With AI taking on a growing share of routine tasks, accounting firms want more than just productivity from their partners. They want partners to double down on client relations and shift to a more value-oriented mindset. Those who have previously focused only on performing tasks will likely face difficulty in this more interpersonal, entrepreneurial environment. Accounting leaders discussed this change at the Accrual Exchange event in Manhattan on Wednesday.
Matt Armanino, founder and CEO of Top 25 firm Armanino, said AI knowledge has become abundant, which means the value of human judgment on that knowledge has gone up. Relationships, which have always mattered, matter even more now, while productivity, which still does matter, matters a little less. What's important is less about someone's ability to file X number of returns in Y amount of time, but instead their ability to establish and maintain trusted relationships with clients and the insight to translate those relationships into business opportunities. While certain partners already do this, he said it eventually will become a baseline requirement for all partners.
"Twenty percent of our partners are exceptional," said Armanino. "Going forward, all our partners would have to look more like that 20%. Just doing the work, just being in the backroom, being technical, is going to become less valuable. … There's a better way. We're going to really prioritize people that don't want to spend their days behind the green visor and spend time building real relationships, becoming a true extension of our clients' teams to help them accomplish things that are important in their lives or their business."
Jeffrey LeSage, former KPMG Americas vice chairman of tax, said he has seen many partners who would "hide behind that book of business" and not be active with business development. More people, he said, will need to embrace client development. This is something humans are uniquely qualified to do, while AI agents take care of the production work.
"Agents are not taking clients to dinners. They're not playing golf with them. There is a human element to that," he said.
He recalled the early 2000s when KPMG was developing its offshore capacities. That involved not only sending out work and waiting to see what came back but also finding how the offshore piece fit in with the domestic onshore labor element. It's similar with AI.
"How does the human factor play into that? How does the technology play into that? It's a process you will have to evaluate," he said.
Scott Manuel, chief strategy and operations officer with H&R Block, said the process is not just the work itself, but the coaching, teaching, reviewing and challenging. Being able to evaluate and possibly challenge AI outputs is becoming more relevant to the shift away from production and into advisory. However, he said this change will require more than just new policies. Capacity, he said, does not magically create advisory revenue. The incentives have to align. At many organizations, incentives still revolve around a production mindset.
"Human beings are going to do what you pay them to do, and no matter how you describe the role, if you're still promoting based on productivity, if you're still doing your reviews based on productivity and paying on productivity, people are going to do productivity. So it really is changing the compensation. Technology can create the capacity, but us as leaders have to figure out how to apply that capacity to valuable things," he said.
Armanino said the issue goes deeper than compensation. The hours-based model runs through all aspects of the profession, not just its incentives. For a long time, it has been the core economic model. Overall, there needs to be a decoupling between hours and revenue, which he conceded is no small task.
"There's so much wound around time. That creates the wrong incentives going forward that we have to stare down to fundamentally change. I think it runs deeper than just how we pay people or how we incent people. It goes to the core of how we price, how we structure engagement. It goes to the core of the operating model of the business going forward," he said.
Randy Crabtree, founder of accounting consultancy Brainstorm Group, said that whatever is required, firms need to figure it out fast.
"If we keep that same mindset, that the value is the time I put in, we're going to just be in a mess of trouble," he said.
