209 How To Develop Grit in an Accounting Firm

Angela Duckworth's book, Grit the Power of Passion and Perseverance. Do you want to have a grittier accounting firm? You want to hire people with grit? Do you want to be absolutely unstoppable? I tell you I do. But you know what might be the biggest problem in the profession right now is, like, the glorification of suffering and of overwork and pain signaling. You know, how late I worked last night? Honestly, even the people online who profess to what an issue this is in our profession are the same people going out and like, complaining every single day about doing this stuff and our clients and all that. And so how do you take the best of grit and. And the value of being able to push through hard stuff and be consistent without wading into that toxic overwork? Right. How do I build grit into my firm without doing it the wrong way and making my team feel like I'm going to reward them for sacrifice? That's what I want to avoid. Let's talk about it. Come on in. We're tackling four things today. We're going to self assess. Because who doesn't love a good old fashioned self assessment, right? We're going to talk grit versus talent. We're going to talk grit versus suffering and then how to build that into your firm and build grit into your firm in, like, a long term sustainable way that is not toxic. Like, that's the main thing we're looking to avoid here. But first, how gritty are you? There's just something about self assessments where I don't know why we as humans are, like, drawn to these. Oh, I'm about to learn a little bit about myself. I think we're past peak online quiz. When did that peak? Probably in, like, the big Facebook days. And then eventually it descended into what Harry Potter character. Are you okay? We're gonna go through a set of five questions and then another set of five questions. I'm gonna jot my score down too. I think this will be pretty easy. Like, you can do it from the lawnmower without having to write it down. First set of five questions. On a spectrum of not at all like me to very much like me. Very much like me is one. Not at all like me is five. Number one. New ideas and projects sometimes distract me from the previous ones. Do you suffer from squirrel? Are you easily distracted? If that's not at all like you, you're a five. If that's very much like you, you are a one. And I know exactly what I am. Next one. I often set a goal, but later choose to pursue a different one. If you do that all the time, you're a one. You frequently set goals, but later choose to pursue a different one. If you never do that, you're a five. Somewhere in the middle, you get it. Next. I have difficulty maintaining my focus on projects that take more than a few months to complete. And if that's totally. You have a hard time focusing on something that takes more than a few months, you're a one. If that's no problem at all for you, you're a five. My interests change from year to year. If that's very much you, you're a one. That's not at all you. Then you're a five. Now, last one in this first group, I have been obsessed with a certain idea or project for a short time, but later lost interest. So you were obsessed with it, and then you lost interest. If that's totally you, you're a one. If that's not at all you, you're a five. Okay, add those numbers up in your head and divide by five. That may be too small of a number to do in your head. Dividing by five. Maybe I'm just. Maybe that's just my number. That's the problem. Maybe you don't have that problem. Okay, this is your passion score. So we added up those 5 divided by 5 to get to a number. This is your passion score. You want to know mine? It is a strong 1.6. And by strong, I mean weak. If you are under 3.8, your bottom 50th percentile, if you're over 3.8, you're top 50th percentile. If you're over 4.3 or your top 80th percentile, 4.5 is 90th percentile. I was the other end of the spectrum, and I suspect if you're like entrepreneurial mindset like me, you're probably pretty low on this spectrum. And according to the grading scale here, I'm in the bottom 10th percentile. Hopefully we got some entrepreneurs listening here who, who can relate. But on all these questions about getting distracted and pursuing new projects and your interests changing, if that's you and you're following different things, you can end up with a low passion score. And we're talking about ultimately, like, what is the solution to that? Is that even a bad thing? Other half of this is your perseverance score. So five more questions. I'll rapid fire through these setbacks. Don't discourage me. I don't give up easy. If this is totally you, you're a five. If this isn't you, you're a one. So if you do get easily discouraged, if you give up easy, you're a one. If that's not a problem at all for you, you're 5. I'm a hard worker. If that's totally you, 5, that's not at all you. 4. If that's not at all you, 1. These are the things where like, yeah, you're like proud at being good at these things, right? I finish whatever I begin. If that's totally you, you're a five. If it's not you, you're a one. So that's three questions. Now at keep adding up the scores for each of these. I am diligent. I never give up. If that's totally you, five. If that's not at all you, a one. Last, I've overcome setbacks to conquer an important challenge. If that's totally you, that's a five. That's probably most of us. If that's not at all you, that's a one. Now this one, I don't know about you. You go through these questions and it's like, yeah, this is like, this is where the fire gets going. This is what separates the wheat. What do you the chaff. The wheat from the chaff. Something like that. So add up your scores for those five and then divide by five. I got four. I'm in the 70th percentile again. The 50th percentile cutoff here is 3.8. If you're under that, you're bottom 50th over that which I suspect most of you are. Your top 50th percentile, 80th percentile is 4.3. 90th is 4.5, 99th is 4.9. I know about you. That was the perseverance score. The latter one, the first one was the passion score. I am high perseverance and I am low passion. And I suspect the entrepreneurial folks can relate. And oftentimes it can feel like you're going really hard in no direction in particular or you need a lot of minders to help you keep on track and to like actually take the things that you say and put them into action. Now, according to this book, grit, your grit score is the combination of those two things. And if you're like me, when I picked this book up, I was thinking like, yeah, it's going to be like sweaty. Like, how do I level up my, my grinding game so I can just work non stop and just have total control, more stamina. All that stuff. But what this book is saying is, is basically grit is not your ability to work later or longer than your colleagues. Grit is like the trudge of life and being able to continue going forward on a specific thing for a long period of time, because that is ultimately the path to being prolific at something, is consistency. And so let's talk about grit versus talent. But what we struggle with, what we get stuck on, and we're getting into grit versus talent now, what we get stuck on is something they refer to as naturalness bias. The fact that when we look at someone and think that they're a natural. No, it's actually the fact that they've put in more repetitions than anybody else. And this is something we talk about on the podcast a lot. You may, you know, watch one of my videos or a video from somebody else. When they're really good and polished and all that, you're like, man, those people are unnatural. When in reality, it's like, it's totally a repetition thing. It is. There's a level of passion there, maybe that you don't have through no fault of your own. And most of us know this. But in many situations, it doesn't actually bear out that we take actions according to this. And a good example is, when surveyed and asked which is more important to success, talent, or effort, Americans are about twice as likely to single out effort. The same is true when you ask about athletic ability. And when asked, if you are hiring a new employee, which of the following qualities would you think is more important? Americans endorse being hard working nearly five times as often as they endorse intelligence. So you want a hard worker. You don't just want a big brain. And I think we'd all agree with that. Like, that's what people say. But in like, in action, this doesn't hold up like, with how we actually make decisions. On a subsequent study on hireability, when you had a whole bunch of applicants to put up against each other, the quote unquote naturals were universally rated higher for likelihood of success and being hireable. Meaning when it actually came time to pull the trigger. We're not thinking about maybe hard working that side of it as much as we ought to be. This was another good quote. The naturalness bias is a hidden prejudice against those who have achieved what they have because they worked for it, and a hidden preference for those whom we think arrived at their place in life because they're naturally talented. We may not admit to others this bias for naturals. We may not even admit it to ourselves, but the bias is evident in the choices that we make. This episode is sponsored in part by Interval. Interval helps accounting firms unlock opportunities and optimize results for your SMB clients. This one's pretty cool. It's basically like a connector that will then surface automated insights based on the ledger connection. So with more business owners to serve and less time to serve them, INTERVAL is the conduit to information and insights that put your advisory practice ahead of the curve. Here's the curve. How do you get ahead of a curve just from a. Just from a geometric standpoint? Is that like another curve with a bigger radius? Through a quick connection to your client's financial data, you get access to automated data discovery and advanced analytics. Interval delivers actionable insights on valuation, industry benchmarking, excess working capital, tax advisory opportunities, and more. Filtering out the noise and highlighting only what you need to spark advisory opportunities, Interval provides foresight into financial forecasts and overall business health while protecting and growing SMBs. Creating a shared understanding because when businesses grow, so do you. Man, I wish I had stuff like this when I was running my firm. If you've got access to the ledger, like that is a treasure trove of opportunity and good advice that you can give people. I was always like, if only we could like wire up all these ledgers to specific service packages that we have where anytime this triggers, we propose this package and we can set it up in a way where it's like a no brainer. We're like, hey, we see this thing, you should totally have us do this. And they'd be like, yeah, but where did that fall on its face, like monitoring the ledger data to actually make that connection. Now I got cool tools like Interval to do that for you. We're still in an ad read. Learn more about Interval in the show Notes below. This episode is brought to you in part by Team up, helping you recruit top Filipino accountants without any ongoing monthly fees. The difference between teamup and all the other offshoring options is that Team up helps you hire staff directly. No middleman. You work directly with your new hire in the Philippines. Hire the person, not the company. Guys, gals, gang. Here's just a few reasons to hire directly. You have access to higher level talent. Makes sense. You have complete control over team culture and training. They keep 100% of what you pay them and it's a lot more affordable for you so you can retain your team for the long term. Team up can source accountants with experience working at US or Australian firms familiar with tools like Xerocubio and Dex also recruit specialist roles, team leaders, tax specialists, administrative assistants. Thought experiment. What if you had an executive assistant for the first time this tax season? Just, just throwing it out there. What would they do? Start at that email video I did on the main channel recently. Get help with that stanky old inbox. I digress. Team up recruits these talented folks for a flat one time fee of 4,000 US American dollars. That's it. 4K one time. Somebody at Robert Half just did a spit take. Robert Half reference. We ever going to get Robert Half to sponsor this pod? Not anymore. And they can connect you with an affordable employer of record if you need help with payroll and compliance once you hire that person. Big fan of hiring in the Philippines. You know, I did a bunch of that. Check out the link in the description to learn more about Team Up. If there's one thing that was kind of annoying about the book, it suffers from a bit of that. I'm going to convince you that it's this way for like 2/3 of the book. And you're like, okay, you got me. Just tell me what to do. Now there is a bit of that here, but they ran through a whole bunch of examples of how this grit score, actually the exact same framework we just went through was a better indicator of success than almost anything else. So they did this study with folks going through this kind of qualification process for getting into West Point. And so if you're not a US person, this is like very hard to achieve, like military sort of career path. They get pulled into this sort of super rigorous program that basically takes like two years to try to get into and up to half of them drop out in the first two weeks of this program. So why would you work on something for two years only to give up within a couple of weeks? And when they assessed all these applicants and they put, you know, their, their gpa, their achievements, their athletic ability, all these aspects about them alongside this grit score, the single best indicator of were they going to come out successful or not was ultimately this grit score. Some other examples, a guy in college whose classmates used to laugh at him because his writing was so bad and cheesy, goes on to win a Guggenheim. They did the same benchmarking for the kids in the like the big spelling bee thing that they put on espn. They had kids across the huge spectrum of, you know, intelligence, iq, age, all these different things they analyzed. Ultimately this grit score was the like, biggest indicator of future success, of their likelihood to win or, or perform well in the competition. They found in General, the higher the grit score, the more these kids practice and the more they went to other bees. Beads, bees. Another study around the author, just anecdotally at one point was a teacher and in her class you would have the talented kids, the kids who could get it on the first try and immediately understand it without needing extra attention and all that. But she'd find that these kids generally wouldn't necessarily get any better grades than the kids who couldn't get it on the first try. And I've always like equated talent with like athletics. Cuz that's the framing that you always hear. You look at like a Usain Bolt, right? Like the sprinter who's just a total phenom, has a pre race ritual of eating chicken nuggets before every race and then just goes out there and blows the door doors off of everybody. And then normal people will be like, man, if I had chicken nuggets before I went into work, I'm going to have an upset tum tum. I'm not going to be able to focus. So when you think about like talent and natural ability, it's often through the framing of athletics where it does matter along with like grit. But when you're playing grown up games and you're like doing knowledge work and you're 30 years down that path, at some point in the rear view, mere natural ability got left and like in the past, right? I think maybe it's a bigger deal like earlier in life, but when you're doing the type of stuff that we do and you do it for decades, ultimately the folks that are going to be the high achievers, it's not going to be talent that is driving that accomplishment. It's more a product of like how long have you had grit? How long have you stuck to the same thing? Like that's going to be the biggest driver of whether you're ultimately successful, which is great news for dummies like me. It means that you're not beholden to the talent that you have. It means you're not, not capable of that thing because it isn't coming easy to you. You're actually in control of what do you ultimately want to down the road look like a natural at, right? You get to decide what things you want to invest in down the road. People will think, oh you're really talented at that thing, you got a real knack for it. When the reality is you're just, you're just doing it more than they are. So grit is valuable. That passion, that perseverance I want to have it. I want everybody on my team to have it. Because that's not only going to help us today, but 10 years from now professionally, it's going to have them in, you know, a better place. So how do I build this into my culture without it being like a slimy thing, without it being a pain signaling thing? Because that is the biggest thing I don't want. I'm going to show you something pretty cool you may have seen online the last couple of weeks, something called Hume. It is a new AI technology that is capable of detecting the emotions of the person it's talking with and mirroring those emotions and countering those emotions in a way that works best. Like, how do you best counter emotion? A, it's going to respond with emotion. B, and it's really interesting because there's some studies that actually say the, the level of compassion you get from an AI tool has already far surpassed the level of compassion that humans are capable of. So, like if you do blind tests, the study was around doctors. If you do blind tests of what an actual human doctor says versus what an AI doctor says, the AI doctor blew the doors off the human doctor. Which maybe isn't surprising because not all doctors are going to have like that great bedside manner. But I'm going to check this struggle at this Hume demo. It's really interesting. You can see what it sounds like to kind of try to process through where these things are at odds. So I'm trying to work through how do I build grit into my accounting firm without it being like this toxic, pain signaling, like glorification of overwork. Help me work through this.

Hmm, that's a tough one. No one create a culture burnout that's. Well, how about focusing on developing resilience rather than just grinding, Maybe set clear boundaries, encourage work life balance and, and celebrate small wins. Build a supportive team environment, you know, that could help foster the grit you're after without the toxicity.

Yeah, I mean, we could build a, like a culture of helping people recover from that resilience that we're asking them for. But how do I do that without, I don't know, like glorifying this resilience in a way that isn't happy.

Ooh, tricky balance there. You raise a good point. We don't want to glorify resilience in a way that just makes people feel worse. How about this? Focus on developing a culture of compassion and care where people feel empowered to take breaks, ask for help and prioritize their well being. Celebrate small steps, not Just big achievements and make sure your own actions as a leader model that healthy approach. Does that resonate?

Yes, but how do I do it?

Okay, let's dig into the how. Well, for starters, maybe have regular check ins where people can share what's going well and what's draining them. Encourage open dialogue about workloads and bandwidth and make sure you as the leader are visibly taking breaks, logging off on time.

Okay, okay, got it. Yeah, but how does that make them gritty? Good point.

We don't want to lose the grit. Let's see. Maybe frame it as building resilience through self care and support rather than just grinding. Encourage everyone to identify their own sources of motivation and meaningful and celebrate the small acts of courage and perseverance, not just the big wins. Make it about growing stronger together, not just pushing through alone. What do you think?

Okay, that's actually pretty, pretty solid feedback. Sidebar. That's really cool. When I first tried that, I was a little blown away by how much of a difference like the empathy of one's voice has on your perception of that experience. Like just its ability to mirror your own emotions and to kind of bring you down when you're up. Pretty interesting. It's actually funny how when you look at sci fi movies and TV shows and all of that, whenever you're talking with robots or computers, they have these very robotic computerized voices and how the tools we already have have like blown past the stuff you see in sci fi. This one's like a little janky. Like it's definitely buggy because it's trying to do a lot of inflection. But I mean, some of like the internal dialogue, like the characters that we talk to using 11 labs, which is the different speech generator, man, that stuff. Like a lot of people I think, don't think could tell that from reality. This episode it is sponsored in part by the fine folks at Live Flow. Tell me if you've ever had this situation before. Somebody needs some information from the QuickBooks file. Maybe it's an advisor, maybe, maybe it's like the financial advisor, some other stakeholder, a board member, maybe even the client. But you don't want that person to have access to the actual QuickBooks file itself. Or maybe you're at like number of user limits for your QuickBooks license. Man, I had this all the time where I wanted to give them like a subset of information, but oh, lord knows I do not want them to have full access to the books. Gang is actually a really good use case for lifelong because you can selectively sync any like little detail out of the QuickBooks file to Google Sheets situation where we actually had this a lot. You've got somebody within the company that like manages ad spend but I need them to tell me like what events certain ads are associated with and they need that data for their own analysis but you can't give them the full p. And Lifflow can be a really great solution here to just get the information out of there that they need to see without getting them everything else. Now Live Flow does a whole bunch of stuff, syncs data out of your QuickBooks file to Google Sheets, can be a one time sync or can keep updating that stuff on an automated basis. They've got a killer consolidations product. Now we can roll up theoretically an unlimited number of companies with different sets of chart of accounts all in the same like really simple, easy to use Liffel interface. People are using this for like Liffel for everything from like managing month end closes, even internally. Like they set up all their work papers in Google Sheets. Kind of wild that is Lifflow. Learn more about that one in the link in the show Notes this episode is sponsored in part by Cloud Cloud Accountant Staffing. Y' all know I'm a big advocate of hiring offshore. One of the biggest changes I made in my firm, we transitioned a Legacy firm from 100% onshore local hiring to 100% distributed US and then 100% distributed globally hiring and honestly is the best thing we did. It virtually alleviated all of our hiring pains, completely changed how we thought about staffing projects and the type of work that we wanted to bring on. Because you know what, the folks we hired offshore really freaking good. A lot of misconceptions around the type of people that you hire offshore because your enterprises will oftentimes use offshore folks for like menial work. Absolutely not the case. There are tens of thousands of people working for big four accounting firms, you know, offshore outside the U.S. you can get folks that can do anything from tax to junior level stuff to super senior level stuff. But try to do that yourself, figure it all out yourself. That's going to be hard. It's going to be scary. Really good place to start cloud accountant staffing. They will hold your hand through that process. Their story is super simple at accounting firm in the US Hired a bunch of people in the Philippines, fell in love with them, but didn't fall in love with the fees they were having to pay to the staffing companies that were managing these employees. So they built their own solution and now they're starting to pull other accountants in. I'd encourage you. A big tipping point for me was when I was like, I'm going to stop being opinionated on this and just try to learn. And so I talked with other practitioners, I talked with some of the vendors that would like help you get into offshoring. That really, really open things up for me. So if you've been on the fence, I'd encourage you to at least learn about it and you start heading down that path. Consider cloud accountant staffing. So how do you build grit into a firm without it being a toxic thing? Actually some pretty good takeaways there. It's probably a human thing. It is doing one on ones. It's understanding where people are at. It's acknowledging resilience, but also acknowledging rest. Probably some good takeaways there. But I can tell you the biggest thing that I came away with from this book and this actually the score, the paltry score that I got for passion actually drives this home even more. I hadn't taken that test before we'd started this. I'm only slightly embarrassed. Anybody get a lower passion score than me? Please post in the comments. Please. The big takeaway for me here was that passion is a product of your goals and the consistency of those goals. So it talks about kind of a goal hierarchy and you can have a top level, like a single top level goal, but then you have mid level goals which are like what are the goals that are kind of enabling that top level goal. And then you have low level goals which are the smaller things. And oftentimes those low level goals, you'll throw them away, you'll swap in something else. Those can change quite a bit and they should because you're learning. And ultimately those low level goals are just in service of the mid level and the top level goals. But passion is about having a consistent top level goal and doing that for a long time. Now the self assessment is a reflection of how you see yourself. And I do think there's a degree of error there when it's like how micro or macro is this? Like, do I get distracted from different goals? I do. But is that like a mid level goal? Is it a low level goal? Is it a top level goal? For me, my top level goal is probably helping people run profitable, calm, sustainable small accounting firms. That's my top level goal. Underneath that, oh, there's a lot of stuff in flux. There's all sorts of different things going on. Definitely got the squirrel syndrome where I'll get really hot on one idea and then switch to something else. But the top level goal there, that's the same. Now the grand scheme of things, I've been out of firm running and fully focused on this for like a year and a half maybe. So I can hardly say that this has been like my top level goal for a really long time. But the unlock for firms here is how can I build a top level goal for a firm that everyone can rally around. Here's actually a quote from the book that I really like that kind of clarifies where this passion and perseverance comes from. What I mean by passion is not just that you have something you care about. What I mean is that you care about the same ultimate goal in an abiding, loyal, steady way. You're not capricious. Each day you wake up thinking of the questions you fell asleep thinking about. You are in a sense, pointing in the same direction, ever eager to take even the smallest step forward than to take a step to a side towards some other destination. At the extreme, one might call your focus obsessive. Most of your actions derive their significance from their allegiance to your ultimate concern, your life philosophy. You have your priorities in order. And I would argue most accounting firms, they don't have their priorities in order. They don't have this top level goal. And if grit is a product of a consistent top level goal, then ask yourself, what am I asking my team to follow? Because if it's a job and that's it, and there isn't any more purpose to it, it's hard to ask people to have grit just for the sake of having a job. And I used to really struggle with this notion of accounting firms having a vision, because after all, it is, it's accounting, it's tax compliance, all these things. And I think actually having been removed from running an accounting firm, and I now work with an accounting firm, like as an entrepreneur, I think it's gotten a little easier for me to have perspective of like the massive value that that is. How much of this is a stressor and a blocker for entrepreneurship. But if I'm just running an accounting firm that is generally serving people, is a vision of we enable entrepreneurs. Is that something that my entire team can be passionate about? I would argue in most cases, probably not. And the answer here, as is the answer with most things accounting firm running is greater specificity. So if we think back to some of the past niches that we've talked about, summer camps, specializing in summer camps. If your top level goal is to enable these Summer camps to create, you know, incredible experiences for people. Maybe that's because when you were growing up, you had an amazing experience. Maybe it's more, you know, mission oriented. Maybe athletics kept you out of trouble in high school. Maybe it's, you know, faith based. If your firm is built around this top level goal of an enabling, of enabling these groups and these types of people, just like it's much easier to attract clients to your firm when you have that specialization. Attracting people to come work at your firm who share that passion is also much easier. And then I think the question of grit, which is largely a product of that passion in many ways, like, solves itself. If people are truly passionate about this and they see how the work that they do contributes to these groups being able to do this stuff successfully, then, man, you're like, you're turning up every day to do something that you feel good about. And you know what you're not even thinking about at that point? Pain signaling, toxic overwork. Now, it doesn't mean you take advantage of it. Like, that's, that's the other extreme here maybe. And I think you see this in nonprofit culture. Nonprofits being operated as if they're not a business and making unreasonable demands of people because they are a nonprofit. And I want to steer, I want to steer clear of that. But if my firm is built around a very specific top level goal, then just like I can go out and find clients who align with that, I can go out and find people to work for me who also align with that. That's really exciting. And when you think about all the things that are changing around staffing that make it hard to have somebody work for you for the next two decades, like that's kind of a joke these days. For my generation, it is. Anyways, I don't know if this is totally a solution for that, but I can tell you the people that are passionate about what the firm is working on, they're going to turn up to work with a very different level of commitment and grit. So my big takeaways from this book, don't get suckered into the whole natural ability thing. Test scores, oftentimes, gpa. Instead of look for grit, look for the things that people accomplished not due to natural ability. Second, when you're old like me, 35, even if you're not that old, and I say old like me slightly, tongue in cheek, ever so slightly. When you're old like me, natural ability has, it's, it's in the rearview mirror. And right now it's about how are you deciding to spend your time to build talent to then be a natural at that thing down the road? Right. Be a natural through repetition. Not because you were born that way. So because talent is not going to be the driver of your success, you're in the driver's seat. That's great news. That agency, we can decide what we're going to work on, make sure it's high leverage, make sure it's something that will always benefit you. And then third, it's hard to ask your team to have grit unless your firm has a top level goal that they can get behind. And if that top level goal is do some great tax returns or always get that month and close out on the 10th, that's going to be a tricky thing to get people to like rally behind that perseverance side of grit. That to me feels a little more like some people will be ingrained with that more than others. But the passion side, that's what I can craft my firm around. Finding the folks who share the passion that is the top level goal for my firm. This was a fun read. Angela Duckworth Grit I have a spectrum of a book is like a sit down. Have to read the actual book from the pages. Two in the middle is like I'll just get this on audible, do the audiobook 2. I'll just read the book summary. This one for me is probably in the middle. It's probably an audible, a 1.5-er, 1.5x-er. Give it a listen. I think you might like it. Thanks for coming and hanging today. We'll see you in the next one. You greedy little accountants, you.