418 My Employees Can’t Know How Much Money I Make

You saw it right in the title. My employee can't know how much money I make. First thing they're going to do, they're going to see that number, they're going to be PO'd when they compare it to the number that I pay them, and then they're going to run off and go do their own thing. They don't want to run their own firm. If they wanted to run their own accounting firm, they would already be. They'd already be doing that. Well, they don't, they don't know what a big opportunity it is. This came up when we did the week on production pay. The notion that it's giving people a peek into how much money you make and that that's a big bad thing. Is it? How should we feel about our team being more aware of how much money we do or don't make? It's the topic of today's podcast. Come on in, let's talk about it. We're in Melbourne today. Melbourne, Australia and an undisclosed location speaking at a couple conferences this week. And I brought some filming stuff, but you know what? I forgot all of my US power to Australia power adapters. So for the foreseeable future, the video podcast gonna look a little bit like a hostage video. Okay. If that bothers you, just close your eyes, pretend we're back at the set. Okay. I wasn't gonna look very good anyways because I am jet lagged out of my mind. Okay. My employees can't know how much money I make. This is a messy conversation. And to be totally honest, I'm not like a hundred percent sure how I feel about it. But let me start this with a different sort of handling of our team that I have evolved on that might be analogous to this. So let, let me start with this and then we'll. Again, I think it'll actually help us bring us back around to a version of this conversation that we can feel good about. So let's think through a different lens entirely around our team's technical expertise. We want all of our team members to be technical experts. Right. But some firms, they will withhold investment. They will, they will say, I don't want my team getting too big for their britches. I don't want them maybe challenging the place of either myself or someone else in the firm. And so you want them to almost kind of stay status quo and you don't send them out to conferences or put too much investment into them because what if they leave and I never get that investment back? Right. But then you end up stuck in this really frustrating spot where you're like, well, they're not, they're not doing what I want them to do and why are they not any good at this or that? And so it comes back to the, the kind of age old destination of that debate, which is, yes, there is a cost to training and upskilling somebody and then potentially leaving, but there's a very real cost to not doing that as well. And at its worst, this fear is like kind of tied to being threatened by your team and folks being unwilling to hire farks. Did I say farks? Folks being unwilling to hire folks. Folks that may challenge your alpha dog status, your big brain, top dog, smartest person in the room status. I actually think that is as big of a blocker as the whole investment debate. I think oftentimes the, the argument that you don't want to invest in them because they might leave, it's actually a little insecurity in disguise that we don't want these folks to become too powerful. But even if we think beyond just technical capabilities and we zoom out a little bit to the mindset of being an employee versus a mindset of being an entrepreneur, so often firm owners are irritated with their teams for not approaching problems in a more entrepreneurial way. It's one of the things that production pay potentially solves for is employees who will do something the comfortable way rather than the, the more optimized, higher output way. The fact that you or I may have been wired to default to the path that is getting the most work done and adding the most value to the business to the ends of lining somebody else's pocket, whereas most employees, I would argue they are more likely if you're paying them hours to sit in a chair, they're most likely to find the path forward that is the easiest, that is the most comfortable. Maybe that's a better way to say the most comfortable. And that's why you can put an exciting change in front of somebody that will seemingly save time. And you're like, how, how can you not be excited about this? How are you not seeing what I'm seeing? And they're like, they're not going to tell you this directly, but when it like the rubber meets the road, it's like, bro, this is a job. I get that you want me to do this. If anything, I'm a little bit afraid because maybe it actually replaces my job. But I'm looking out for number one and I would much rather stay on the path I'm currently on because that's what I've done for the last 10 years that's comfortable. And so the business owner gets upset and they're like, you just, you don't see the world the way that I do. And there's this really dangerous path you can go down of like thinking of employees as this like working class type of people that shouldn't be privy to the things that you're privy to or they're somehow born different or they're not like you. And that's just, I mean, that's just a dangerous road to go down in, in so many ways because then like you are the one deciding, well, here's, here's what you're capable of and here's what you're not capable of, which you always have to do with the team to a degree. But you can never let it get so far as that. Like they're fundamentally different somehow. That's just a dangerous road to walk. And to me, this whole, they can't know how much money I make. It feels a little bit that way. Like there's people like me and then there's people like you. Because let's be real, any member of your team can go run out to YouTube and see how much money Logan Graff makes running his little tax firm. That sounded very demeaning. Running his very successful tax firm. It is not like that information is not out there and people can't see or, or back into, I mean, go to chat GPT. What's the average margin of an accounting firm? They do some quick math, do like back of the napkin numbers. Anybody can get to that number. And I, I think people can smell this fear of, well, if they get a taste of the rainbow, then they're never gonna, they're never gonna, you know, be subservient to me or something like that. Like that management style, like it just, I think it just stinks on a person. And nobody wants to work for that because it feels like it's at odds potentially with what is best for that person. And being a great manager really just boils down to that. We've all had the managers who are very obviously self interested and just seeing you through the lens of what you can do for the firm. And maybe I, I don't know, maybe everybody hasn't had the benefit of working somebody with somebody who is not wired that way. But it looks like, I mean, talking down to the team, it's, well, you don't, you don't want the risk and the, the stress of having to run your own thing, and we're the very best firm out there. And there's literally no other firm that can do what we do or is, is as suited of a place for you as we are. And it's all just. It all just comes from a place of self interest. Meanwhile, your team, they can see straight through that. They're like, it's a big old world out there. What's the likelihood that I landed in the perfect spot? And the moment I get a whiff of, like, you not being real, then it's pretty hard to argue that that's the place for me. You know, I had a number of staff that we, I mean, I shared before. We managed right on out of the firm where they, they upskilled super fast. I showed them the, the big exciting world that was out there, and they said, I want to go give that a taste. We had some people that ended up circling back, but everybody was made better for it, and everybody on the team grew super quickly as a result and was much more aligned with my vision for how I wanted to run that firm. And I wouldn't have traded that for anything. So I think where I've ultimately landed on this is that any way of managing a person that is built on a foundation of relying on ignorance or even like enforcing or enabling ignorance, I don't know that that's the impact that I want to leave on people. And that's coming from me, someone who was opened up to the bigger world of accounting by getting to go to a conference for the first time that my firm would pay for. And that's a classic argument of, well, if. If they'd never agreed to send you to that conference in San Diego, then you'd still be working at the firm, wouldn't you? And I, that might be true, honestly. But I can tell you I did a whole lot for that firm, too. I went on to buying out several of the partners that didn't have a way out at that point. Left the firm in a much, much better place than I found it ran a firm that I think was like, truly a really good place to work. It was not perfect by any means, but looking back, like, it's still something I'm proud of, for all of its imperfections. And the thing that I take the most pride in is what we enabled for our team. The fact that we could see them coming into the firm on one trajectory and then very quickly them be on a completely different trajectory. Whether they stayed at the firm, whether they left to go do something else. What I'm Most proud of is we enabled for a lot of people something that hadn't been enabled for me after like 15 years in the career to see that transformation and people in three to five years, like that was really, really exciting. This episode is sponsored in part by Carbon, the practice management system. Something that Carbon does that I love is they will literally tell you the stuff that they are working on and have like a big TADA event at the end of the year to announce. Like, hey, here's the stuff we're about to ship and here's what we're prioritizing for the following year, which that level of confidence and transparency. I like it. In fact, in the process of doing that, they probably actually get a lot of really useful feedback around like, okay, here's what I like about that. Here's what I don't like about that. Whereas if they didn't put that stuff out ahead of time and kind of just did this big ta da, they would have less information from their users than they have by like kind of involving them in that conversation. They did that at the end of 2024, announced a whole bunch of stuff. Honestly, all the Carbon nerds and Carbon just has some real enthusiasts, they all turn up to that webinar and they're so it's like the highlight of the year. They got the popcorn out there like, oh, what are they going to announce? And a bunch of people did get excited and they went ran out to LinkedIn and they're like, oh, I'm so, I'm so excited for this and that and that and that. I mean props to Carbon for building that level of fandom in your software tool. But also people, it's accounting firm software. Let's get some perspective. Probably not a lot of tools in your stack with that level of transparency. If you're in the market for practice management System, Carbon is one of those tools you kind of have to consider. It's like on the have to look at list. Learn more about Carbon. Check out the link down in the show notes. This episode of sponsored in part by Team Up. You know, the greatest proof of something that actually works. People are doing it. People are coming back and doing it more. I got a report here from the last few weeks of the projects that Team Up's been working on. By the way, Team up, they help you hire talented accountants in the Philippines directly. You work directly with them. Can I just run you through like, I don't know, like half of the things they got in the pipeline right now. Firm in Hawaii hiring a Bookkeeper, returning firm. They're coming back for more. New firm in California hiring a senior accountant. New firm in Australia. I'm so sorry. Oh, what was that? I'm so sorry. Hiring a tax accountant. Firms in Florida and Texas hiring senior tax accountants. They are returning firms. BC a returning firm from BC hiring a junior bookkeeper. Arkansas firm hiring an executive assistant. New firm from Colorado hiring a senior accountant. You get the idea. Every flavor of accountant you can imagine a whole bunch of firms that are coming back, which tells me they've done this before and it worked. That's what I did. I started with one and then immediately hired like three more folks in the Philippines over the course of two or three months. If you're looking to work directly with folks in the Philippines, TeamUp's got the recruiters and can help you do it. Check out the link in the show notes to learn more. So if you zoom out a bit. I'm not like a personal legacy guy. Like, I could, I could care less, honestly, what people say about me when I'm gone. What I do really care about though is what is the net impact I had on the people that I will leave. I think that's a much better way of thinking about legacy. I mean, the last thing people need to do after I'm gone is to be like, worried about me when the world's still spinning. But, you know, money or like any of those things that you could leave behind, like, none of that matters as much as a change you, you how you impacted someone or a group of people's lives because they're still living on. They can still do stuff. They can still support, you know, the next generation of people and if we can find it in ourselves to be positive sum enough to think that, yeah, like, if I give back to my team and do things that maybe don't always pan out in my own sort of best interest, I'm probably going to be just fine for a couple of reasons. One, because along the way, it's going to make every single one of those people better. It's going to challenge them. They're going to be more aligned with the things that I'm excited about. But also too, over the long run, that's just a better way to conduct my business, not only with my team, but with my clients. And I'm pretty sure if I carry myself that way consistently, it's going to pay dividends in the long run. That's something that no matter how it shakes out in the end I can be proud of. We've Talked a bit about how, you know, non compete agreements are just, they are pretty brutal with a few exceptions, non compete agreements, you know, when you buy a firm or something like that, there's, there's situations where that makes sense and needs to be enforced. But the staff of your firm signing a non compete agreement and not, not all are made the same. There's like a level of stealing clients that's wrong. But there's, I mean the very first one I signed was like, you can't go into business being an accountant within X number of miles from this zip code. I'm like 18 years old and I'm like, what's my hourly rate? They're like this. And I'm like, okay, where do I sign? And we were off to the races. But we've talked on the POD before about how I'm more of an advocate of the op. The opposite, basically a compete agreement to say that hey, if you are going to go do your own thing and if that's something that you think is in your future. And there's a lot of people that just know that like I worked with a guy who doing his own thing was always in his future and the people that he worked for were perpetually telling him no, you don't understand how hard it actually is. And there's a reason that you're an employee right now and not doing your own thing already. None of them are building him up. They're all through a very self interested lens just telling him all the reasons why it'll never work for him. By the way, that guy's off running his own firm now. A lot of folks are just wired that way and we pretend that they aren't. The whole careers thing, if, if, if you don't have the context for like six months we ran something where we would try to place accountants in my audience into firms in my audience where it's like, hey, do you want to run? You want to work for a super modern firm that aligns with kind of my vision for how a firm is run? And on the flip side, hey firms, do you want to hire accountants who are aligned with, with this kind of method of firm running? Everybody's super excited on both sides. Totally made sense, right? Well, as we start talking with the folks on the applicant side to place them into firms, 80% of them are like, yeah, keep this on the DL, but I'm probably going to be running my own firm in two or three years and I just need something to get me there. And I'm like, I Can't, like in good faith place you into a firm if I know you're going to run off and do your own thing in a couple years? Especially not like on the, you know, they told me this, but I can't tell the firm that. And then we charge, you know, the firm a recruiting fee to place that person. I just didn't feel good. Right. So why are 80% of those people ready to go do their own thing? Well, I think probably my vision for firm running is it's gotten pretty hard to separate from like the ambition and the agency and kind of the special thing that is being able to run your own thing and have the confidence to do that. Like, if I can instill confidence in a bunch of people to believe that they can actually do that thing, that's really, really cool. Especially on the podcast where we go a little deeper. I wouldn't say that, like the YouTube videos do that so much, but a byproduct of listening to 450 episodes of Talking about small accounting firm running is just confidence is being like, no, I actually know how this stuff works. And I've heard from other accountants and like, I know this is inbounds, this is out of bounds, and I'd actually do this thing. It's not as scary as I once thought it to be. And so on the careers thing, there's a version of that where I'm like, this careers thing, this could actually be a super lucrative business because I mean, you think about that, think about the cost you what you pay to a recruiter for a hundred to two hundred thousand dollars a year accountant. Because that's like the level of people that we attracted into that careers thing. I, you pay, you're going to pay, Robert. Half, I don't know, for 40 grand for somebody like that. So for me, that could be a great business. Right? We place, I mean, think about this. Like, and this is one of the reasons why we started down this path. We place two to four people a month and we had, I think we had several hundred applicants in that pipeline. We place a couple few people a month and that's a 1 to 2 million dollars a year business that I can run with like, I don't know, an admin, like somebody just making connections. Like, do we have to then be more careful about the content and not make it about like launching your own firm? Because then a firm owners get their people to tune into my stuff. They, they won't do that anymore because all the people that listen to my stuff are then going to Go off and launch their own firm. So we should, we should stop doing all that stuff so that the applicants that come into the pipeline aren't going to launch their own firm. We don't want them to have that confidence because we want to be able to place them into firms, and firms will pay a bunch of money for that. See how much that sucks? Like that's, that's going through life, running your business, being reliant upon other people's ignorance, like building a business on top of kind of that enforced ignorance. It just sucks. It's better business. Maybe actually on the accounting firm side, I don't know that. I don't. That's probably not an actual better business because as those people grow, they grow for you. Like they're doing even more for you than they could have before. But there's absolutely going to be scenarios where what's best for you financially, what's best for your business is not going to be the thing that is like lifting up other human beings. And then you just gotta, like, give that some real serious thought and consider, you know, what is the U5 or 10 years down the road? How are we gonna feel about that reflecting back? Like, was that the right thing to do or not? Anyway, so we talk about compete agreements, these folks that are kind of hardwired to go and do their own thing someday, if we can stop pretending that they're never going to leave you, because everyone will leave you. Just plan on that from day one. You have no forever employees. That's probably the case, especially this day and age. Like, everyone will always leave you. And the less that you pretend that won't happen, the more likely they will be willing to have a transparent conversation with you about their plans. And if those plans can be, hey, I know you're gonna go do your own thing someday. So when you do, there's probably a little book of business that we could send with you. You're gonna pay us for it. It's gonna be a great little starter firm for you, and we'll maintain the relationship like we can find ways to be helpful to each other. You're getting paid for clients leaving that, you know, maybe are no longer your optimal clients. And that's a whole lot better than that person walking into your office that one day. You know exactly what that feels like when the person comes in that doesn't usually come in and they sit down. You're feeling that right now, huh? Like, you know exactly how bad that feels. The digital version of that, where they want to hop on A hop on a zoom or something like that. And they are not the type of person that would normally initiate that stuff. You sit back and you just crap your pants and you hang on to the arms of the chair and you wait. And then when they don't say they're leaving, who you're like, you're so relieved. In fact, you've probably had conversations with people where they, where you saw that relief in them and they may even say like, oh, I thought you were coming to tell me that you were going to quit or something like that. Don't leave yourself in the position where the other person feels like that's the only path forward is dropping that bomb on you. That's why I love the idea of folks leaving with part of your firm, you getting paid for it. That just seems like so much, that just seems so much better to me. So to bring this full circle, do I want my team to know how much money I make? I don't think that I'm going to put like a full P and L in front of my team. Although there are firms that do this and run this like hyper transparent model. And I don't, like, I don't, I don't necessarily see anything wrong in that. But to the degree that sharing is required to do like production pay, something like that, where you're doing a rev share, like I have no problem sharing that because it not only aligns all of my team better with the things that I'm looking at, but it gives them so much more in the way of stakes to do the things that I want them to do. Like that's the beauty of a lot of aligned incentives. Like if I'm trying to make more money out of the business, then why is my team members only KPI, how many hours they worked last week? Now am I going to sit them down and do like a little crash course on like here's, here's how accounting firms make money. When an accountant and a client love each other very much, this is what happens. And this is the revenue and this is the cost. I don't know if I will do that or not. Honestly, if I had somebody that was hell bent on going out and running their firm someday, I probably would. I'd just be like, hey, here's the most transparent version of this. What I think about it and I'm happy to give you advice and when the time's right, we'll find a way to make that happen. The flip side of this, the opposite. The worst timeline is the one where you Keep all that stuff under wraps. And then one day they stumble across Logan's video about how much money his accounting firm made last year. They stumble across Yuri's LinkedIn post saying, here's how he made 160 grand last year. Working, you know, 15 hour weeks most of the year. And when they do, you know who's probably going to lose in that situation? Almost certainly you. If you are keeping them in the dark, then most likely it's going to be a surprise to you when they bounce. It's a messy calculation to make. And there, there might be situations where, and there are, like there's, I don't, I mean, I'm not 1000% transparent with my team now. I wasn't then. Like, there's definitely situations where you have to be selective and there are things that kind of, you got to carry that you're not going to project onto the team. But enforcing ignorance on them unnecessarily because you think it won't serve your own ends, man, that's not a legacy. I want to leave. I want the folks who worked for me to be absolute rock stars. Even if they didn't come in on day one as rock stars, by the time they're leaving, I want them to be in a better place. It is easy to forget that what a responsibility it is to be an employer. We see the faces of the people that show up to work and we have that level of connection with them, but we don't always see the faces of the people who are reliant upon that person that works for you, their partners, their kids. Being an employer, that is a really big responsibility. Don't take it lightly. Like that's, that's the biggest thing I miss about running an accounting firm is, is enabling that for accountants. And you know, so many folks running accounting firms are past that financial threshold where more money, you know, additional happiness is just very, very marginal as, as more money comes in the door. And you know, in my opinion, none of that stacks up to the satisfaction of like doing right by people. It's, it's, frankly, it's an opportunity. Like it's a tremendous gift to be able to employ other folks to find yourself in that situation. Don't forget about the people that are counting on you. It's a big deal. Gang, thanks for coming and hanging today. We got another fun one planned tomorrow and I'll see you there.