Talent Talks with Tina Teodorescu

Hello, and welcome to the Big Four Transparency podcast. I'm joined today by Tina Teodorescu, Fractional Chief People Officer for Small Fast Growth Companies and the founder of Talent Edge Advisory. Thanks for joining me on the pod, Tina. Thank you, Dominic. Great to be here and great to meet your audience. Yeah, yeah, absolutely. So we've had some conversations in the past, and from those, like I very quickly gathered that you've had a very kind of interesting career through public accounting, most specifically, but you didn't start off in public accounting. You started off in a tech company, I believe, and then you ended up in public accounting. I'm curious to hear a little bit more about that story. Sure. I actually, I'm a behavior scientist by training, and I actually started my career at a sales performance consulting firm, working with very large global tech companies. We would either be brought in because their performance wasn't up to par, the sales team, or they were launching a new service line. We would go in and analyze their exemplar performers, their top 2% to 3% and figure out exactly what their profile was, what they did, what their tools and resources, what training, and then we would work with the leadership team in HR to build the performance environment to raise everyone else up. So I did that for the first half of my career, which really gave me a lot of insight into the levers that drive business performance and made me very focused on business objectives, business strategy, and those levers versus more of a traditional HR background. In working in consulting, I got exposure to multiple industries and types of companies. I got into HR the first time when I worked at a health insurance company that had a whole change of leadership, and they were losing market share. I was first brought in by their sales group, and then I built from the ground up their leadership development program. I was then recruited to be the global head of talent at Zipcar. During my tenure, we acquired multiple car-sharing companies, so I'd been part of that. My role was really to take their most expensive asset, their talent, and really keep them engaged, retained, highly productive, and also build the roles that they needed to execute their future strategy. How I got into public accounting was Zipcar was a client of a small regional accounting firm in Massachusetts. When Zipcar was acquired by Avis Budget Group, I was lucky enough to have a conversation with their CEO or their MP, who was very forward-thinking, very innovative. His name was Carl Famoletti. He recruited me there because he had this five-year vision for the firm. He knew public accounting had not evolved fast enough to stay competitive. He knew that he could see the endgame if there weren't radical changes to the profession. He decided he wanted to triple the size of the firm in five years, take it national, open an advisory practice, differentiate the firm from any other local firms, drive up the valuation costs, and eventually sell the firm. I was lucky. He recruited me to be a talent strategy partner to him to achieve those objectives, but he also took me under the wing and let me really operate from a CEO's vision and see under the covers of what it really takes to not only manage a CPA firm, but grow it and innovate it. It's challenging, but it was a huge learning experience for me. Interesting. That firm got acquired by a top 10 firm. I think that was Baker Tilly, right? Who acquired that firm? Yes. What did that look like internally? Who was happy and excited about the acquisition? Who was worried about it? I'm curious how that plays out. Even maybe for yourself personally, if you're not technically a partner, how does that usually play out for you? Yeah, good question. I think Carl and the major owners of the firm realized that it was harder and harder. We saw margins being compressed because of the cost of talent and the pricing with customers and how much they are willing to pay and the competition and the rising cost of just being compliant, upskilling talent. It was really hard. I think we saw either we're going to have to really adjust the firm down to lower margins figure out how to change the business model, or we could sell the firm. They really did a lot of research. They talked to multiple firms. I think they decided Baker Tilly was the best match for the values that they wanted and the growth trajectory of their people. I was part of a very small M&A team. There were only eight of us who were part of the due diligence team, who knew about the transaction. I knew about it six or eight months before it took effect. Because most of these type of acquisitions are really talent plays, that talent was a huge part of that due diligence. Part of the deal is I stayed with Baker Tilly for a year during integration. I think that the corporate, the leadership team, we kind of knew that beyond integration, there wasn't really going to be an opportunity for us. Baker Tilly doesn't need three ... They've basically grown through acquisition. They've had like 30 acquisitions. They don't need 30 chief people officers, or CIOs, or CFOs, or chief marketing officers. We kind of knew that there wasn't going to be a place for us. I think people that technical talent had two different perceptions of it. Some saw Baker Tilly has more money. Maybe I can get paid more. Certainly, there will be more ... They're bigger. They're growing rapidly. There might be more promotional opportunities. There certainly was more learning, and development, and opportunities for them, opportunities to work with larger companies. Those were all seen as positive. But our employment value proposition at MFA was we were small and agile, but we competed with the big four. We were very technical, but the teams were very small. Even staff and intern had access to partners. They had access to working with multiple types of industries and customers. They liked that the teams were very small and agile. Everyone knew each other. It was very collaborative, not competitive. I think we lost that, that employment value proposition and what made MFA special was lost. We did lose some percentage of talent within the first few months because they were like, you know what? I either worked at the big four, or I interviewed or interned there, and I chose MFA because that's not what I wanted. They've lost people since then because they're just different. They're a big firm. It feels different. They have all these KPIs, and dashboards, and billable hour targets. There's just a different feel. Some people have thrived and done very well there financially, professionally. Some people, it's just not the right place for them, which is fine. As you know, accountants have endless opportunities. They have a lot of opportunities for where they can take their talent and energy. Yeah, that makes a ton of sense. Again, yeah, you've picked a place versus you've been assigned a place. What are the odds that the place you've been assigned is going to be a match for everybody? Probably not very high, and I'm sure that that's factored into the modeling as well. After Baker Tilly, you also spent some time at KLR, another, I want to say, regional firm, I mean, yeah, regional, but they are bigger than MFA, slightly bigger than MFA was. They're probably 80 or 79 in the top 100, or high 70s now, maybe. A little, probably 100 more employees. They're a little bit bigger. With all that time spent at the helm of a people and culture team in one job title or another, what were some of the main concerns that were being discussed at that level? Then also, how did that evolve over your career in public accounting? As you and I have talked about, the main concerns, I mean, public accounting, their only asset and their only way to make money is through their talent and the brains and capabilities of their talent. Talent capacity or lack thereof, rising costs of talent, productivity and lowering productivity, lowering margins, turnover, the leverage model and the margins. A lot of CPA firms are filled with people that are Generation X or baby boomers, and they're going to eventually slow down. With the margins and with the work level, they have fewer and fewer people that are looking up at the partners and saying, that's my desired career path. There's some significant headwinds. With AI, with so many other technologies coming up, and the increasing complexity of the customers' businesses and compliance, there's a constant need to not only attract and retain highly skilled people, but upskill them constantly. It's a hard business to be in and to do well. My old CEO used to say, a lot of people can manage businesses and CPA firms, but very few can manage, grow and innovate them at the same time. You need to do all three. It's interesting that you talk about the cost of upskilling. I talk a lot about how we should be focusing a little bit more on retention. Obviously, there's some bias there. The product offering I have can be spun a lot as a retention tool, even more so than a talent attraction tool, because you can then keep your people at market in terms of their compensation. I put a lot of focus on retention. When you talk about the cost of upskilling people, I feel like that's another plus one on retention. Outside looking in, I personally feel like firms tend to spend a little bit too much on attraction of employees. It seems like if you need to fill a role, the budget is just whatever it takes to get someone in that seat and not enough on keeping people in those seats. Would you agree with that? I would absolutely agree with that. The reactive decision-making around hiring experienced talent. It's like there's so much work. The volume is so high. The complexity is so high that the people running these teams are just desperate for talent because they know if they lose someone who is highly skilled and experienced, then that work is just going to have to be spread among all the other people that are already overloaded and burnout. But very few firms do this well. Really, the workforce planning is strategic workforce forecasting. Where is the business now? Where are all of our service line businesses? Where do we see it growing? What talent, at what level, what skill, what cost do we need to do the work and grow the business and have the margin we need? We did that exercise. In almost all cases, they're too heavy on the top. They're too top-heavy. They have too many very high-level, extremely expensive people, and that's just not a sustainable model. Then when one of those people leaves, the automatic knee-jerk reaction is, we just lost a senior manager. We need another senior manager. Well, good luck going out to market and trying to attract a senior manager. Yeah, maybe you're going to be able to do it, but you're going to have to pay above the market. Most of the time, you're going to have to use external recruiters. That's going to disrupt your comp levels internally. There's a lot of research that people that are recruited from the outside don't stay as long as people you grew from within. It's like, well, why don't we spend a little bit more time forecasting on the front end and thinking through what percentage of this work could be delegated down if those people were trained to less expensive and more available talent, including offshoring talent, including paraprofessionals, including admin people. A CEO at a CPA firm recently shared with me, when he was head of tax, 60% of his work in any given week, he didn't need his expensive education or CPA to do, which means there was a lot of less technical work he was doing, a lot of admin work, a lot of chasing clients for information work. To me, when I heard that statistic, I'm like, can you imagine how much we're paying this guy? If we could take 60% of his work and all the other people at his level and delegate it down to less expensive resources or automate it, imagine the uplift in the margins and the productivity and how less burnt out those higher level people would be if they could get 60% of the work or even 40 or 30% off their plates. Yeah, it feels like a lack of understanding of leverage for one's time. I think a lot of very senior people at firms think, oh, this software is so expensive or this executive assistant, I maybe don't totally need one or it's actually intimidating to try and incorporate that into your workflow. But you might be able to 2x or 3x yourself, essentially. And if you're getting paid at such a high rate, you need to understand how that leverage works. It might still be like $100,000, $200,000 extra that you're spending, but you might be able to get twice as much out of this employee who's getting paid $400,000. And so it's like, well, this pays for itself. And I do think that there's generally a bit of a lack of appreciation and understanding for that. Maybe some of old school mentality that's stuck around of, just put your head down and get it done. But I do really hope that more people sort of embrace that for sure. There's a lot of factors. I mean, people are so busy that when you're so busy with head down, it's very hard to look up and get up kind of on the balcony and look forward. Also, you don't have time to train people. The number of people that would tell me, we just need a plug and play, Tina. We want someone so they're willing to overpay and get someone at a higher level of experience than they really need because they don't want to train them. They don't want to onboard them. They don't want to supervise them. So you might have a senior manager that 15% of his work is senior manager level and the rest of his work is supervisor, staff, or even admin level. But you're paying a premium because you just wanted someone that you don't have to really manage or train. Yeah. Yeah. So I'm just being aware of our stoppage in time coming soon. So I have a couple kind of rapid fire questions that I would love to throw at you. The first one being, who should be considering a fractional CPO for their firm? What are some of the early signs and what are some of the kind of quick wins or just general impacts that you might see from having someone in that seat? Yeah, absolutely. I think firms that are smaller, 10 to 50 million and want to grow and are really struggling with talent challenges and those are preventing them from growing and they don't have the revenue to hire an experienced chief people officer or they have more of a traditional HR person and they don't need a strategic people officer full time, they could bring someone like me in to really advise the leadership team on, we are here, we want to get here, what are some key talent strategies and programs that would really catapult us and where are we leaking? Where's our boat leaking that we need to fill on a fractional basis, a few days a week, a few days a month or on a project basis or consulting basis? It's really those customers that we're either going to have to sell or we're going to have to figure out how to grow and protect our margins and get to the next one. Yeah, another one I wanted to ask, where you mentioned this behavioral science background at the beginning, I'm very curious from a behavioral scientist perspective, what are some of the key differentiators between the top and bottom performers that you see in PA and are there any things that can be addressed to kind of help bridge that gap for some of these? So one of my early projects that the CEO asked me as a behavioral scientist to do in the firm is he asked me to go sit for three weeks in the tax department. He gave me no guidelines about what I was supposed to be looking for. He just said, no, go sit there. I know you have a behavioral scientist background. And I had no public accounting experience, so I was not biased at all. It was right when I started. And he said, just come back in three weeks and tell me your top three observations. So I sat there and I just sat as a fly on the wall with partners, with senior managers, and I just observed what they were doing. And one key takeaway for me was this whole leverage model and the multitasking. We had partners and we had responsible parties who were like senior managers, very highly paid, hard to find, doing so much shifting of multitasking and picking up and putting down tax returns and so much what I would characterize as admin work that could be delegated. For example, they'd be working on a tax return. They'd get to a point, oh, I don't have this information. I need to progress. So then they would put the tax return down. They would get on email, try to find, do I have that information in my email somewhere or in my office? Oh, I don't. Now I need to send an email to this customer that I need these three pieces of information that I need to go and track like when they actually send it. And then I can pick up that tax return again. The really strong performers were very, very good at compartmentalizing and delegating work down to so elevating themselves to their highest and best use and empowering other people. And they spent a lot of time in developing people, developing business because they knew they couldn't be in the weeds. That wasn't their highest and best use. But the other people tried to do everything, tried to kind of, you know. I love that. There's a lot of wisdom in that. I think workflow management is so deeply underrated. And for a lot of people, I'm really bad with context switching. Like that will just take me out. Like my productivity is gone once I've done too much context switching. It'll completely ruin my day, basically. So I think that there's a lot of wisdom in that. So thanks for sharing that. I have one last really quick one to get to with you. And this one's a little bit, you know, about my own business. But how hard is it to access good compensation data and what impact does that have for people in your roles? I mean, I would say it's hard because, you know, you subscribe to these reports that are not inexpensive. And for smaller firms, it's a big investment. And they are relying on backward facing data. So, you know, data last year, they're relying on the HR teams, filling them out, which is time consuming. And, you know, a lot of people don't, maybe don't have the time that you would like their data. Because it could take, it took my team at KLR, like three weeks to fill out the Mercer comp study. Oh my God. It's just really time consuming. And they're expensive. And, you know, you may not have, and if you have multiple offices in different locations that maybe have different cost of living, they don't really take that into account. So. it, you're relying on the data and it's, it's, it's helpful. You know, it's certainly a starting point, but then you also need to, all you need to have your recruiters getting real time data, you need to be monitoring, um, fishbowl and other things. So it's, it's hard. And when people have multiple opportunities, unless you can differentiate your culture or, you know, other, other kind of intrinsic motivators that would attract and retain people, then, you know, they're just going to be like, you know what, I could go do auditing, you know, I'm doing the same work, there's nothing keeping me. I don't feel connected to these people or this firm. So I might as well go make 10% more or 5% more. So I think it is important to be, you know, really competitive with compensation, obviously. But I think it's also very important to find ways to build connectivity and make people feel connected somehow to your firm. That's awesome. Well, thank you for all of the great advice, all of the great insights that you've shared, Tina. I'll be sure to link, you know, you directly in terms of your CPO, fractional CPO work. I know a lot of firms that are listening. Hopefully some of the people, maybe this perks some ears and they think about some things they've got going on internally, but, uh, thank you so much for, for taking the time to join me on the pod today, Tina. I really appreciate it. Thank you for the opportunity. Thank you, Dominic. See you later.