You have watched your newest hire work for their first 30 days and you are looking back at their great resume and 15 years of experience. all you can think is, "Does he really have 15 years of experience, or just one year of experience 15 times?"
It was this experience that led us to make "You have to love training" one of our core values. As we tried to differentiate our CPA firm from our peers, we chose to have professional staff who could do five core areas of work, instead of just audits or tax returns. Every time I would try to hire someone with experience, they would be competent in only one area out of the five. Since they also had "years" of experience, they demanded a premium pay that bore a poor relationship to profitability.
Instead of just passing on the cost to my clients of my paying too much for labor, I decided to solve the problem a different way. By growing my own talent, I would be able to keep access to our services more affordable and fulfill our mission of serving businesses between start-up and $5 million in revenue. But I would have to prove we could train people and stay profitable. We would also have to accept the slower growth curve that comes with growing your own talent.
THROWING THEM IN THE POOL
The first step was to identify the five core areas we needed them to be competent in. For us, that was personal tax, business tax, accounting system implementation, financial statement preparation and forecast modeling.
The next step was to identify the personality characteristics needed and screen for those with our test from New Jersey human-capital management company Caliper. Since we have tested all of our team with this service going back to 1998, the consultant gave us incredible feedback on how new hires would work with an existing member of our team, as well as guidance as we transition existing team members into new roles.
Once we hired our prototype employee, we had to schedule their work to stretch, but not break, them. We told them about how we employed a 70/20/10 training philosophy: 10 percent of your training will be classroom, 20 percent will be one-on-one mentoring and 70 percent will be throwing you off the deep end of the pool to see what you can do. You will take a lungful of water, but we won't let you die. Until I throw them off the deep end, I do not know what they really can do.
When we started this process in 2003, I had just asked some partners to leave that were not aligned around this mindset and we were at break-even profitability, down to nine employees and $1 million of revenue. Up to this point, when we added an expensive person with narrow experience, we could get some growth but no profit, since they could not be used for more than one service offering and they were resistant to expanding their skill sets. When they would leave - by our choice or theirs - we would start the crazy cycle all over again.
By 2010, we were on pace to do $1.8 million in revenue and had 21 employees and were on target for 10 percent pre-tax profit. The employee we hired as our prototype is still with us and is one of our top client managers. We have had only one client manager leave to take a job with a client and only one new hire did not make the cut. Going from turning over one to two professional staff each year to turning over two professional staff in seven years is a pretty good turnaround. We have always had plenty of new business opportunities - our only bottleneck was how quickly we could add the right people. This process allowed us to peg our growth rate to our talent development rate.
WHAT DID WE LEARN?
1. New hires have no baggage to unlearn.
2. What we thought would take four to five years took only two to three.
3. We found new services to sell to clients that also served as training work for our developing team.
4. People love the opportunity to grow.
5. We have the capacity to grow two people per year.
6. Hiring for attitude and training for skills really works!
Greg Crabtree founded Crabtree, Rowe &Berger PC, a Huntsville, Ala.-based CPA firm where he leads the business consulting team. For more information, visit www.seeingbeyondnumbers.com.
