Are Firm Partners Better At Schmoozing Than Actual Accounting?

Hey 👋 - Brandon here.

Happy Saturday to 1,492 growth-minded accountants.

Here’s one growth tip for you and your firm.

Today’s issue takes less than 10 minutes to read.

I saw a Reddit post titled:

“Why does it feel like the people who make partner are better at schmoozing than accounting?”

I remember my early career days at PwC when I was working on a project with a partner. He was regarded as one of the best technical minds in the office.

So I found it odd when I discovered he reported to a partner who seemingly lacked technical knowledge.

To make matters worse, the technical partner was grinding all day every day while the non-technical partner was routinely absent from the office playing a round of golf.

Today, I’m “the boss” and I’ve hired talented technical people who run circles around me.

And I can clearly see a core concept that my 24-year-old self was missing:

Leverage.

Technical work and client delivery is the lowest form of leverage

“Leverage” in this context refers to how much impact you can add with each minute of your day.

Serving clients, though extremely important and central to the economics of a firm, is the lowest form of leverage.

Why?

To make more money, you have to increase your prices or output.

But the market will only accept a certain amount of price increases. So this leads to accountants earning more money primarily through increasing output by working longer hours.

When you “do the work” you have little leverage on your time.

To earn 2-5x more, and simultaneously work less hours, you have to be a master at leveraging your time. I think about this in the form of a leverage “pyramid” (Alex Hormozi has a visual).

At the base of the leverage pyramid is client work.

The next level up is managing the people who are performing the client work. These managers have more leverage because they can use their time to drive a much higher impact than if they did the work themselves.

Above this level is marketing and business development.

These are the people who find the work that the managers manage and the team fulfills. Without these “finders” (finders - minders - grinders framework), there would be no work to fulfill.

The next level above that is leadership (think VP / exec level).

These leaders are managing entire departments, service lines, regions and offices. Their decisions can impact many people and a small tweak to the P&L can result in hundreds of thousands or millions in increased profits. They have very high leverage.

In most accounting firms, the leverage pyramid stops there.

But some firms have one more level that’s even higher leverage than being an exec. And that’s software. Writing one line of code that’s used 10,000 times is about as high leverage as you can get.

A flawed belief: “I need to do more of what got me here to get to the next level”

People who are great technicians or client service providers are assets to any firm.

But at some point, they may get frustrated that they aren’t earning more money and working less hours. They double down and work longer hours to increase their output because that’s the only leverage they have.

And they get frustrated with partners who seemingly work less and make more money.

Their ego prevents them from seeing the obvious:

Higher earners have mastered the concept of leverage. The most successful people know they don’t need to be the best technical expert as long as they are great at managing and leading the technical experts.

Instead, they focus on being the best platform builder.

(Of course, I’m well aware actual schmoozing does happen and can help people rise in the ranks, however Peter Principle eventually comes into play and the schmoozers almost always get pushed out. There are exceptions, of course, but I believe them to be rare).

Where are you on the leverage pyramid?

Perform a self-assessment to determine where you are on the leverage pyramid.

Are you okay with your leverage level? Or do you want to move up?

To move up, what type of skills do you need to develop? What gaps do you have? Are you sure you want to develop those skills?

To be clear, a high-level title does not prevent you from working on low leverage work.

It boggles my mind when I see partners in firms billing 1500 hours a year.

In my opinion, a partner-level person is someone who should be focused on the highest leverage activities. They should be focused on filling the sales and talent pipeline and building a platform that is efficient and effective.

Not preparing or reviewing a tax return.

That's all for this Saturday. See you next week.

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Cheers,

Brandon

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