How one small firm drastically cut its busy-season hours

Johanna Sweaney Salt, CPA, CGMA, used to work 100 hours a week during busy season. As the founder and managing partner of Gray, Salt & Associates LLP, she believed it was her responsibility to put in the time needed to make her small firm a success.

Today, Johanna remains a full-time partner at the firm, and her son, Dalton Sweaney, CPA, is now the managing partner. His desire a few years ago to spend more time with his young children prompted him to ask his mother if they could make changes to make busy season less crazy.

She said yes, starting a multiyear journey that has freed Dalton up for more dinners with his family and has cut her busy-season hours almost in half. What changes did they make and how have they kept the firm running profitably?

What you’ll learn from this episode:

• How the firm began a move to cut back on both total hours and hours worked in the office.
• The remote work toolkit that assisted in the business transformation.
• How a hard minimum set by the firm helped to maximize profits.
• When, how, and why the firm fires clients.
• The firm’s ideas about four-day workweeks.

Play the episode below or read the edited transcript:

To comment on this episode or to suggest an idea for another episode, contact Neil Amato at Neil.Amato@aicpa-cima.com.

Transcript

Neil Amato: Hello, listeners. This is Neil Amato with the Journal of Accountancy. Today’s episode of the JofA podcast is part of an ongoing collaboration with the Small Firm Philosophy podcast. You’ll hear JofA editor in chief Jeff Drew speaking with two CPA firm partners on the topic of business model transformation. It’s an interesting family dynamic, and the guests also discuss how they went about trimming their list of clients. That’s coming up right after this word from our sponsor.

Jeff Drew: Welcome to the Small Firm Philosophy podcast, produced in partnership with the Journal of Accountancy podcast. I’m your host, Jeff Drew, editor in chief of the JofA. Today’s guests, Johanna Sweaney Salt and Dalton [Sweaney], are partners in GSA LLP, an eight-person firm in Los Angeles County that is 60% tax and 30% client accounting services. Johanna and Dalton are also mother and son. Dalton’s desire to spend more time with his young children several years ago led to a number of changes that dramatically reduced the number of hours worked during busy season.

We’re doing this as part of the business model transformation project that the AICPA has initiated. We know that your firm has made some changes in the way you do the hours, especially during busy season. If you could talk about the changes you’ve made to move away from the traditional way of doing things during the busy season; could you describe that?

Johanna Sweaney Salt: I’ll start, and I’ll go back about 30 years when I was working for another firm that was very, very old school. I was there for 13 years, and it did not offer a lot opportunities for women. It was very traditional in that you’re 100 hours a week during busy season. The one thing they did well is they did support families, so if one of my kids was sick, I could drag him into the conference room. But by golly, I was at work and I got to a point where I thought, if I ever started a firm, I want it to look exactly opposite of this.

Dalton Sweaney: I think a lot of this was an evolution, almost a slow burn, I think like Johanna was talking about that. There was this yearning for a different way to do things. I came on in 2013 and had kids at the very end of 2015 and during that tax season, that would have been spring of ’16, man, being away from little kids late into the night, it’s not a great place to be. I was fortunate enough to be able to say, “Hey, grandma, I want to be with your grandkids, at least for dinner or whatever else it may be.” That was maybe  Step 1 of a shift in creating a bit more of a remote policy; as long as the work is getting done, in the hours at which they get done. If you need to take a three-hour break, between 5:30 and 8:30 and then hop back online for a couple of hours, that’s OK.

Salt: I believe the exact question was, “So what’s our remote work policy?” And I said, “Let me get back to you on that.” And fortunately, PCPS had a remote work toolkit there and we just utilized the heck out of that. I did have another partner at that time before Dalton became partner as well. It was a little bit of collaboration, but that probably was the single spark point to really evolve.

Sweaney: It is a goal for me to reduce Johanna’s busy season hours by 10 every year. I think the last 2-3 years, we’ve hit that. Three years ago it was 80 plus, and then two years ago, 70 plus, a year ago, 60 plus, and now we’re in that 55ish range so 50 plus. We’ve been trending in the right direction. I think each year it’s going to get harder because as a percentage, i we’re cutting more hours if we do keep that time and I may have to pivot what my goal is. But if we’re trying to make the same amount of money or roughly, and we’re reducing how many hours we’re working, that means things have to change.

This past year probably what reduced our hours the most is we very intentionally instituted a hard minimum, which we had not done before. We said, if we’re doing your return it’s $750 minimum, that’s what we’re going to charge. It doesn’t matter because as complexity has come up with COVID things, and stimulus things, and all these new laws, and notices, and all this stuff, it’s not just the tax return anymore. There’s so much more. We were just eating it on all of those other engagements. So we instituted the hard $750.

I was shocked at how many clients went from paying under $300 to, no questions asked, paying $750, because I think they do still see the value in it. Did we lose some? Yeah, and that was intentional.  Actually our numbers, I’m shocked at how closely we hit what I was hoping for. We hit the number basically on the head. We do charge by form, but that minimum is there. That helps create a little bit of capacity for us.

Salt: Further to that point, we’ve been very strategic in firing clients. I’ve talked before on an interview about firing clients. I started with an Oct. 15 deadline, maybe 7-8 years ago. It’s the same people. They’re playing games, they’re dragging their feet. It’s not funny. I don’t want to work with these people anymore. I probably fired 25 1040 clients. They got a letter on Dec. 31. I waited until after Christmas to send that to them and it was such a relief. We’ve been super strategic each year about going through our client list. I actually have about eight names on the list right now of people who [received] a letter at the end of June that we’re no longer going to be providing services to them for various reasons. They’re unpleasant to work with. They won’t go with the system. They’re rude to some of our team members. They’re really sweet and nice to Dalton and me, but they’re just ugly to our admins.

I always joke that nobody is allowed to yell at my team except me. We strongly suggest they find another CPA and the same with some business clients. We fired a large family group a couple of years ago. It was such a relief, and several other businesses that it just wasn’t a fit for various reasons, whether it’s personality or they wouldn’t get with the program. We’re trying to automate and streamline so that we can provide more efficient and more valuable services. It’s just not going to work if we have somebody who’s swimming against the current. That’s been a real relief as well.

Drew: Do you have like a standard letter you send or …?

Salt: Yeah. We’re with Camico, and they have a couple of suggestions on their website for using that. We tweak it a little bit. But  generally, it’s either: “We’ve taken a look at our practice, and we’re going in a different direction, and we regret that we will no longer be able to provide services.” And here’s what’s due and when it’s due. Just so there’s no hard feelings. The other one, this is one that Dalton has crafted, jump in where I’m wrong: “The firm has undergone a lot of changes, and it seems like we’re no longer a fit for you. We’re terminating our relationship.” That doesn’t mean it’s a bad thing. It’s sometimes a good thing, and it could be positive for everyone.

Drew: With the client culling, is it mostly on the tax side?

Sweaney: I would say it’s both. That was a larger swath that we took, this past season, was on the individual side just because the hard minimum forced our hand. But we are looking at it in all aspects.  Like Johanna was saying, the changes we’ve made which should drive efficiency and create more value for our clients. If it’s having the inverse effect, [they’re] probably no longer a fit for us. Two, we’ve gotten very cautious. Yeah, cautious is probably the best word, in accepting new engagements and fielding their responses. Johanna’s just had an engagement with a client or prospective client that was going to be for us a substantial client. We’re talking $30,000 or $40,000 of tax return fees.

There were just a couple of things in the interviewing process that, none of them were red flags, but there were maybe three or four yellow flags. Having talked through it, we’re in a position where yellow flags are now red flags. We don’t need to take on these engagements. We don’t want to create this extra stress. The work that we’re doing is stressful enough. If the clients are the ones giving you the stress, that is not the place to be. Like the stress should be in having to meet deadlines and getting the work and managing some of these other uncontrollable things.

Drew: Now my understanding is you guys have made some changes from the old style of going through busy season where you’re going to be working every Saturday and there’s going to be staying at night all the time. How has that changed?

Sweaney: Nobody in our team worked more than, I think Johanna was the most at 55ish [hours]. I don’t think anybody else worked more than 50. I think I was close to 50. I think Johanna worked every Saturday. I think there were one or two that I took off because I had a buddy from out of town that was in town and I said, I’m going to go golfing with him. Then another one, I think I might have worked a half Saturday. But [with] the rest of our team, we create a calendar and they split it. Even our professional staff, we basically say, we want one professional staff or two or three, however many we need given what week it is. Often the middle of March is just insane.

We generally have three then, but leading into it, here’s how many we need. Then they go through and they basically calendar it ou,t so that often they’re getting those two full days off to recharge and reset before coming in. Then our admin team too. We have two of them, so they take turns. Unless somebody has something scheduled, they may go two weeks in a row to have the next two weeks off. But that’s been a big shift. And I didn’t work a single night. I don’t know if Johanna did.

Salt: I did not. I did not work the whole night. No Sundays either.

No Sundays, no nights. When I left the office for the day I was done and none of our team did. We were working remotely from time to time. I would do a day or two remotely a week, but our team in the evenings wasn’t having to work. If they chose to, because they wanted to cut out at lunch and go for a round of golf and then work four hours from 6 to 10 at night afterwards, that’s fine. But generally just from our core hours, 8-ish til 5-ish, apart from that, nobody was working.

Drew: Well. That is impressive. Now in terms of remote work, how often do you have the remote work policy? How often do people come in?

Sweaney: All of our team is local. They’re all within a 30-minute drive. Generally speaking, they come in at least once every other day. Often during tax season, I think it was one or two days. I think two is probably the most common. Either three or four days in, if they’re working that Saturday, and then one or two days remote. That’s the rhythm I run. During tax season it’s one or two. I think it’s often one, but sometimes two.

It gets tough because when we do appointments every other day, like, let’s say it’s a week where Johanna is going to have appointments Monday, Wednesday, Friday, and I decide I’m going to be remote Tuesday, Thursday. Well, she and I have no time to connect that because she’s going to be in appointments pretty much all day Monday, Wednesday, Friday. And if I’m out of the office Tuesday and Thursday, that means we’re only in office together on Saturday, and there are some things that it’s just easier to do together. Could we limp through it with a Zoom meeting or something like that? Yeah, we could but we found in-person connection for some tasks, it’s a bit better.

I tried it on a weekly basis. I scheduled out what are the tasks I have and what are the things that I can do actually better in a remote setting because I’m not getting interrupted every 10 minutes by a team member, and what are the things that I need to do in office for whatever reason? We try to schedule those out.

Salt: I live less than a mile from my office here. I could walk if I chose, but don’t ask me how often I actually walk. For me, I feel I need to have my door open and I need to be available because people have questions and they need guidance and we pride ourselves in to say, if my door is open, come interrupt me. Some days, do I get anything done? No. It’s one constant interruption, but it’s good because we’re investing in our people. They ask a question, they learn something, they’ll know it for next time.

I can help you learn debits and credits, although hopefully you’ve learned that in your accounting class, but we can train you for the technical stuff easy. The people skills, we can’t really train. You either have them or you don’t. That’s what we’ve been looking for. Our second-to-the-latest hire is a young man we met at a student night at a local university where the students get a chance to network. Different professionals set up at different bistro tables, and they come and they chat and they ask questions.

Then when they ask a question, we give them drawing tickets for a door prize so that the more questions they ask, the better chance for a door prize. This was two Septembers, Octobers ago, something like that. After we got home or back to the office, we said there’s something about this young man that we really like. We had gotten his résumé and he was going to graduate the following May.

We brought him in to meet the team before tax season and we ended up extending him an offer to start  that summer and that’s what we’re looking at. Did we really need somebody else at that time? Probably not. Are we keeping him busy 100% of the time? No. But guess what? When we’re not keeping him busy, he’s studying for the CPA Exam, which is a super high priority for us. We encourage that. We support it 100%.

That’s a philosophy that we’ve taken which at this point, now that we’re at this level, that is the reason why I worked less than 60 hours a week, and the rest of the team worked less than 50 hours a week and wasn’t here every Saturday. During the year, our office is closed on Fridays. We’re currently talking, Dalton and I, about potentially going to a four-day workweek. We haven’t quite worked out the logistics on that, but we do give all the team members the first and third Friday of the month off, with pay, May through December, and then some half Fridays off. Most of the team works remotely on Friday, so it’s a ghost town around here. I think that helps set the tone during the rest of the year.

I know busy season is coming, and I’m going to be working 5-6 days a week, but now I’m only working four days a week and I have all these paid days off in addition to my PTO. So, we’re pretty generous with that and you know what? They totally get the work done.The goodwill and the appreciation that they express for having this time is really done wonders for our firm.

Drew: Is there anything I should have asked you but didn’t?

Salt: Looking through the list of questions, I liked the one what you wish you would’ve done differently and Dalton had a good response.

Sweaney: I just wrote down, I wish we would have done it sooner. There’s a risk to what we did. Having a minimum, don’t know what the client takeaway is going to be, how many we are going to lose. As much as I pencil down numbers and calculated how many would we have to retain if we lost this many at this price point or that many at that price point, I wish we would have done it sooner.

Again, it remains to be seen fully until, probably October we’ll know if we’re going to be up or down. But currently we’re projecting maybe unlike the more negative projections, maybe down 3%, which again, I would gladly have 10 hours a week off for a 3% pay cut.