157 Why Every Accounting Firm Needs a COO

Hey, welcome back to Las Vegas.

Today we are talking about, oh, can you hear that vagus lung creeping in? Oh, it happens every time. Today we're talking about how to hire the Yin to your Yang. That person that can come alongside you and make your wildest dreams come true. Whether that is a coo, whether that's an ea, and talk about a couple different things, a book and then a killer HBR article on this subject. It's something I experienced myself in firm running when I found that person that could help me. I'm not exaggerating. They probably took two thirds of my day to day off my plate. And it's something that I think by looking at these ideas and how the smartest people out there do it, I think we can be inspired to push the envelope of what is possible for us and the way that we run our practices. Come on in.

Let's talk about getting some help. Help, help.

Two things I'm drawing from here. A book called Second in Command by Cameron Herold and an HBR article called Second in Command the Misunderstood Role of the Chief Operating Officer. And just say this straight out of the gate. If you run a small firm like a COO through the lens of like a corporate coo, like, that's not really what we're doing. In fact, midway through the Second in Command book, there was like this big old gut punch, oof moment where he's like, oh, by the way, if you don't have an executive assistant, why are you even reading this book? A COO isn't an ea. I'm going to give this to you through the lens of small firms. And I think there's actually some inspiration to be taken here from how you find a killer coo that translates to, okay, I run a small practice. How do I just go hire somebody right now? That can make my life way easier or pull somebody into a new role that I haven't yet imagined that can take a bunch of work off my plate. That's my goal here. And so we're going to go through a bunch of like, kind of the thinking behind CEOs, and they're framing as like the ultimate compliment to the CEO because that's given me a bunch of ideas on not only how I could make like a high level more sort of executive higher, but also like the things that we plug our assistants into day to day. And the reality is most accountants, like, don't have an assistant. Like, you haven't leaned into that yet. And so hopefully this, this opens your mind to just how much you can get help and how it's okay to get help. And like, I think there's probably a very real element of being unwilling to raise your hand or accept that maybe you need that help or be the type of person that has an assistant and all those things. So let's try to push past those. So four things we're gonna run through. Why you need a coo, and this. The first three are the framing from the book. Second is how to choose a coo. This was the most interesting bit to me. Three is how to work with a coo. And then fourth, we'll talk about my thoughts on having a version of this in practice and what I would do differently next time. There was a quote in this book that said you've either hired an assistant or you are one. That's just. That just hurts if you don't have one. I understand what they're getting at. I don't know that I 100% agree with it, but my feelings are still hurt. So first off, why, why do you need a coo? The beauty is you are hiring the perfect human being for everything you suck at. And doesn't that sound nice? Rather than like hammering your square peg into a round hole until the end of time, you're literally gonna go down the list of things that you're good at, things that you're bad at, things that give you energy, things that take energy from you and find the person who perfectly fits your contours and the way that your brain works to complete what is asked of you. And especially in small businesses, when you're the big boss, everything is asked of you, like, whether that's a thing you want to or not. Ultimately, everything falls on you to get done one way or another. And so I love the framing of a coo, a high level assistant, whatever you want to call it, as being the ultimate compliment to what you are and what you can do, but also what you lack. Ultimately, we're looking to hire a person to handle the minutia so you can be more intentional about how you spend your time rather than being an order taker from others. And in small firms, this looks like, I think either spending most of our time spending solving other people's problems, clients problems that come into our inbox each day. And that's an extremely hard thing to plan around because you don't have a degree of control over that pipeline of the things that are coming in and being asked of you. As your firm gets larger, it's a combination of clients, but also of team members. And the reality is like as soon as you start building a team, there's just additional overhead with the team management stuff from spending time with them to things that come up in people's lives that are completely outside of your control that may create issues in the workflow or in projects that need to be done by certain deadlines. And to have another pair of hands in all of this, like this is ultimately the goal so that you can get back some control over your own time. It's a really hard thing in a small firm to feel like you have control over your time. And some of this may require into leaning. Require leaning into the identity of what a CEO is and a accepting that like this is you and it's okay for you to be this way and it's okay for you to get help and acknowledge the things that you can't do. But to start thinking down that path of who's the ideal person to compliment me? Consider what your unique abilities are. This was a concept from the Second in Command book. So what are the things that you are uniquely suited to do and how can we ensure that you're focusing on the lion's share of your time just on the most important things that you're uniquely qualified for that for some reason somebody else can't do? So for me, that's probably marketing. That's probably, you know, visibility going out, talking about what I do, doing that through the lens of content as well, that could be you. Your abilities may also be more internal, like internal facing. So process building. We've been talking about quality assurance processes internally. Maybe that's something that you either really enjoy or are super qualified to do Systems design and optimization, the way that we get our tech to work, relationship management. Like maybe you are just the ultimate person for greasing the skids and maybe that's the most valuable use of your time. That one in particular probably breaks down beyond a certain size of firm unless you are thinking of, you know, how you're enabling team members to do that through more of a mentorship capacity. In fact, that's actually something that I didn't see here where I know some large firms that where that is virtually the entire job of some of their top people is mentorship is coming alongside people and helping to develop the team and get them what they need. Some things that especially got me excited about this and big busy world which, which isn't me and isn't what I do and probably isn't most of the folks that listen to this. There's many CEOs that have no direct reports or the COO is their only direct report. Imagine that. Can you imagine that? That's wild. But I think it points to the very the self limiting beliefs we put on just how much agency we have over changing our circumstances and going about work a different way and how the one person like that one next person that you're missing can make such a huge difference. And we aren't always investing our efforts in the thing that's going to find that person or lead to that really meaningful change. Because it can be easier to just turn up and do the work and solve everybody else's problems at your own expense, Gang.

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Link at the show Notes. Okay. Second, how do you go about choosing this person? Again, we're hiring the yin to our yang need to be aligned on both personal values and work style. So personal values that is kind of dependent on the depth of this working relationship. So if this is a big org and this is truly a coo where this is an incredibly important partnership for the whole company, that alignment is probably going to be really important. If this is an assistant where maybe like there's not that same level of integration, maybe it's not as huge of a deal. I would say in both cases work style is super important. We especially since COVID like we I feel like there's a growing number of different work styles from folks that just need the energy of being in person to folks that can manage working in a distributed way effectively and have really good written communication, to folks that want to work synchronously and be on meetings and all that. To folks that want to work asynchronously. You want to ensure that where that person's going to be at their best is the same as where you are at your best. It's not ultimately like trying to get you a right answer. It is more a question of alignment between the two of you. There's no such thing as ultimately like the perfect coo. It's more just the one that fits you well. So we're looking for the person with the skill set that complements yours can come in and do the things that do not give you energy, maybe that you're bad at. They had a anecdote in the book, don't go out and hire a swimmer that knows all four swim strokes. And as like if you're going to. I don't know why you'd hire a swimmer, but if you wanted somebody that was going to be really good at something, you wouldn't go out and grab the one who is good at all of those things. You're going to go out and find the folks who are fantastic at the things that you need. And I think oftentimes in a COO type capacity, we can project on those people the need to be able to do anything and everything, when in reality what we actually want are the folks that are exceptional at what you can't do or what you don't want to do. In that HBR article they outlined seven types of COOs. This was interesting to me. They said in most cases you want to get to where that person is one of these kind of types, but there's situations where you're going to have a single person that could be wearing several of these types, but you kind of want to get it down to a single one. So the seven types of COOs. 1. The executor one role of a COO is to lead the execution of strategies developed by the management team. It's simply a concession of the complexity and scope of the CEO's job today. With external commitments, it simply requires two sets of hands. So their job is simply to execute on the strategies that are developed by you. Any other management team members. Second type of coo, the change agent. So sometimes companies have to go through a specific strategic pivot, such as a turnaround, a major organizational change, or a planned rapid expansion. So while they aren't executing on things as broad as like general strategy, they need to have unquestioned authority in order to push this change through. That's kind of an interesting one. A lot of firms stuck with change management, maybe it is a. Maybe it's a family firm that's going through transition and there's a lot of stuff where you need to kind of pull up the carpet and do some hard change in a short amount of time. I definitely went through that and that's a hard thing to manage, but to have somebody who can help drive that through, that actually would have been really valuable for me. Third type, the mentor. Some companies bring a CEO on board to mentor a young or inexperienced CEO. That's really interesting. Within that type they also talked about how eventually that role or the need for that type of person probably goes away as that person develops. That's an interesting thing to think about. If as folks are like coming into ownership for the first time, is there somebody that could come on board in the capacity of that mentor that could be really valuable Type number four. Or if you've got a person, a younger person you're trying to bring into that capacity who may not have the confidence yet, or may not quite be there yet, is there somebody else that you could bring along with them to serve as that mentor? Number four? Quote the other half, a company may bring in a COO not as a mentor, but as a foil to complement the CEO's experience, their work style, all that. So John Shirley, who was the COO for Microsoft for a while, one observer called him the calm, self effacing balance to Bill Gates brilliant and often intimidating effect. So what is the impact that you have on people? Is there someone who can serve kind of as the foil to that? I think that's the thinking. The fifth type is the partner. This is the more of the two in a box model or co leadership approach. So you're just the type of personality that works best with a partner. Type number six, the heir apparent. In many cases, the primary reason to establish a COO position is to groom or test a company's circumstances. CEO elect. This. They did point out this doesn't necessarily mean they will for sure eventually evolve into that CEO role, but that's kind of what you're doing, is you're grooming that person to ultimately come into that role. And then seventh, the mvp. Some companies offer the job of COO as a promotion to an executive considered too valuable to lose, particularly to a competitor. So somebody that just rises up through the ranks and ultimately becomes that super valuable person. This framing was interesting for me because there were stages where I needed different things. There was definitely a stage where I needed somebody in that sort of mentor capacity. And what I probably actually ended up with was more of somebody who was like that mvp. They were so good and so effective that we just had to keep giving them more and more to do and eventually the highest leverage use of that person was to be like a really helpful assistant for me to free up my time. Now the third Thing. The book touched on how best to work with your COO over time. This, honestly was probably the least interesting section to me. In short, you gotta invest in the relationship oftentimes more than we're willing to do. This probably depends again on the, like, the depth of that relationship. Is that a COO in a larger org or is it an assistant who maybe you're beginning to pull into more aspects of the business? Think of it like a marriage. Think of it as an actual, you know, business relationship where the quality of that relationship and what you put into it will genuinely impact what you get out of it. Also, be mindful of the fact that a COO will generally get you from A to B. But if you go beyond B, they're not going to be the right answer forever. And that's okay. So consider where you're at right now and where you're trying to get to. Don't go out there and hold out for the unicorn that is, you know, going to be the ultimate solution until the end of time because it doesn't really exist. So what are the skill sets required to get you to where you're trying to go, you know, over the next 36 months or something like that, and acknowledge that the right person in that role is probably not the right person forever if you're going through change in the business and growth and that sort of thing.

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Notes to learn more.

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Last some of my thoughts and things I bumped into in practice and things that maybe I would do differently next time. This all started very organically for me, the notion of like having an assistant. So this was in a very traditional 80 year old accounting practice. Nobody had ever had like any sort of assistant in that role. Actually that's not true. So we merged in one practice and the guy had. This is actually like so true of traditional accounting. We merged in another practice and the guy had an admin gal who was very hands on, helping to manage his email inbox and all of that. And this was, I think this was before I bought out some of the other partners. But he comes in and immediately the question from legacy ownership is, so this admin, they don't have very many billable hours. Tell me how they're like, they're, they're this line item that costs us X. Like, tell me how they're ultimately contributing to the bottom line here. And then partner merging in is like, because my time is the most valuable thing that there is and she's saving me a huge amount of it. And that actually became this like, point of friction until some of the legacy partners had left because they just, they couldn't get their head around that. And I think there's a, I think it's honestly founded in there's this element of sort of blue collar not, not being willing to put your hand up for help. That there may be a degree of that being a generational thing. I know I've, I certainly felt it like really, I'm going to be the kind of person that needs an assistant. Like we, we see that as, I don't know, like a hoity toity thing or you're not willing to be that kind of person right? When the reality is you're probably a blocker to the rest of the business and struggling to get done a lot of the menial things that an assistant could help you with. So we merged a partner in who had that. And that did serve to normalize it a bit within our practice. And by the time I left, I was actually so bullish on this that we were making high level hires. And a perk for that high level hire was you're going to have an assistant. So at one point we hired a gal who was going to come in and do some, and oversee some engagements, do some advisory work, I think for like three days a week. And I was like, in the process of trying to woo her from some other opportunities. I was like, you know, you're going to have your own assistant. She had a young family. I know how hard it is to only work part time and a few days a week. And what if a client reaches out and that sort of thing. We're going to have an assistant in your inbox that's going to be managing all that stuff for you so that you can truly turn off when you are not working and eliminate this whole notion of monitoring just in case something comes in. And this monitoring creating this passive sense of anxiety where it's like, okay, I'm not working today, but like, should I just take a look or should I leave my email notifications on? I'm like, no, don't do any of that. We got an assistant that'll watch your back. If there really is something we need you for, which is exceptionally unlikely, they'll let you know. Otherwise you can turn work brain off and get on with your life. And this I think is something we probably actually don't do enough. And you can even have these assistants in a pod sort of setting. So I'm thinking of situations where there's a lot of menial processing of documents or something like that that your professional staff gets stuck with. And one example is within a tax practice when maybe your document collection workflow isn't where it needs to be and you've got clients sending a bunch of unstructured docs to your professional team and that requires a whole bunch of processing of getting those into the right format and all that. And especially in the US and tax season, you spend a tremendous amount of time just going back and forth on documents and getting those things to where they need to be. And if you're, you know, the big boss and you manage a big volume of that, oftentimes you'll be the blocker to getting that document to where it needs to be for somebody to finish the project. But if you think beyond the big boss level to like your team, I think it even makes sense to have a level of assistance working with these pods so that one your team actually learns how to delegate stuff which is a learned skill. And a lot of people aren't able to do that naturally. And so you end up with very high level people wasting time on, on things they shouldn't be spending time on. But also just to like be helpful there and be able to save a bunch of time and be sort of a relief valve for staff that maybe aren't like mega high level staff because they oftentimes need that help too. And you'll find. So I loved hiring non accountants for this who were just like hustlers and could work hard and, and enjoy its systems and stuff like that. And those people ended up becoming like phenomenal people. And the person that ultimately became kind of the assistant on all of the stuff that I was doing, that was how they started. They were a very capable non accountant hire. When this may have been. Before I came into ownership, I had to fight really hard to make this hire because as an 80 year old accounting practice admins were the ones that sat and waited for the phone to ring and that didn't take a high powered person. Right. So it was, I mean it was all the tropes you would, you would Associate with that old kind of school of thought. But this was a very capable person. We were going to have to pay more than we had ever paid for an admin before. And at the time, part of my argument was like, this is in many ways the face of the firm. It's like the person they see when they walk in the door. It's the first voice they hear when somebody calls. Like, I want this to be like an impressive experience. Like, if we're trying to go up market and make this feel like a premium service, like, they need to have a really positive experience when that person picks up the phone. And so we hired that person, and they ended up getting involved in a ton of different aspects of our business and ultimately became kind of, I don't know, something that was. That's between an executive assistant and a coo. And by the time I was leaving, they were really progressing into more like a leadership capacity within the firm because they had earned everybody's respect from their ability to, like, get stuff done and work through hard organizational things between people and all of that. But this person was in my email inbox. I've shared before my approach to email delegation and past podcast the notion that, like, I was never. I never had my email open, like, the entire day. And that's something that's just such a drain on your attention that I think we need to get away from. There was one time a day that I opened my email and I responded to emails out of a folder, not out of the inbox, which is constantly, you know, has new things flowing into it to distract you. Right. But I had one folder that I worked out of. The only things that hit that folder were the things that only I could handle. And that was very, very few things. And whenever those things did happen, there was a process to consider, why did this have to come to me? And does it mean we need to assign ownership of. Of something to somebody within the team? Does it mean that we're missing some sort of capacity in a team? If you run a team, I think it can be really easy to swoop in, to be the hero. But the point I got to was, you're telling me we have 40 people that work for this company, and there's things that only I'm. Where I'm the only one who can do that thing. That seems exceptionally unlikely and in most cases is just, I was maybe the easiest place to send that to. Maybe I had swooped in in the past and been the hero. Maybe a person was just afraid of getting it wrong. Right. The stakes of maybe not giving the right answer or maybe not briefing me when they thought I would want to know or something like that. So that in that case, my assistant was able to serve kind of as the foil on many of those things. And so once we decide, like, you know, this role now is the subject matter expert on xyz, when something comes in along those lines, it can go to them. And having a second set of eyes on that stuff was even helpful for like, pushing back a bit on maybe some of the work routines I would settle into where they were even protective of my time in a helpful way where, you know, they had the ability to say, like, should you really be doing this? Like, do you have to do this? Why can't this go to xyz? Why can't we go hire a person that can do this sort of thing? As opposed to. If that was just me managing all of that stuff, I don't know that I would have as clear of a perspective because it was me doing the work without the benefit of like, you know, kind of being removed from it. Like, it's very easy for us to coach other people and even tell other accountants what they're doing wrong with their firms, but when it's you, it's like, it's just different. You're looking at that through a different lens. It's maybe one of the biggest things I think, folks, accountants in general have not leaned into enough. And this goes straight down to solo practitioners developing that right hand person who can take a whole bunch of stuff off of your plate, get you to a place of being able to work more intentionally. There's so many aspects of our firms, frustratingly, that can't be automated right now, and you end up having to do these sort of manual processes. And that's irritating. But it's also a problem that can be solved by having somebody come in to help. Like, humans are very good at repeatable processes. Oftentimes it's us that gets in the way of not being willing to delegate that stuff or raise our hand and ask for help. We'd love to hear any experiences you've had with maybe trying to hire an ea, working with a COO or any version of developing that right hand person. Because for many of us, this probably sounds like a dream situation to have that person, right, who can just come in and knows how you work and can just magically take that stuff off your list. If you got any good lessons from going through that process, drop them in the comments tomorrow. We got Q and A Friday. Got any questions, drop them down there as well, and I'll see you there.