Jack Sweeney 0.07
Well, we’re not going to direct the opener in your direction. We’ve heard so much about the great resignation. And this is something that I guess began to grab headlines last summer, and moved into the fall. Now we’re hearing other bits and pieces other, whether all the employee base that resigned, whether they’re content, whether they’re coming back, Watson flux, supposedly in the workforce, what it is your assessment, what’s going on, when you look at that the businesses your lines of sight go into,
Wayne Spivak 0.41
I found that a lot of the people have done the great resignation or the millennials who have said not content, and they have an entitlement. If you read what they write, you know, they should be able to work from home. Their cultures are very important. Diversity, they don’t want to do mundane tasks. They missed that day in accounting class. And that, you know, so as a CFO or a manager in a business, your workforce is going to be millennial or lack thereof. So you’re gonna have to come up with some sort of motivation to get them to come back. And work from home is one of those items, but work from home has a lot of issues. And I think there was there was just an article, I think, in the Wall Street Journal, on how the states were sort of taking a blind eye to everybody working from home, especially if they were other states. And now they just realized that they’re losing a lot of income. So now all the states are going after the employers and the employees looking for money, what else do the states looking for. So that’s going to be a small nightmare in the next 12 months or so. Yeah, I mean, it depends on which state, I mean, California has already started New York and can’t be too far behind, because they’re always coming looking for money. So that’s the high level of it. It’s finding what works, that’s not going to bankrupt the company. They want flex hours, they want a four day workweek. And they want stipends for working from home. Okay.
Jack Sweeney 2.30
Larry, do you want to share your thoughts on what’s triggering this and what’s transpiring? Here?
Lawrence Chester 2.35
I think a lot of this has been triggered by the government providing a lot of funds for companies, which has created all kinds of tax reporting and Accounting Reporting situations with regard to the PPP and, and Seidl loans and the ERC and other things so that there is more accounting work that needs to be done than there has been in the past. So there’s a shortage of accounting staff available. If you talk to any public accounting firm, you’ll understand that. And so what’s happened is people are, I think, looking for the better opportunity and have the opportunity to get it, there’s a limited amount of staff available, and there are more opportunities out there. So the issue of working from home the issue of, you know, benefits and other things, people are literally taking jobs for any reason to improve their own situation. And if it is working from home that drives them, then they will do that. If they’re looking for more cash, then they will do that. But keeping staff is a real struggle right now. And I think it’s not just in the public accounting environment, but incorporate also
Jack Sweeney 3.49
talk about that, what would middle-market CFOs? What is the advice you have for them? Whether it’s retaining talent or hiring new talent? What? What’s your recipe?
Lawrence Chester 04.02
You know, I think the problem is literally finding skilled staff. And I think the current situation is that people are hiring much less experienced staff than they really need or desire and having to train them up. So that there’s less skill working at the corporate level than I think we’ve seen in a long time. And that and so skilled staff is being stretched thin.
Jack Sweeney 4.29
Is that true at $50 million businesses as well as $500 million businesses within the middle market as you get bigger, is that still the same
Lawrence Chester 4.39
situation? You know, I, I have to tell you, honestly, Jack, I don’t have that much experience in the larger you know, in the middle of the middle market. Most of my clients are in the lower middle market and the 20 to $50 million areas. You know, trying to find a bookkeeper. I mean, good luck. I mean, the last time I heard a bookkeeper they were looking for, you know, 70 to $80,000 a year as a bookkeeper. And they’re few and far between. And they say they’re skilled at QuickBooks. One of my clients literally has an assistant who said, Don’t worry, I can handle QuickBooks. And she took, if you can imagine three hours of training on YouTube, to get her to the point where she was able to handle all of his accounting needs, you know, it took my staff six weeks to straighten out all the skilled accounting work that she had done over the prior year. It’s not pretty out there. It really isn’t. And I think that it’s going to continue to be a struggle for the next, I would say probably for the next year to 18 months.
Jack Sweeney 5.42
Want to ask about l&d investment. Now, if you want to hold on to talent, you know, learning and development, many CFOs we speak to tell us, it’s not immediately visible, but they think it’s a great way it does promote employee engagement, they become much more engaged when they feel like they’ve learned something or they’re applying something that was taught to them within the company. Is that a reality in your eyes or is carded to connect the dots? You know,
Lawrence Chester 06.10
I think that’s an important way of retaining staff. But there’s a risk there. And that is that the risk is you’re training your employees to go to the next level with the next employer. And there’s really no way of keeping them. You know, I think if you put together a policy where you say, you know, you’ve got to work with us for two years after you finish the MBA that we paid for, you know, or we’re going to charge you back for it. I think you just become a pariah with regard to being hired, you know, Glassdoor will have a great time, you know, putting those reviews in about you. I think the attitude of developing your staff training your staff, I think is an important thing that every company should do. I mean, and then you have to just hope that those people, you know, have a sense of loyalty. Unfortunately, I think that loyalty is something that’s in short supply right now.
Jack Sweeney 7.06
Why is there a technology solution here, that, in some ways can help with employee engagement?
There’s always technology.
Speak in AI, though, I’m wondering if Yeah,
Wayne Spivak 7.18
there’s always technology, there’s always a better way of making the mass trap. Except you still need skilled staff. Because you have to feed the animal, you have to I mean, the AI, you can’t just let it run ramp, it’s like letting the dog out and you have all on the fence and the dog was gone, didn’t have a home, the Chinese dog stays in the backyard. While you have to make sure your data is good. And that’s the problem with every company. Their database maintenance is awful. We picked up a small client that we’re doing collection work for 90% of the emails bounce 80% of the phones don’t, don’t get answered. The other 20% Don’t ring through. And these are new clients that is in the company is only three years old. So it’s, you know, so they can have the greatest thing in the world. It’s not going to work. So it’s database maintenance. But I wanted to say something about the last question. It’s a wedge, and that’s the l&d. You want to train people, you want to give people a sense that they belong. If you’re in the military, and you went from your master’s, you have to sign a contract to give two years for every year that you’re in school. So it’s not an unheard-of thing. And they do it all the time. It’s not that popular in regular commercial business. But you have to train your staff. And but you can do it in such a way of Oh, come to radius 2023. You know, that’s three days, that’s an expense. Hopefully, you sit in these classes, you pick up something. Alright. So it’s a management style. It’s a change management style. A lot of big corporations did pay for masters. And a lot of people stayed around or, or they worked, they got their masters and they moved on. But that’s the price you pay. And it’s a double-edged sword. But you have to do it.
Lawrence Chester 9.22
I think honestly, it’s not just education. It’s really giving them an opportunity to be able to do more. I think when employees have ownership of the activities that they’re involved in, it’s not just giving them the responsibility. It’s having them gain ownership over it. I’m responsible for this. I know how to reduce DSO, and I know how to improve collections. I know how to improve our database so that the information is more accurate. I know a report that I can put together that will be helpful to that other manager. And I think those are the things that if you create those opportunities and give employees the chance to be creative, you know, I, I joke about the fact that I see more creative accounting out there than I ever have in the past. But the reality is that there are, I do have staff who’s creative, who can walk into a company and find new ways of doing things. That’s where people are valuable, and to give somebody the opportunity to create that new information to create that new approach, to use technology, in a way that nobody else in the organization is using that technology to be able to provide better answers for senior management, I think that’s worth its weight in gold. And I think that you know, if, if the salary numbers aren’t dramatically disparate, okay, because, you know, if, if somebody else is going to pay them 50% More than you are, it doesn’t make any difference how powerful you make their job, they’re gone. But if, if you can provide them with an opportunity to be more of a contributor to the overall operation of the business, and to have ownership of that, I think that’s a strong piece.
Wayne Spivak 11.17
I don’t know, I 100% agree with the pay. It’s not wrong. But why do people go work for nonprofits for a lot less money, it’s also mission-driven? It’s the love of what they’re doing. So you know, again, management style, giving them ownership, which is a key component of any project that you do, if you have to get the buy-in from the deck plate, which is nautical, for the end-users. And once they feel ownership of the project, the project will succeed, if it’s a suitable project, without them, it’s never gonna go anywhere. So it’s really they have to be felt that they want it. Now, obviously, if you’re, you know, again, if somebody’s going to offer them 50% More, and you can’t match that, you know, unless they’re out of their mind, they’re gonna leave. But they may not like where they go. Money’s not everything. Just mostly everything.
Jack Sweeney 12.16
I just want to quickly mention when I am interviewing CFOs, the two metrics that they frequently will put forth as to how they keep a measure of whether they’re succeeding with their workforce, goals, net new hires, and employee churn. Does that sound right? Would you add any to that? And again, another interesting thing that often comes up is whether they’re surveying your employees more than once a year. A lot of HR leaders, I think would tell us once a year, is no longer where it’s at. You have to be doing it at least twice a year, if not quarterly. Would you agree with that sentiment? Or do you think that’s a little? You’re asking a lot?
Lawrence Chester 13.03
I don’t know, I think you can serve it yourself out of existence. I think by the time you’re serving your employees, every quarter to find out how they’re feeling about things, I question whether or not you have a sense of where your staff is, I’ve always laughed at the person who has a performance review. And then was surprised by the results of the review, either good or bad. I mean, if you don’t know how you’re doing in your job if your boss isn’t telling you on an ongoing basis, what’s going on and how he feels about the work that you’re doing. Doing an employee satisfaction survey on a quarterly basis, is really, I think, a waste of time.
Wayne Spivak 13.45
It should be every day. That’s one of our jobs. When you know, I go into New York into a client’s office where I’m the CFO, I don’t just walk in, walk into my office, shut the door and not interact, you have to interact with your employees, obviously, the more they are, the less number of people you can interact with. But you walk around the company and you talk to people, even if it’s about the baseball game, you’ll get a feel if people are happy, sad or whatever. And you know, surveys, you know, they’re wonderful, they make each other happy, because they got to prove that they did something. But if you do it on a daily basis, people get to know you, you get to know the people. And you get that feeling and somebody will tell you something that you didn’t know,
Lawrence Chester 14.31
it’s important. I think another little piece of that is there’s nothing better than an attaboy, okay. Or an ad for a girl. I mean, the reality is being able to walk down being able to just walk up to an employee and pat them on the back and say, you know, I liked the analysis you did that was really helpful. You don’t have to say any more than that. Just that one sentence. I think that goes a long way.
Jack Sweeney 14.55
I want to touch on this topic that’s been out there forever about automation. And replacing human jobs and what have you. But I’m going to draw a scenario for you because I don’t know if this is, Do you believe this is I believe this is very much the reality you, you’re in the C suite top management position, and you hire a top performer into the company. And it’s great because it’s where you want, you know, you want more top performers, this is a big goal of yours, you want to get five more of these. Now, that top performer is out the door in 12 months, because they realized as they came in, that you’re using a, you know, a 10-year-old ERP system, there was some thought that you were going to upgrade this next 12 months didn’t happen. The person lost heart, they realize they’re going to be in a company that’s just dated infrastructure. And there’s not a prayer that it’s going to be taken to the next level. And they’re going to lose, they’re going to be doing a lot of little snags and headaches that they wouldn’t have to deal with if they were in a company that was investing correctly in automation and in technologies. Is that up? Is that probable? I think that could be probable? No,
Lawrence Chester 16.05
I think it is. There’s, especially in the lower middle market, I think there’s a fear of spending money, the making a capital investment, especially in technology, without having a direct understanding of what that payback is and how it’s going to relate to the bottom line. I think there’s less of an understanding of the value of data and information at the lower little middle market level than there is with big companies.
Jack Sweeney 16.35
And I guess what I’m getting at is employee attrition, due to the failure to automate or upgrade with the millennials that you’re describing.
Wayne Spivak 16.43
Well, with automation, I used to put in a lot of accounting systems and manufacturing systems. And one of the things I would say to the ownership is, I would draw it on a whiteboard or a pad or something was the exhilaration, desperation, curve, Oh, it’s wonderful, it’s wonderful, it’s great, it’s great. Oh, my God, the work we have to do, and then it would come up again. And it’s the same thing. So automation is going to take some jobs if you don’t get retrained. Because every automation requires training, it’s going to cause new people to come in. And so you may have a net change of plus or minus, you know, and you’ll have some new faces, you’ll have a core set of people that are going to stay and change his life. So, you know, if you don’t change, you get your scenario. And at some point, you know, things deprecate and they don’t work anymore. Right. Another flip side is that every other day you have new software coming in, and you see no appreciable value to it. And then you get churn and burnout. So it’s like everything else. It’s a balancing act. But just sitting there, like dough in the headlights not doing anything, is a short path to bankruptcy, you have to evolve. And so you might lose a few, you might gain a few. But, the company has to evolve, it has to change its mission, and has to meet the new possibilities that are out there.
Lawrence Chester 18.24
I think companies that don’t embrace change, are waiting for the death knell. Especially in this day and age with technology moving as fast as it is. And tools like we’ve seen this week, are available to improve internal operations and provide data and information more quickly. The world passes you by. And so the question is, are you going to make the investment to be scalable to be current and continue to grow your business or be viable in the market? Or are you in a position where you’re going to say, no, what we’ve got is working just fine, thank you, and let the world pass you by? Because at some point in time, that becomes a critical mass. And you’ve gone, you’ve waited too long. And the cost of implementation to get you to that point where you need this to be current with everybody else is so high that it becomes unreachable. I think that incremental change of investing in your business, especially from a technology point of view, is important. I mean, I’ve got a law firm who’s a client, they don’t have a laptop or a computer in their system that’s less than seven years old. And they were asking us, you know, should we buy new, soft, you know, new computers? And I said, Well, I can’t believe that you haven’t up to this point. They said, well, buying 15 new computers is expensive. So you’re not supposed to do it every year. You know, you’re supposed to replace three computers a year, every year, and then just rotate them and That’s not a big expenditure, you know, nobody’s asking you to spend $50,000 today.
Wayne Spivak 20.08
Computers are so cheap they can be compared to what they used to be,
well, the kind of computers you use, I understand.
Wayne Spivak 20.16
I mean, you know, you stick a couple of pieces that go together and it works. You borrow a hard drive from Larry’s machine that he doesn’t know about you stealing his data. I mean, it’s easy, but no, really, I mean, I’ve seen what Larry said that they don’t invest because middle-market companies shouldn’t have the same fear that small market does, that they don’t have the cash. I mean, that’s assuming they’re able to read their accounting and figure out the cash flow. And let me tell you, I’m really impressed by a lot of the modules I serve high radius. And my suggestion to them is to bring it down to the lower mid-market, upper small market because there are as many transactions going on, it’s just enough to be able to afford the price. But you know, if you know what your cash flow is going to be, you invest in your infrastructure and invest in your people, you invest in marketing, you know, using your money wisely, not foolishly.
And that brings people into the company to stay. Now, you’re moving ahead. So it’s, it’s a, it’s a change of management thought because a lot of middle-market companies are still working with the founders. As CEOs, not everybody gets venture capital or private equity, contrary to LinkedIn. And just because you were a founder, and you’re a great entrepreneur, doesn’t mean you’ve taken the jump to become a CEO. Even though you called yourself a CEO from day one. I’m the CEO of my company. That’s a company of two and a half people. I’m not the CEO. I’m the president. Now, I’m not the chief executive of other executives, if because, you know, because the only other executive is my wife. She’s the Chief Executive. And she’s the, she’s the app. But you know, that’s part of the issues you have you got to spend money, and you have to wisely spend money.
Jack Sweeney 22.25
I get a sense that the last typewriters, or could have been found in middle-market companies, right, and in the 90s, maybe. And similarly, they’re experiencing something similar now. Whereas I mean, the same question about automation, is automation a threat to human jobs? I mean, they were debating right forever. But why is it now that it seems clearer than ever that, of course, you’ve got to be and I think it has something to do with with the digital and mobile applications now that have become so common in everybody’s life, that when they go back to work, and they’re in this sort of manual environment, you know, when, meanwhile, they go home, and they can order their food and do everything right from their mobile device, they’re thinking, Is it Is this even substantive anymore? Automation can replace human jobs? Could this be a probable reason why midmarket CFOs? And employees are hesitant to accept automation solutions? I don’t think so.
Lawrence Chester 23.30
I think the reality is that technology is going to replace people just as technology has been replacing people for the last 100 years. The question is not, will it? I mean, I don’t think we’re going to get to a point where there aren’t going to be any jobs because technology has taken all of them. The reality is that jobs change. People need to learn to do new things. People need new skills to be able to manage just the output of the technology that companies have bought. And I think that that enhances the engagement of employees. I think that gives them new challenges, and new things to work with. I think it’s a positive thing going forward.
Jack Sweeney 24.13
Thank you. Thank you guys, and thanks for watching. And for our audience. You’re about the same size as the panel.
