Technical skills will never go away, but there’s a whole other set of leadership and ‘soft’ skills that firms can’t afford to neglect, says consultant and coach Erin Daiber of Well-Balanced Accountants.

Transcription:

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Dan Hood (00:03):

Welcome to On the Air With Accounting Today, I’m editor-in-chief Dan Hood. There’s a popular saying these days that what got you here won’t get you there. And I think you might add a corollary to that, which is the type of people who got you here won’t get you there because of all the many changes that firms are facing that are all calling for new and different kinds of skill sets at all levels, and particularly I think among firm leaders here to talk about all that with us is Erin Daiber. She’s a CPA turned leadership coach, speaker and trainer, and the founder of Well-Balanced Accountants. Erin, thanks for joining us.

Erin Daiber (00:32):

Thanks so much for having me.

Dan Hood (00:34):

I want to just jump in sort of, we we’re going to focus mostly on leadership, I think, but just to start, maybe we can talk about the sort of broad skill sets that accountants need to have and how are those changing?

Erin Daiber (00:45):

Well, I think technology is disrupting our profession so profoundly. The skillset absolutely need to change. In fact, I think in a pretty short order in the next 18 months or so, accountants are really going to have to become technologists. They’re going to have to get comfortable with these technologies, how they work. You don’t have to become an expert, but at least know enough to be dangerous and have some people on your team that are really good with the technology. I think our clients are going to start asking about those solutions, and we’re going to have to be advisors in that way. Alongside of that, we’re going to absolutely need to double down on emotional intelligence, relationship building, communication, all of the things that for so many years accountants have said we don’t need that fluffy stuff, but we absolutely do. We are going to be so much more focused on the advising and the relationship building with clients as technology handles a lot of the nuts and bolts of the compliance side of our roles. And so we need all of those strategic thinking and visioning skills and really all the human skills are going to be critical going forward for accountants to stay relevant.

Dan Hood (02:03):

And as you say, that’s sort of at all levels of the firm, right? Everyone’s going to be involved in the technology, but also been affected by the technology pushing everyone at all levels to more advisory roles, more the human roles and all these things, right? That the technology hopefully can’t handle. It can’t handle yet. Let’s hope it never learns to comfort an unhappy client. They do that then we’re all out of business. But some of the human skills you’re talking about the EQ skills, the communication skills, the leadership skills, those point directly to leadership. What are some of the skills that you think that the leaders of accounting firms are going to need to

Erin Daiber (02:42):

Learn? Well, I think one of the things we’re seeing right now that has started to separate firms that are really thriving and will continue to thrive in the future, and those that are struggling, our leader’s ability to be adaptable and to manage change, which is not easy to do, but I’ve seen a clear distinction where firms that have dedicated individuals or dedicated themselves to training those skills in their leaders, this ability to manage change and manage multiple spinning plates all at once have really kind of taken and extended their lead out ahead versus those that aren’t comfortable with change themselves aren’t able to adapt and pivot without having all of the information. They’re the ones that I feel like are kind of sticking their heads in the sand or waiting, taking that. Let me just sit back and wait and see what happens approach, and these are the things that keep me up at night worrying about firms like that because I’m concerned that they’re falling further and further behind.

(03:47):

I was just having a conversation with somebody recently about the pace of change in our profession being so rapid that it may feel like we’re building the plane while we’re flying it, but that’s how it has to be. We have to be willing to jump out there and move initiatives forward maybe without having all the data or knowing what other people are doing, because if other people are already doing it, you’re behind in some ways. So I think those are going to be critically important. And then just the evergreen communication, being able to communicate with your team about change, about how they’re feeling and why they need to pivot and adapt will be really critical.

Dan Hood (04:31):

I can’t tell you. I think the change management thing is fascinating. It’s a fantastic point for firms to think about. Accounting has for a long time changed very slowly for all kinds of good reasons. They’re cautious, they’re careful, they make sure things work. They don’t rush into things without carefully considering it and carefully adopting it. The flip side of that of course, is that accountants are also like, well, I’ll just wait for a long time and maybe I won’t have to change. But as you say, the pace of change and not just the pace, but it’s not just that you’ll have to make a change particularly quickly, it’s that another change is right behind it and another change is right behind that, and another change is right behind that. And I think that as a skill set is not talked about enough. We’ve talked about soft skills in terms of communication and all sorts of things for a long time.

(05:13):

I dunno that we’ve done much work on them. We will talk about that a little bit. How much we’ve been talking about have we actually made any progress, but the change management as a muscle that firms need to develop because there’s going to be, as you say, a lot of fast changes coming away, but a lot of them, it’s not just the pace, but the scale and the number is going to be norm. So I think that’s a fantastic point to make. I think firms should be focusing a lot more on that. They, here’s the question. As I said, we’ve been talking about the soft skills of communication, for instance, and managing clients and managing client relationships for quite some time. Our firms doing enough here. Are they paying enough attention to it? How good are we at this?

Erin Daiber (05:52):

No, is the short answer to that question. I think some firms are, some of the firms that already have really robust learning and development teams and have the resources to put robust plans and programs in place. I think they’re doing a pretty good job of incorporating these things, maybe pivoting those programs to address the new skills that are needed. But in general, we’re not doing enough to focus on these new skills. Again, keeps me up at night because I’m worried about do we have enough time to develop these new skills in the leaders who are already in a position inside the firm before their jobs significantly change as a result of technology. So I’m worried about that, and at the same time, one of my sort of signals or indicators have firms come to me and asked me about that, and the answer is no. I’m still the one going to them and saying, what are you doing with this? What steps have you taken? So I would say we’re not moving on that front at the pace that I wish we were.

Dan Hood (07:05):

And as you say, one of the reasons why it’s crucial is that you’re going to need, you need to have these skills soon and a lot because the change is coming as fast as you can imagine and often faster. I think one of, there is an argument that a lot of firms make generally against any kind of change, which is, Hey, we’re doing great. We’re making tons of money. We have more work than we could possibly do. In fact, I don’t have time to develop my skills in change management or technology or because I’m so busy doing client work. I think there’s also another argument for a lot of older, particularly older partners, the partners who should be putting these plans in place, getting their younger generations trained up, dwelling their own skills, is that they sort of say, no one ever developed them, right?

(07:47):

This was not a focus for accounting firms for a long time. The focus on soft skills, the focus on change management skills, they didn’t need these kind of things. Just sort of the structure of your job taught you what you needed to do and your skill sets developed that way. They want to, why should they focus on it? Why is it important? We talked about, yeah, there’s going to be a lot of change coming, but they’re going to hope to ignore those changes as well. Why? Sorry, I didn’t say that out loud, but why is it important for them to focus on this? I mean, they’re hoping, put it this way. If they’re hoping to wait out the changes, why do they need to develop change management? They’re hoping to ignore the technology. Why do they need to focus on technology? Why are these skill sets important to them?

Erin Daiber (08:24):

Well, I would actually take a step back and say, yes, you’ve been super successful, and in fact, those are the hardest conversations to have. Or with the firms and the individuals who’ve been the most successful because they’ve got a lot of evidence to support the idea that they don’t need to change, that what they’re doing has worked and should continue to work into the future, except that things are changing so rapidly. But I actually think that this is one of the gifts that PE has given to the accounting profession that people aren’t conscious of, or I haven’t heard many people talking about, which is they are signaling to firms that you have untapped potential in your business. So I would argue that even if you’ve been wildly successful, you’ve still been leaving money on the table in some way by ignoring these skills over time and you’ve been successful or reach this level of success almost in spite of not having those skills.

(09:20):

And it could have been even better. And I think one of the arguments that I’ve gotten a lot over the years in working on soft skills or the pushback, I guess I don’t know about an argument, is that those soft skills aren’t important, and what we really need to focus on are the technical skills. But if you think about ways that the lack of these skills might’ve been impacting the business, I think there’s a direct impact on the bottom line. So for example, not having the accountability in place, not being willing to have tough conversations with people, those would, in many cases be considered soft skills, being able to have critical conversations, and that’s directly linked to leaking profits or limiting your profits, limiting the amount of money you’re bringing in. So even though we maybe didn’t always have a focus on these skills and people got away with it for a while, I do think there’s a big opportunity to focus on it now, and it’s just going to be critical. It’s a completely different environment than we were working in 20 years ago.

Dan Hood (10:28):

Well, you made the point of you’re not successful because you ignored these skills. You’re successful in spite of the fact that you ignored these skills. And if you hadn’t had these skills, how much more successful might you have been? I also, did you point out it is one of those weird linguistic things we call the things you were talking about, having hard conversations with people. That’s some of the most difficult things you can do. That’s way more difficult than the tax code, right? Calling somebody aside and saying, Hey, you’re not doing your job right, is way harder than understanding your tax skills. But for some reason we call that a soft skill. It’s actually one of the hardest things you can do, and it’s a key part of leadership. We’re going to want to talk a little bit more about the specifics of leadership skills and particular leadership skills that we want to be developing in the next generation of firm leaders. But we’re going to take a quick break first.

(11:19):

Alright, and we’re back. We’re talking with Erin Daiber. We’re talking about the future skill sets that accounting firms need to develop all across their staff and their employees, but also specifically what they need in their leaders. And just before break made the distinction right between their current level of leaders and the future people that they’re hoping to develop. I think for some firms it’s easier in some ways to say, well, we’ll develop the next generation. I don’t need to change because I’m pretty good, I’m great. But maybe that next generation, they need some extra help. So we’re going to talk about both those aspects, but maybe one sort of place to start is are there warning signs that you haven’t done enough to develop your next generation of leaders? Leaving aside the skillset, is there a way to figure out, Hey, my firm, it’s pretty set for leaders. I may need to give ’em new skills, but do I actually have them in place?

Erin Daiber (12:07):

One of the biggest red flags that I’ve seen recently is when I talk to partners that are seasoned, maybe thinking about retirement and their comment or their complaint is, well, no one’s ready to take over. So that’s a big red flag, big warning sign. And unfortunately for some it’s too late because the timeline to get someone up to speed doesn’t align with the timeline in which they’d like to retire or move on. So that’s a big one. If you look back at the people that are coming up behind you and you don’t currently have someone ready or within a couple of years that could be ready, that’s a good sign that you need to start developing them and that it’s not just that next layer, but we need to start sooner with everyone else really from day one, from the staff level on up. I would say one of the other places that you can look that’s tangible is some of those standard metrics that we use.

(13:06):

Profitability. If your profitability isn’t where you want it to be, take a look at who’s doing a lot of the work. A lot of the times, one of the clearest warning signs are where you’ve got manager and senior level individuals spending a lot of time on projects that can signal to you that they’re not doing a great job of delegating, giving feedback and developing the next level of individual, which is sort of a quick fix to start developing those skills in them and then holding them accountable to shifting work down. That’s critical, but it does start at the top. So there’s a cultural component of this that if at the leadership level that’s not happening or if they’re not incentivized to do that, you may have a hard time getting traction on a shift like that.

Dan Hood (14:01):

I like that. That’s as a barometer of how successful you are in developing your next generation is how much client work are your partners and your managing partner doing? If they’re still doing a lot of that, they’re probably not focusing on developing staff. Pushing down work is actually a great way to think about, to start developing staff, give ’em more responsibility, give them, and then hold them accountable for it. As you said. I want to just while we’re here, while we’re talking about this, if we’ve got to find our next generation, how do you identify strong candidates for leadership years? If you look and say, well, no one’s ready now, how do you go back through your staff and say, well, who might be who I might start trying to get ready? What are some of the characteristics of a person you want to bring into your leadership conveyor belt?

Erin Daiber (14:47):

Well, I think the skillset can be diverse because you look at most partner groups inside of firms, they don’t, and I would argue shouldn’t be cookie cutter. They shouldn’t all be the same, because you want a diverse team with diverse skill sets and backgrounds, and you want all of those individuals to be able to look at the partner level and see themselves, see that they are in the right place, that they’re represented, and then see themselves long-term in your organization. So I don’t know that there’s one set of criteria or characteristics, but I do think it’s important that those individuals are people that others want to follow and that they have the ability to motivate others to really not only speak as a leader, but also show it in all of their actions and their behaviors really be the embodiment of a leader. And again, there’s not a one size fits all with that, but just making sure that they’re really representing the values of your firm. And I do think one important characteristic that is just becoming more and more critical is the ability to be futuristic, to not be held in the confines of the way we’ve always done things, and to really be able to break out of your own comfort zone around what we’ve done, the information we have, and be willing to take some leaps. I think that will be critical.

Dan Hood (16:16):

I mean, almost as important. It sounds like almost as important as what you’re not looking to them for is what you’re not necessarily concerned about their technical skills. You’re not necessarily concerned about their deep knowledge of the tax code or of gap or anything. I mean, obviously they can’t be ignorant of it, but that shouldn’t be necessarily the top criteria.

Erin Daiber (16:34):

No, I don’t think so. I think those skills, especially with technology, a lot of that will be taken care of in a way. So it will always be a foundational component of what we do as CPAs and accountants, but I don’t think it’s the critical. And what I would say is it’s not a differentiator anymore. When you get to that level, if you’ve made it to the senior manager, even the manager level, it’s kind of assumed that you’ve got some level of technical competence that you have worked it out to get this far. But what starts to differentiate and distinguish that person is do they also have the drive and the people skills and the cultural alignment that makes them a great candidate to lead this firm into the future?

Dan Hood (17:26):

Well, you that way, right? Everybody in the firm should be good at these things, right? Everybody should be good at tax or the technical aspects of things, right? That’s why they’re working in an accounting firm. That’s not what’s going to make them a good leader. So excellent. Well, let’s talk a little bit more about what makes people a good leader with some of that. We’ve talked about some of the skills that people are going to need in terms of knowing more about technology and being more comfortable with it, being good with change management. Change management I think is technology. Comfort with technology is something that everybody in the firm needs it. Firm leaders need it somewhat, but obviously that change management skills I think are pretty crucial for leadership, particularly when it comes to leading people through change, which is a little bit different than adjusting to change yourself, getting people comfortable with it. What are some of the other skill sets you’re looking for, you think we’re looking for in a leader?

Erin Daiber (18:10):

I think a willingness to learn, not treating development as a destination, but constantly being on the learning curve. I think it’s really toxic. That’s a bit of a harsh word, but I think it’s a little bit toxic when we have leaders in the firm that are not willing to learn or not willing to embrace things, and they just say, well, I don’t know how to use that, so I’m going to do it my way. You guys continue on, but that’s not really the model. That’s not contributing to the culture that you want. So that being on the growth edge, being open and curious also, I guess along those lines, a willingness to say, that’s not for me. And maybe that means that it’s time for me to step back into a role that’s not so leadership focused. Maybe I’m still here as a contributor in some way of my technical expertise and my client knowledge, my inherent organizational knowledge, but maybe I don’t need to be the one driving initiatives forward anymore for the betterment of the firm.

(19:16):

I’ll continue to double down on the communication skills. I think part of change management is really being able to communicate differently to different groups of people, speak to them about what’s in it for them. That’s what everyone is always thinking, what’s in it for me with this change? And I saw an interesting stat recently, I think the A-I-C-P-A published it, that 80% of transformation success or failure has to do with people. So things like having a growth mindset. We’ve talked a little bit about being able to motivate others to change and then being able to collaborate with other people, collaborate across generations. I think that’s going to be another challenge. We’re pretty close to having. We definitely have three generations in the workforce right now. We’re nearing having four, which is going to add some complexity to things. Also, three

Dan Hood (20:13):

Generations, too many, lemme just put it down. I think that’s three generations, too many. One generation at a time in the workforce. No pushing, no shoving. Sorry. Cut.

Erin Daiber (20:19):

Yeah, there you go. So that’s what I think will be really important is being able to connect with different people both internally and our clients are going to be changing and getting more diverse as well. So being able to connect,

Dan Hood (20:37):

Because particularly you talked about you’ve struck a chord when you’re talking about the, I don’t know how to do that, so I’m going to opt out of it. I think for a lot of earlier generations of partners, there was the notion of, well, I’ve made a partner, now I can do what I want. As opposed to saying, well, I’ve made partner. I need to be more aligned with what the firm is doing than ever before. It was one thing when I was at a lower level now, because not just do I need to do it, but I need to model it for everybody. Everybody below me so that they take it seriously as I’m supposed to.

Erin Daiber (21:07):

Absolutely. I think it’s critical, and it’s one of the places where firms start to lose the momentum, especially if we’re implementing change and we’re doing something that’s really new and transformative and everyone’s kind of pushed outside of their comfort zone. We’ll look for any excuse to not do that, to not put ourselves through that. And a partner or someone who has the respect of the firm, especially if your name’s on the door, if they’re not doing it, that is a really good excuse for everybody else to take themselves out. And there you go. You’ve now spent a bunch of money on a new technology or some kind of development program or an initiative, and you have really low uptake. You’re not getting the ROI from it. And it’s something as simple as that. Someone giving them the excuse not to.

Dan Hood (21:56):

I think it, it’s interesting you talked, we talked about a little bit about delegation earlier and having to make sure that partners are pushing work down and that being a great good start for developing and accelerate leaders, right? Giving people more responsibility, more complicated work, being a little bit of a leadership role. There is a great start. Are there other ways to start this leadership development process? For instance, maybe one way to describe, do you need to tell people that you’re thinking about them for leadership, the people you identify should be like, Hey, we think you are the next generation, or does that scare them away?

Erin Daiber (22:31):

Oh my gosh, no. I think we should be talking about that very early. In fact, if they’re not somebody that you’re thinking about for the future of your firm, why have you hired them? I mean, I think it has to start at the very beginning where we hire for the culture, we hire for those skills. And of course, at the early stage, you’re hiring potential, but that’s potential that you think you can develop over time. But yes, we need to be talking about that early and ingraining that in people letting them know that that’s potential we see in all of them if that’s what they choose. I also think there’s a component of being transparent about what that looks like. A lot of firms don’t talk enough and talk early enough about what the path to partner or path to leadership looks like. And there may be very diverse and winding paths.

(23:21):

It may not be a linear path, but when we don’t talk about it and we don’t tell people they make things up, and usually what they make up is that it’s going to be horrible and hard and not something I’m cut out for. We tend to take ourselves out of the game if we don’t have someone else saying that they believe in us and they see that potential. I’ve seen it actually many times where firms have built entire succession strategies around a couple of key individuals, and in my role coming in and coaching some of these people, I have confidential conversations with them where they don’t know that that is built around them. And even worse, sometimes that’s not at all what they see for their own future. And so you may think you’ve got this solid succession plan in place, but without having those conversations, you don’t really know. So I think that’s really important.

Dan Hood (24:19):

This is the communication skills problem, right? You’re not literally not communicating is the first step to fixing the communication skills problem is to communicate in the first place. Awesome. Any other quick tips for people to start their leadership development process that we don’t have time? Unfortunately, it would take days to map out a proper leadership development strategy that people could use, but are there any other quick ways they can start letting ’em know that we’re thinking of as leaders is obviously a good place to start.

Erin Daiber (24:48):

So I think having the conversations is a great place to start. I would encourage firms to think about it holistically, not just one group or developing the seniors, developing the managers, but really think about what is that pathway? How do we get somebody from a brand new staff who’s green in every area to a full-blown, really effective leader? So thinking about it holistically, mapping out a path that’s going to help you to have a cohesive strategy. One of the things I see in firms often is we’ve taken this bit of a patchwork approach, which is, okay, so I’m not suggesting that you have to do it all at once, but at least think about what that pathway is going to look like before you start to put programs in place so that it is cohesive at the end of the day. And the other thing is can make sure that it’s aligned with your overall firm strategy.

(25:45):

I’ve been using this analogy of those two things. Your firm strategy and your learning development strategy should be related, closely related, not distant cousins. Sometimes in firms, they are very distant cousins, maybe three times removed, where it just feels like it’s been thrown on there. And what happens then is your learning and development or your leadership development programs aren’t meaningfully moving the needle on your firm goals. You’re not going to get the ROI out of it. And that again, opens the door for somebody to say, this isn’t worth the investment anymore, so let’s stop doing it. Or let’s cut back. And really, at this stage in the game, I think firms should be doubling down on these types of programs and putting but in a smart way, right? Making sure that we are measuring the skills, we’re being intentional about what skills we’re trying to develop, and put some systems in place to measure that ROI to make sure that they are making a difference.

Dan Hood (26:49):

Excellent. Alright. Well, I think they have their marching orders. They know what they need to go out and get working on, but I could make the snarky point of if they can align it with their strategic plan when they have a strategic plan. But that’s a whole other podcast that we won’t talk about a list from. But I think assuming they have that, that’s always a lot of good advice for them to get started. Erin Daiber, thank you so much for joining us.

Erin Daiber (27:11):

Thanks for having me.

Dan Hood (27:13):

Thank you all for listening. This episode of On the Air was produced by Accounting Today with audio production by Adnan Khan, or review us on your favorite podcast platform and see the rest of our content on accounting today.com. Thanks again to our guest and thank you for listening.