389 Are You Hiring GHOST Accountants?

Big study came out from Stanford recently that showed that upwards of 14% of software developers are, quote, ghost workers who do virtually nothing and are costing big software companies billions of dollars. Billions. How is this possible? This is like a growing trend of folks who either skate and like, just get by doing the bare minimum in their jobs to either spend that extra time, you know, power leveling their Paladin and World of Warcraft, or to take another job like some people, upwards of three or four jobs. The overemployed. This is a trend that has grown a lot in the last five years. And I actually think there are some forces that are going to make this even more common. Which brings us back to how should we feel about this? How does this change how we hire and manage our accounting staff? And what does it mean for the future of distributed work? Today we're digging into the study. We're seeing what it means for accounting. I think it's fascinating. So come on in, put your smart glasses on, let's talk about it. So this study, you may have seen it in the wild. It's fascinating. Basically what they arrived at is 14% of remote software developers at these companies were doing virtually nothing, as in they were writing virtually no code each month. So that's 14% of remote workers, 6% of folks who were working in office, and 9% of folks who were hybrid. There you have it. Bring everybody back to the office. Right? This was an analysis of over 50,000 engineers from several hundred companies conducted by Stanford. Working out some of the numbers here. This equates to 1.8 million ghost engineers globally. And so this is just within the software development domain. And that works out to about a $90 billion financial loss from these ghost engineers who aren't contributing anything. And this all kind of got dropped. And there was a bit of a kerfuffle on Twitter because they actually went so far as naming a whole bunch of companies that these engineers were from. And interestingly so Paul Graham, he's like a software Silicon Valley guy, he said of the companies he saw on that list, there was only one company that surprised him, but it was also the only company where the CEO actually responded to, to this study. So the company was Box. Paul Graham says Box is the only company on that list that actually surprised me. It's like it's your metas, it's your Googles. It's. It's all of kind of the big Silicon Valley names you'd expect. Paul Graham says he's surprised to see Box on that list. And of Everybody named in that study, it was only the box CEO that actually responded and said they were doing something about this. A lot of folks chimed in and said that percentage feels low to me. They actually expected it to be higher. And this, this is kind of feeding, feeding the troll that is like the anti remote, anti distributed work troll. Like this is just the fuel that they needed to get everybody back into the office. I this Delta of the 14% of people who were remote versus the only 6% of people who were in office, this may be the best statistic for them to hang their hat on to say, well, this is why we need to have everybody working back in the office. It would actually be fascinating to run the numbers so that you've got the delta between 6% and 14%. If I do some quick math there, that's 8%. If you strictly look at those figures, the framing being well, you're going to have 8% fewer ghost workers. If everybody works in the office. I have to think that the overhead of everybody being back in the office, let alone the upside that comes from being able to hire people anywhere in the world who are presumably much better at their job than like just being regionally limited. I have to think like overhead costs alone make up that deficit of having to put all those people in offices. I digress. It was a banner day for people that don't like distributed work and for people who don't generally trust the folks who work for them. And we all struggle with this. Let's pretend that we don't. And for me, where I struggle with trusting the people that work for me most is when I'm like tired or already grouchy about something, or something goes sideways and you're like, ah, I always knew it about this person. Or yet, no, they really have been underperforming lately. And I can tell you, I don't know if you're the same way. I can tell you 80% of the time when I drill into that issue, I'm like, okay, so no, this was actually my fault or this was my miscommunication or I forgot this detail or that detail. And our minds are so quick to run away with like these spooky stories that we make up in our head about how you're somehow being wronged, right? And then when you actually get down into the details, you're like, okay, cool it, bro. A lot of this actually is your fault and preventable. But what's followed on from this study I think is really interesting because the initial, like the knee jerk reaction Is this is wrong that we have all of these ghost engineers. How do we lock them down even further and be even more controlling of them? Meanwhile, you have other companies like Spotify who recently came out and said, we're never going to ask our, our employees to come back to the office because they're not children. And it's amazing culturally what a huge spectrum it is of like, where companies have landed on this. So the reaction for some was doubling down on monitoring software. Like on the software that you put on everybody's machine to make sure that they're working. And then, you know, the employees have like, you know, mouse jigglers. Has kind of always been the thing where you just have software that moves your mouse from time to time to. In order to like, trick the monitoring software into thinking that you're actually working and getting stuff done. Nevermind the fact that that doesn't actually solve for the bigger issue of like, what are your job responsibilities and are you actually getting them done? And by jiggling a mouse, are you getting done what you're supposed to get done? And the whole, like, premise of a mouse jiggler has just always been so foreign to me. And maybe that's because I've been like a small company guy and I think it's a little harder to go under the radar in a smaller company if you're not producing in some ways, and in other ways it's easier, which you're going to circle back to. And so it's just, it's just always seemed very plain, plainly obvious to me that if the solution for a problem is a mouse jiggler and that's how those people are looking active, then there's a larger issue of like, accountability and incentives and actually measuring what people are contributing. Like, there's a bigger issue going on there. And I don't, I'll be totally honest. I also try to not go too extremely to the end of the spectrum that says, you know, people are doing their best, we need to trust them, we need to accommodate them and all that, because I've been hosed by people who were like, thieves. Like, I have had people who worked for me that I ultimately did not come to trust and who were not the type of folks that were ever going to work hard. And everybody needs different things. And in a perfect world, you know, we honestly, we should genuinely pride ourselves in creating a workplace that can meet people where they are and adapt to the very different needs that people have in order to turn up to work and be their best. Like, that's one thing where we should pride ourselves in that flexibility and being as flexible of an environment for those people as possible and, and have meaningful conversations to like, understand their situation and how we can meet them where we are where they are. But I would love it if that was a hundred percent of the solution and that you wouldn't ever have folks come work for you who are stinkers or unmotivated or even just don't align with the way that you see work and the way that you want to build your organization and kind of the culture and voice that you have. I'm cautious not to go too far to one end of the extreme or the other. Oftentimes I think the conversation can get a little too touchy feely, particularly in thought leadership where it's like, no, we just haven't done enough to accommodate or something like that. That's certainly the case. And there's a million forms of bad management where had you done more, had you been more accessible, you would have created an environment that was more likely for that individual to be successful. That's totally the case. But the other opposite is also true. And so I try to like, try to balance that out in the most human way possible. I found in my company, like the, the best way to root that stuff out was to have a core team of really good people who cared about what they did, but also like demanded the same from their peers. And there was a stage in building my firm where we were growing super fast and we were hiring really fast and we weren't as particular and we didn't even really have our voice and have that culture nailed down enough to say like, here is what we do and the pride that we have in our work. We were hiring so fast that we're kind of reaching. Like you really, really need that next person because you've got that big client and that you want to serve and so you're willing to spend a little more for somebody that is maybe a little bit more of a question mark, which, I mean, I think we all know, like we've probably all done that and ultimately come to regret it. But, but it was in those times to where like we didn't have that peer accountability, which I think was the ultimate sniff detector of is this person a good fit within our organization. It's not to say you won't have people who don't need a little something extra or something different, but that is one nice thing about running a smaller organization is I think it becomes a little easier for those peers to like Sniff out or root out, like something's not right here. And later on, once that team had been refined a little more, when you pulled a new person into what was a really solid core, it totally changed the dynamic and kind of your radar for how is this person fitting in and are they delivering on kind of the expectations we've set up for them now where I think this gets harder and where this is getting complicated, more complicated over time. Clear back in the very beginning of when I was doing like the beginnings of my content creation started with like no code for accountants and I'm still a total no code dork. Zapier make, you know, scripting macros, stuff like that. Like at my core, if I weren't doing all this and if I was doing technical work, like that's the stuff that I geek on and I spend all of my time on is accounting with a more kind of software angle. And, and it's because I'm fascinated at how those tools open up a huge productivity gap in two different, you know, two people who would otherwise be the same. And I, you know, really early days in that content, it's something Chad and Chad Davis and I used to talk a lot about is we are increasingly getting these power user tools at our disposal that I truly believe are opening up the delta between these the highest productivity, highest output people, and I don't know, whatever the opposite end of the spectrum of that is the norm or the folks who are doing that work the way that it has always been done in the past or in the traditional way. Let's just say if you have a particular set of skills that lets you build an Excel macro to do something that was otherwise very time consuming. There's so many examples of stuff like that these days that, that I think the highest output people and the delta down to the lowest output people is larger than it's ever been before. And if you were a high achiever and a high output person like I was, and I suspect a lot of the folks that listen to this that ultimately went on to become firm owners were, you know, that you getting plugged into a time based salary system where you come in and you are in a role and you get paid a certain amount for that role, you will always get the short end of that stick because those roles are designed to compensate kind of the median output expectation of somebody in that role and you'll have people that you work with who are below that median expectation that are offsetting you that are at the upper end of like, you know, the higher Output folks. And it's the same thing as in college or in high school when you do the group project and like you were the one that ends up doing all of the work, either because everyone else in your team like isn't as motivated or you or because you can't trust them to do it as well as you think you will do it. I think actually those folks, I think that's a signal to probably future pains where you're like, well, they're not gonna do it as good as me, so I can't let them do it. Like, you may have been one of those people that now struggles with that problem, right? But the traditional 8 to 5, 9 to 5, 40 hour week framework where you come in and you make a salary, if you are a high output person, you get hosed in that setup. I personally have never been a fan of that setup because I think it I unfairly can't be rewarded at the scale of the things that I do. And that probably resonates with many of you. This episode is sponsored in part by liflow. It is the time of the year where we make resolutions for what we want to do better in 2025. And one of those resolutions might just be upgrading those client touch points, improving the client experience. Because at the end of the day everything kind of boils down to that and how premium your clients perceive your service to be in one of the most automated ways to create really valuable touch points that are like actually connected back to the accounting ledger. But it's is life. It's Live Flow guys. Gang Gals squad, Live Flow. Originally the secret sauce was, was they were a connector for your spreadsheets. They would connect QBO and zero files to your Google Sheets or your Excel. And they still do that very well. But they now also have like an online dashboard where through all those same connections you can create like super quick and easy, not overwhelming. If you don't want them to be dashboards that actually feed in live data from the accounting ledger, either on a continuous basis or just a snapshot. So I could like send a roundup to my client over text every single morning. It opens up all sorts of possibilities. But the tool itself isn't a bunch of work. That's what I never liked about reporting systems, is you log into that thing and it's just a lot. Customizability is a big thing here. LifeLow always has really nice templates you can swipe, but you can also build it into whatever you want it to be because ultimately how clients value our service it really boils down to those touch points, what we put in front of them and what they get out of it. To learn more about Lifelo, check out the link down in the show notes. This episode is sponsored in part by Teamup, who helps you hire talented Filipino accountants directly. Let me just run you through what they did in the last week. I think you'll be impressed. Just kicked off two new recruiterments looking for a senior tax accountant and a staff level accountant. Both for firms who are returning to Teamup for more hires. MO hires, active projects they've got in the works, man. I got access to the mainframe here. Not really. They send me a weekly report. Now they've got 23 active projects going. Just over 50% of those are with new firms. The rest are with with firms who are coming back for more hires. And they've got five new hires that are kind of in the early stages. Pre recruiting the positions executive assistant, senior tax account, senior account, senior tax account, and accountant. Four of those five are firms who are coming back to team up to do another hire. And you know what that means? Means they didn't regret it the first time. You know what I mean? I don't know why I said it like that. Learn more about Team Up. Check out the link down in the show notes. This episode is sponsored in part by Carbon, the practice management system. Funny story about Carbon. So we did our 2025 practice management system recommendations. There's like 40 some practice management systems out there. And we pared it down to a list of. Of, was it 7? Some much shorter list where I'm like, these are the only practice management systems that I recommend. And doing that was a big undertaking. Cause we looked at basically six different sizes of firms and for each of those different sizes, firms of different service mixes. So if you did tax, only if you did bookkeeping, only if you did tax and bookkeeping combined. And for all those different scenarios we gave a top recommendation and. And two secondary recommendations for the practice management systems that are best suited for those types of firms. Now only two platforms got five top recommendations. One of them was Keeper, which honestly is not even a practice management system. It's like month end close automation. The second was Carbon. Carbon's really good man. It's like it's one of the only tools out there that raises to the level of if you are considering tech change in your firm, honestly, practice management system or otherwise, you have to see what Carbon does and understand what it does. Because if you go down the list of really, really smart like thought leader accounting firms right now. Chad Davis, great example comes on the pot a lot, a lot too much. A lot of really smart firms are running on carbon. And sometimes honestly, like, that's what I need. That's all I need to see. Do I really need to like out big brain these other firms that I look up to, or do I just say, okay, they've done a whole bunch of due diligence. I still got to do a bit, understand what works for me. But there's something to that. Learn more about carbon. Check out the link down in the show notes. We're coming into an age with AI. I would argue in many respects we're already there. In fact, I have never wanted to run an accounting firm as badly as I have wanted to the last 30 days because I see so many cool opportunities of things to do with like the new 01 model from OpenAI. I've heard from a number of people who are privately building their own stuff around that model. That's automating some really, really cool things. And I think AI technology and AI agents, which 2025 is kind of going to be the year of the AI agent, these are tools that will control our desktop and click around and type things like building up these skills just opens up that gap even further. Because you can cut any number of AI agents loose on a project at a time. These things can be working in parallel. It's the first type of technology that you can like semantically describe to it. Here's how I want you to get a task done. Do a very specific thing and then just cut it loose, you know, without having to know how to write code or anything like that. It is the most rewarding technology we've ever had for people who can think in terms of systems, because at the end of the day, it still comes down to systems. What is our firm's system going to be for reviewing a tax return, for reviewing a month end close, for completing a month end close? You still have to be able to break it down into what the very explicit process is. And many of us struggle to do that with people in our teams and build those systems within our firms. And we as a result are overly reliant upon expertise and upon experience. Whereas if we add a systematized version of it, while it may not be as perfect as your process and how you do it, it helps raise the bar for all the folks who don't have that expertise and helps them better contribute to the team and actually help them learn faster what their own spin on that process ought to be because you've kind of given them the scaffolding of a starting point. When it comes to getting useful things out of AI, we still have to provide that framework. And oftentimes people say like, well, AI was just figure all that stuff out. And one day it probably will, but there's going to be a really long period in the interim where it's only going to be as good as we can instruct it. It's kind of like the human problem where, yeah, you could have a incredible expert at this thing who's really, really good and done it for 30 years and they'll just figure all that stuff out. But today we don't have that. Today we have the intern. We have like intern intelligence level AI models, which is incredible. The last time I tried to hire an intern was maybe four or five years ago in a pretty small market. I think minimum wage at the time was like 1450 an hour or something. I tried to hire three interns. Two were a sophomore, one was a junior. I offered all three of them $25 an hour and they all turned me down and had better offers elsewhere, sophomores in college. And so the notion that we have AI assistants that are like intern level smarts, if not a little better now that's pretty wild. Like, that's pretty amazing. The reality is these, these models are benchmarking at beyond human PhD level smarts in certain domains, which, man, if somebody had told you two years ago we would have AI assistance beyond PhD level smarts right now, don't you think we would be using them more? I could do a whole, man, I could do a whole side diatribe on this right now. The, the super misplaced security fears around AI models right now and just how much more secure many of these AI tools are than very mainstream practice management systems that many accounting firms are running on. Like, I want to take the apps that firms use and rip the name off of them. Because honestly, these days, like the way that accountants buy tech, when it comes to security, the biggest thing that drives whether they will buy an app or not is whether they know people use it, is whether other people are using it in their firms. It is not at all like first principles. What are the fundamental core things we need to look for in security and apps? It is. Do I know a bunch of people that use it? Oh, then it's probably fine. And there's gonna be a day where AI is way more normalized than it is right now. I just don't want to wait for that. Because if we actually strip it back to first principles, you know, chat, GPT, like, it is a SOC 2 type 2 certified app. Most of our practice management systems, almost none of them are SOC 2 type 2. Many are type 1, many of them don't have any SOC 2 certification. And it's just very disappointing how quickly that conversation gets to AI isn't secure almost on principle. Like, it's a, it's a weird thing for people to like, take this stand on. In fact, I was giving a talk recently and I could, I, I could. Somebody nearly fell out of their chair with kind of outrage at me merely saying, it's not as bad as you think it is. And I would encourage you put it alongside all the other apps that you use and you'll find it's actually probably more secure than many of the apps you use every day. And they're just, they're just besides themselves. Like, people are hung up on the notion of client information being used in AI tools. I think that's still founded on kind of the outdated notion that anything you put into an AI tool is trained into the model. That's just not the case on leading tools anymore. But still, anytime I post on Like LinkedIn, I will get people that'll comment and be like, I'm not gonna put client information into an, into an open AI model to an open source model. Because I said OpenAI and it's like, no, no, no, no. Nothing about what OpenAI does is open source. Nothing about what you're putting into it as being trained into the model if you're using a business plan. So there's just like, it's just unfortunately still not a very high level conversation around AI security. And the result is the people who are using it very successfully. There's actually a degree of shame in this where it's like, no, they understand and they've done the research and the due diligence and they have no problems using it in different ways, but are almost skittish to, to talk about it publicly. Which I think is why I hear from so many people privately, because there's so much confusion around this still. You still need to do your own due diligence and like, have a standard of, you know, here's the security standard for any app that we will use inside of our firm. But it is an exercise that is so worth doing because the upside is so great and it continues to get better. One of the really early things we talked about in this podcast was like, AI is getting better so much faster and there's gonna come a tipping point where it's so compelling that people have to challenge these false assumptions that they have about AI not being secure. Because the upside is so potentially great. If I can tell this agent to go and do X, Y and Z for me on the 2nd of every month and I never have to do that again, my hope is it makes people stop and say, okay, here's why I thought it wasn't secure before. Let's challenge that assumption and see if there is a secure way to do it. I would argue we're already there. So if it's me running a firm like that's due diligence, that is absolutely worth doing to enable my team. I would go out when I was hiring. I would look for people like me who are very, very obvious outperformers, like the folks who were punching above their weight and would think about how to solve problems in more systematic ways rather than just shooting from the hip and it being something that they've done for 10 years. Like, can this person write an SOP for a junior on how to review a set of financial statements? Because those are going to be the people that can break down a problem into chunks that can then be delegated to a bit of software, AI or something like that. So as people are enabled more and more with AI, which kind of feels like an inevitability right now, the delta between what our different team members can do now will open up and be even bigger, which for me is yet another argument. It makes it all the more imperative to be incentivizing and compensating our people based on their productive output and not based on, well, how many hours did you work last week? Because we all know that like 40 hours for two people. That is not a, not an accurate proxy for the value of work that they contributed to your firm. And I know I've been talking about production based pay and doing a week series on this podcast. We've been talking about this for months and I'm hopeful that we'll be able to run that that week of episodes in January. It's just been hard to kind of track down the right people to have those conversations with. And what we're going to do is just say, walk me through what you've done, what you got right, what you got wrong. Doesn't it make this worse? Doesn't it make this better? The thing about production pay is inevitably when you set it up, it becomes a game. You're then trying to game this system of production pay. And how do I get the most out of this. But the question you have to ask yourself is, is this a better game than the one we're playing now? Because we're all playing a game. And if the game is I have to sit in a chair for 40 hours a week and not come in over budget on projects, that's not a great game. So is this a better game than the one we're playing already? If so, then how do we design a system of compensation that is more closely tied to the output of my team members than it is, you know, the volume that they worked or something like that. And to bring this back around to the study here, the whole ghost worker thing is amazing. The way that they pulled this study together was basically by looking at like, are these people actually producing lines of code? And after a month's time, what do they actually have to show for what they just did in the last 30 days? And I'm sure there's a tremendous amount of lost nuance in it, like a aggregated study like this where it's like, well, what was that person's responsibility? Was their responsibility actually to write, you know, a hundred lines of code a week or something like that that ultimately makes it into production, or was it something else? But it just points to the value of having really clear expectations for your team and for what they're supposed to get done over X amount of time. And in some roles that's tremendously hard. You know, I have kind of a, kind of a right hand person that does, that's involved in all of my business stuff and they get entirely different things thrown at them every single day. And I have no idea what tomorrow will bring and what the next day will bring. And so putting a box around, well, here's your expectations and what has to get done every single week is very challenging in a role like that. But if I have an accounting manager, if I have a bookkeeper, if I have a tax preparer, those roles are really, you know, by and large production roles where we have a general notion in our head of if we hire another tax preparer, we should be able to get another, you know, X number of tax returns out or something like that. Even though tax returns are always an awful metric for, for yield or like volume of work, but we have a notion in our head based on the other team members that you have of how much that next person ought to contribute. And it's not to say that they don't get pulled into other kind of softer roles. And when they do, I think you build that into the system to say that like, hey, 20% of your time is actually gonna be mentorship over here or something like that. But the biggest problem with just paying somebody to, you know, put in the hours is there's then no incentive to improve how that work gets done, to invest time into better systems, into, can we create an AI assistant to automate this, that or the other thing? When people are compensated based on the hours that they work, there is no incentive to do that. And that's oftentimes the greatest frustration that we have with our team is we'll come back with this awesome time saving idea and we'll be like, and to you, it's clear as day how this is better. And you take that back to your team and it falls on deaf ears or there's some initial excitement, but then it never actually happens and you're like beside yourself. You're like, how could everybody else not be as excited as me about this thing? Because we're projecting onto them the notion that they're going to have the same level of excitement about doing work more efficiently than you will. When, if you boil back why you're excited about that, it's like, oh, we can do a higher volume of work, we can run a more profitable firm, but in most firms that never trickles down to the staff, like there isn't upside in that for them. Whereas if your staff was incentive was incentivized and compensated based on, you know, say it's a three person pod and the expectation is this three person pod's accountable for, you know, half a million in work or something like that. I'm just picking numbers and they get X percent off the top of that half million in work. If you come to them and you say, I'm pretty sure that by making this change we could push that half million to 600,000 with the same amount of input, same amount of effort. If that's actually gonna change what everybody's getting paid, like that's, that's, that's a very exciting thing, right? Like you can expect a very different level of interest in what you're putting in front of them as opposed to if it's instead just framed as like, yeah, I think if we change this, you can get another hundred grand in work done. And everybody groans and they're like, oh, that sounds hard. In fact, one of the, like, one of the best arguments for production based pay is, is, you know, if you don't do production based pay every time you get a new client or a new project in an accounting firm or something like that, and you win that business and you're excited. As soon as it crosses over the threshold of now, it's somebody's job to get it done on a recurring basis. Who's excited about that? When's the last time somebody jumped up and said, yeah, give me more work? So you end up in this spot where like you're excited to have won this new client and then you have to give it to somebody and you do the old eeny, meeny miny mo. This group seems least busy and you give it to them and they're like, okay, cool, thanks. More work to do as opposed to if they're paid based on production, the hands shoot up. It's an entirely different game. And it's something where like they're excited and oftentimes appreciative rather than it being like, like everybody kind of hiding when it comes time to hand out new projects. Because now nobody just wants to do more work for the sake of doing more work. I foresee, I actually foresee the whole ghost worker problem probably getting worse as work gets more distributed and it gets a little easier to go under the radar, particularly at like, big accounting firms. Like, I wouldn't be surprised if these numbers held up at larger accounting firms, but the reason I actually think that they could get bigger is what we talked about with like folks getting much higher output, you're going to have super productive people who can get their jobs done much more quickly than others thanks to like really compelling AI tools that are, we're kind of now getting our hands on and are in the pipeline. And interestingly there's, there's a lot of examples of like firms and just not even accounting firms. I mean, if you look at the high schoolers who just pounced on ChatGPT and they were using that for anything and everything. And now you have this entire generation of folks coming outta school that are just wizards with AI tools in a way that you are, you and I are not. Like they've spent hundreds of hours with them, but those kids were using AI tools whether somebody had blessed them or not. And if there's a tool on the market that can automate somebody's job, I mean, I'm just, I'm just going to assume that if I don't give somebody access to it, there's a very high likelihood that the people on my team are going to be using that tool whether I gave them access or not. And there's ways that you can lock this down in the IT environment and, and prevent that sort of thing. But there's also ways around that where people will literally like take pictures on their phone of their screen and get help from AI to, to work through this project or something like that. And I think if we're, if we're too slow to acknowledge the upside of these tools and offer some flexibility to experiment responsibly, like within kind of the boundaries that you define, then we run the risk of people going out and doing this stuff without our blessing. And still to this day, like, there's. It's a shockingly small percentage of firms that actually have their team set up with an AI assistant. And please do not make it Microsoft Copilot is just about the worst option you could choose right now. Right now it really only ought to be ChatGPT or Claude, because they're light years ahead of anything else at the moment. But the approach I take with my team right now is keeping them literate on the best ways to use AI assistance and just ensuring that they have one like, at their disposal and try to share those use cases we're stumbling into across the firm. Because we're all kind of figuring out like a new way of working with these things right now. That is, that is getting more powerful every day. But if we don't even give our teams those tools to begin experimenting with, to figure out ways that they could use them for kind of their own personal workflow issues, then as models get even better, like, you've kind of put them in a hard spot to where they don't even know how to like work those things into their day to day. So headed into the future, you know, there's already people talking about like, who's gonna build the first single person unicorn? The notion that one person will build a software company that can grow to a billion dollars. We did a whole, we did a podcast episode in the past actually that was like, who's gonna be the first person to build a single person $10 million accounting firm? So most people think that like an incredible level of leverage is being made possible thanks to AI right now. Got a growing number of tools like replit that let you write code like, and you don't have to be a code like a programmer. Like, you explain to it what you want and then you go back and forth with the tool and it revises the UI and changes how things work kind of step by step. But I've actually heard from a number of accountants who are like, man, are you playing with this stuff yet? And they're like, Building their own apps and solving really painful workflow headaches. And the whole notion that like anybody can be a programmer now, like that's unlocking kind of a whole new level of potential productive output for people. So to me, like all roads lead back to, all point back to just a change in the ways that we employ people and how it has to be much more tied down to the actual productive output of the individual. Getting really, really explicit about the expectations of what we need from them, of the work of like the volume of work, of the quality of the work product. And I would say thankfully, in accounting firms, while this seems hard to measure and a little bit abstract, it's a whole lot easier for us. I would argue then even for software developers, like if somebody doesn't contribute a single line of code to production in a month, there could be very good reasons for that and there's really bad lines of code and really good lines of code. But in an accounting firm that is a little more production oriented, where you got to get all these month end closes done every single month and you got to get X number of tax returns out the door this month, I would argue while there's it's by no means easy, our profession's actually a little bit more suited for that than some others. This episode is sponsored in part by by Makers Hub. If you're thinking about getting into some new, more profitable services in 2025, one that I cannot recommend enough is advising your clients on their kind of short term cash flow outlook. Oftentimes it's a prerequisite to be able to do more long term planning, which we want to jump into. And then we realize, oh, they're not going to make payroll on Tuesday. So that's kind of what they're focused on. That was the story of like my evolution. We tried to do long term planning, that didn't work. Then we started doing short term planning and then we're like, I kind of got to have a better understanding of your AP setup. So then we started doing bill pay and that kind of created the loop and opened up a huge advisory opportunity. And AP right now, funny enough, is being like completely reinvented by AI. It truly is because we can actually do much, much more automated extraction than we've ever been able to do before. Makers Hub, they're pushing it farther than anybody else that I've seen today. We did a demo day on them a while back about how AI is kind of revamping ap. I think it's now the most watched accounts payable related video on YouTube anywhere because it's like really compelling. It's really impressive. If it's something you're looking at for 2025, take a look at Makers Hub. They recently rolled out a bunch of stuff around purchase orders to really impressive tech. Link down in the show notes. This episode is sponsored in part by Cloud Accountant Staffing, who will help you find wicked smart accountants in the Philippines. As you know, this is what I did in my firm. My last four hires were Filipino accountants and they were absolutely rock stars. How can cloud accountant staffing help you? Well, they can help you with all the questions that you're too embarrassed to ask if you've never done it before. And you're going to have a lot of them and that's totally normal. The people who crap on offshore hiring online are the people who haven't done it. There's a reason that these businesses are a thing in that they're growing really, really fast, the world is getting smaller and there's a ton of really smart accountants in the Philippines. I know because I did it myself. Now, what's the difference with cloud accountant staffing? Different sort of staffing and groups have different approaches. We basically work with two different groups in my content that will help you find sponsors in the Philippines. They have slightly different approaches to how they help facilitate the ongoing relationship with those hires. Two different flavors, one more direct, one more hands on. I actually recommend that you talk with both if that's something you want to explore. Having a conversation with these groups, man, it is free. You're going to learn a bunch. I recommend doing that no matter what. So to learn more about cloud accountant staffing, check out the link down in the show notes. This episode is sponsored in part by Ignition. Come, come, come, come, come. Here's the thing. Here's the thing about client billing. You can't bill for the time you spend billing. You can't. You can't. It is pure waste. And we're bad at billing because it's, it's icky. You let things slide. You don't get paid. You waste time. Waste time chasing people for money. That's not what I did. I would just, I didn't want to waste time chasing them and so I would just, I just eat it. Don't do that. This is where Ignition comes in. The leading revenue generation platform for accounts and professional services. When I was running my firm, Ignition wiped out our ar, it's true. And significantly reduced the time spent billing clients, saving our partners over a thousand hours in the first year Cause they didn't have to bill all that stuff manually. Man. With Ignition, we won more business with impressive online proposals. No more hustling. Hustling PDFs and Word docs. We automatically pulled payment upfront or at the end of a job when it was done. No more dialing for dollars. We transitioned our firm to more recurring revenue and better managed scope creep. No more leaving money on the table. Ignition is making thousands of firms more money and genuinely made us more profitable. Check out why over 7,000 of the smartest businesses run on ignition@ignitionapp.com I'll put a link in the show notes. Now something that most of us generally suck at as accountants is, I mean, managing people and being able to hold them accountable. I mean so many of us are conflict averse, myself included. When we see all the struggles that accountants have with having hard conversations with clients who maybe aren't meeting expectations or they're just kind of not jiving with them. The flip side of that is we're probably really struggling to have those same hard conversations with the members on our team. And for as much flack as accountants take about like, you know, being able to manage clients and being out there is kind of the chest beating like rainmaker that can win clients and all that. Like yes, that's not going to be most accountants. But what we talk about a lot less is how we're probably like not wired to be fantastic managers either. In fact, a great book on this. I'm doing a main channel video right now that is like my kind of my favorite books for accounting for monies. Really good one that we went through in my community. Radical Candor by Kim Scott that is just kind of like about a more mindful approach to being a manager while also being able to be like, do like manage folks in an emotionally intelligent way that leaves space for being direct in service of that person without like tearing that relationship down. And I think that's what we all struggle with is one, just the pain of it and the inconvenience of it not wanting to have those hard conversations. But two, maybe not having the tools to be able to navigate it in a way that's gonna feel productive. One common thing I've seen is you get to the point where you're gonna terminate somebody and it takes that person by surprise and they're like, I had no idea that this was even on the table. And, and that only happens if it's like, yeah, no, we, we really probably weren't clear in our communications in the lead up to that and everybody understanding what are the steps that happen prior to termination and how do you put somebody on a plan to try to resolve those issues before it gets to that point? Because the worst case scenario for all of us is having to terminate somebody. Like, there's definitely the whole school of thought that is like, you need to terminate fast and move on fast. And I do. That's. I probably lean more that way because I've made the mistake of hanging onto folks too long and trying to fix them when it was like, no, if you just would have acknowledged a year earlier that that wasn't the right person for that role, we would have been further down the road had we found the right person. That is all. That is all tremendously hard. But I mean, one of the most common things I hear from accounting for motors that keeps them up at night is why is it taking this person so long to do this thing? And how do I come in and tactfully help them? Cause easier for your mind to go to the bad place and be like, ah, this person's stealing from me, or they're not doing their job, or this, that or the other thing. Sometimes that is the case. I would say more often it is the fact that it just takes different people, wildly different amounts of time to do the same thing. And I actually think it's been made a little bit harder by distributed work. Like, we've lost that adjacency of sitting alongside other people and being able to look over their shoulder when they're doing that thing. As much as I love the upsides of distributed work, there's a lot of aspects of working in an office that I do really miss, and that's a really big one of them is when you're a junior. Like, you learn just by cheating off everybody's homework and seeing what they're doing and asking questions. And I mean, just think, I can go back to what it had been maybe 17 years ago when I first started in this profession and I knew absolutely nothing. And I was thrown. And I started in an itty bitty firm where there was zero training. And you are thrown to the wolves just in the most extreme way. I can't imagine doing that though, sitting at home in front of my computer and having the barrier of teams or a zoom call or something like that between me and a peer. Like, just think about how hard it was for you to go stumbling into somebody else's office to ask them a question, like how you feel like a dummy and like you spend so much time, I mean you could spend a whole afternoon trying to figure something out just to not have to walk through that threshold again and ask them a question, but then layer onto that like, oh, you don't even see those people. Those people are now on the other side of Microsoft Teams or something like that. And you don't have the camaraderie with them that you would have if you bump into them in the break room and stuff like that. Like that is a level of isolation that I think makes it so hard to figure it out for yourself if you're kind of thrown into the deep end in the way that I think accountants in the past definitely have been so, so hard for those people to get up to speed in a distributed environment and easy to forget how many things you know, just as a problem of, as a product of expertise that they don't know because you either didn't come of age, they, they didn't come of age in an office environment like you did, or you just don't have the infrastructure to bring somebody along from day one like a new person. In my experience, that is more commonly the culprit for why is this person not getting anything done? Then they're a bad person. And there was just, for me, there was no alternative to, you just got to spend a lot of time with your pod. That's actually a really good argument for pods. We're going to talk a little more about pods in the coming days. Pods, to me are how you kind of break through that social discomfort of coming into a bigger organization or an organization of any size and not knowing people. Your pod, like those are almost your buddies in the beginning and the folks that you more than anyone else have permission to pester and ask those questions of, the solution in our firm was just pods spending a lot of time together. But that was also fun. Like, that also built camaraderie. It built connection, even though they were working on other sides of the country. And it developed those folks and got everyone in much more in sync on, like, how much time should these things be taking and what are the things that this person has blocked on that I can help them with and that sort of thing. But that, like that, that kind of thing that lives between your ears, where you bounce back and forth between is this person stealing from my firm to do my system suck and we're not training them enough. That's really hard. And then oftentimes when you're, when you have to kind of put the screws to someone, even if they are not the right person for your firm long term. And they're, they're, you know, not a hard worker or something like that. You still end up in that existential crisis because oftentimes you will let a person like that go who was never going to work out no matter what. And what do they say? Well, you didn't create a space where I could be successful. This is all your fault, or this or that. And oftentimes even the people who never would have worked out, you can send those people along in as tactful a way as possible. But you still have to live with that in your head and be like, are they right? Like how do I know? And it's such a person to person thing. Like that existential dread is really, really hard. That radical candor. Let's put a link to that in the show notes. That is actually the, the best book I've read around directly. How you manage people and try to have those very real conversations doesn't get into the system which I think is ultimately the solution. You have to have both sides of it. You have to have a really a rock solid system for what's the expectation of how you know the volume of work you should be getting out. And as this production role, 100% of your time is a 50% of your time. So that system that defines the expectations, extremely important. But then being able to be human and have meaningful direct conversations with people as described in this book, like that's kind of the second side to it. And until you have both of those ingredients, I don't think there's any escaping the problem that these software companies have where you really don't know like how are people contributing? Is everyone contributing the same? And this may be blasphemous for me to say and it's easier to get your head around in the context of people working for big companies than it is for them working for little small shops. But if you think about these people who are in this study, if they really are a quote ghost worker, they are vilified for oftentimes doing what is in the financial interest of themselves rather than doing like what is in the best financial interest of these multi billion dollar companies. And does that seem entirely reasonable? Like many of these people that will go and they will work multiple jobs. In fact, there's an entire subreddit, there's an overemployed subreddit on Reddit. That's just it is there's tons of people. How many people are in this subreddit? 379,000 members in the overemployed subreddit that are just sharing practical tips on how to not get caught on how to manage, like multiple jobs at a time. And there's just a, there's a very kind of, you know, objecting to that on principle sort of reaction that I think most of us probably have. But what are these people doing? These people have figured out a way to meet the minimum expectations of a job while working another job so that they're making more money at the expense of oftentimes these humongous organizations who have not put enough thought into this role to actually ensure that, you know, people are turning up for work. Now, another like thing that is probably very common here is they're the type of people who are very good at automating their jobs and being much higher output than the other people on their team. And if they don't do this and go out and get multiple jobs, like, they're then kind of a victim of that system going back to being, you know, the person that did the entire, you know, group project. And so it's like, while it does absolutely feel wrong and dishonest and there's, there's part of that where there is like, kind of lying at the core of it. I mean, the counterargument is also like, why would you expect someone to not go out and do, like, what is in the best financial interest of them and instead be fully devoted to making more money for this, you know, multibillion dollar organization? It's a, it's a murky one, right? You can see both sides of it. But how do I ultimately protect my business? Maybe even protect isn't the right word. How do I build my business in a way that acknowledges that this is a reality and will increasingly become a reality as AI makes people more productive, it is to try to get back to having the ability to have very direct conversations with your team members in a way that, that services them, that benefits them, and creates greater transparency and expectations. But also, second, devising a machine within your business, like a clear enough framework so that people can come in and understand exactly what is expected of them, understand the thresholds, you know, above and below, which you acknowledge, like, hey, you're overachieving. And if you want to keep doing this, like, we're going to incentivize you to do so this way. But also, here's where you're underperforming. And it's not a meet the bar or you're out, it's a, this is our opportunity kind of our signal to Come alongside you and help you and find out what you need. That's kind of the evil of timekeeping, I think time tracking is. So many folks went through an environment where you either meet the bar or you don't. And the fear and the discomfort of being compared with everyone else and the fear of not being enough, it's just, it's a really hard thing that was like branded into accountants, many accountants, very early in their career. And like, nobody likes that. And there's a version of production based pay where it could kind of be the same thing too. But I think if we approach it more with an open mind to say, like, hey, if you're not at this bar, like here's kind of our process for how we can help you to improve and get you with some of the other higher performing folks to see, like, what are we doing differently and how do we institutionalize some of the things that increase the likelihood that folks will be delivering where we expect them to? It's a hard problem for sure. Like this is probably the biggest kind of core struggle within an accounting firm that ensures that you get kind of consistent output from all sorts of different types of people. Maybe the most important thing that you can build into a firm that increases the likelihood of people finding success. Because it is a really big responsibility hiring people. Like pulling folks into a team that is, it's easy to lose track of just how many people's livelihoods are tied to your ability to execute and create a work environment where folks are gonna feel safe every day and be able to be at their best. And just how spooky it is the notion that, well, if you get it wrong, you're actually putting a whole bunch of other folks livelihoods at stake. That was probably my least favorite part of running a firm was that pressure. Important thing to get right and being made a little more complex and dynamic with changing tech. I would argue to that end, if you found any super cool, like high leverage things, like ways that you're using tech to unlock new things for your firm this year. Man, drop that stuff in the comments. You got any wisdom for folks struggling with accountability with their team members? That would be really good to see as well. Easier said than done. Thanks for coming and hanging today, Sam.