to deal with me now, so.

So, you know how I would wrap this up? It’s funny—and it’s a little late now and I’m kind of busy, but—you know, I think to myself, “Geez, I really wish I would have stuck it out and stayed in the profession.”

Yeah.

But seeing as things didn’t work out that way, I’m very glad where I have ended up, and the fact that ultimately I’ve kind of come full circle, and I get to participate in helping our firms and helping to strengthen the profession is so exciting. It’s so exciting. I can tell you, and you know this because you can probably say the same thing: I’ll never be bored a single day that I’m here. 

Yep. No, I agree.

No. And I love that we’re surrounded—I say I got a trifecta in my job here is that you’re dealing with accountants, and they’re guided by a code of ethics, and they’re extremely smart, intelligent individuals. And they’re in the association because they’re committed to getting better. 

Yep, yep.

So I really couldn’t ask for a better place to be.

Nope, nope, that’s great. I think that’s a great great wrap up. I appreciate your time. If anybody wanted to find out anything more about you or CPAmerica, where would they go look?

You can look for us at CPAmerica.org. Or you can find me in all the places—LinkedIn, Twitter, Facebook—I’m there.

Alright. 

You want to see my dogs? Go to Facebook. If you want to see what I’m eating, go to Instagram.

Oh, you have a specific spot for each thing. I never thought about that! See, I learned something new—well, I learned many new things today. But now I’we got to learn how to use my social medias correct. So all right, awesome.

Yeah, intention. You gotta be intentional, Randy.

Yeah! Well, I’m gonna wrap it up again. 

Yeah!

It was a pleasure having you here. I had been looking forward to this for a while and obviously with your role change, it made it even more important to get this going so we could see how you’re gonna affect the organization and the profession moving forward.

Well, I am very honored that you asked me, and thank you.