The Wize Way

Episode 83: “Systems Dependent” and not “People Dependent”

• Wize Mentoring for Accountants and Bookkeepers • Season 1 • Episode 83

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In this week's episode of The Wize Guys Podcast, Tim Causbrook, Thomas Sphabmixay, and Kristy Fairbairn explore the concept of having a system-dependent firm and not a people-dependent business.

Let's deep dive into the secret sauce of scaling your business - systems. Discover the journey of transforming businesses from people-dependent to system-dependent by creating procedures that can be replicated, ensuring efficiency and stability. Imagine a structure where a single experienced leader guides a team of junior accountants, combined with a seven-division system, the workload eases on the owner making way for scalability and growth.

Tune in now to find out more about Wize's principles!

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Thomas Sphabmixay:

You've got to master leading yourself. So that's about self-discipline, that's about experience, that's about controlling your feelings. So you've got to lead yourself.

Wize Mentoring:

From Wize Mentoring is The Wize Guys Podcast, a show about accounting and bookkeeping practice owners and the many stories, lessons, and tips from their experience of transitioning from a time-pull practice to a business that runs without them. I hope you enjoy and subscribe.

Thomas Sphabmixay:

Today, who we have here to be answering questions on systems dependent and not people dependent is Tim. So thank you, Tim, for sharing your knowledge here with us today.

Tim Causbrook:

Yeah, all good. It's a great topic and it's pretty core to Wize. I've noticed a lot of people recently maybe in the last year or so, who have been drawn to Wize in particular, have been asking about what systems we have and what systems Ed and Jamie use to run their businesses. So it's a great topic. In terms of the systems, there are really a few key systems that we use at Wize to run our businesses, so they are, as best as they can be, systems- dependent. I'll just say at the outset that accounting firms and bookkeeping firms it is a people's businesses, it's not software. We use a lot of software. It's not software. You still need people. So what? We're not saying people aren't important. We're not saying you don't want to find good people, but we're just saying, if you think about the Deep and Narrow team as a system of just people, what we had when I met Ed. Aside from working with Ed, I had about 15 accountants onshore and I was trading on eggshells, to use Ed's language around all of them because they were wide and shallow. They all managed a portfolio of $200,000 to $300,000 in clients and if any single one of them left, there was a big hole in knowledge about the client processes. What have you? And one thing I've noticed in the last year it doesn't matter where you are in the world. Frankly, people have had trouble hiring good talent. We spoke with a very large accounting firm in India and even in India with a population in excess of a billion, he said their biggest struggle in the last year has been finding accountants in India, which kind of blew my mind. So one of the things I've noticed is people really struggle to find talent and one of the first things Ed said to me when I started working with him about five years ago now was when you have a Deep and Narrow team, you still do need leaders. You need people who have CPAs, who are technical, at least one per team, but you only need one per team. And when you think about that, one for a million in fees versus I had probably three or four CPAs per million in fees who all had five to 10 years of experience. That's leverage.

Tim Causbrook:

So any system is about a couple of things. One of the main things we love about systems is it gives you leverage. And what I found is we very, very likely set these teams up before the pandemic happened and throughout the pandemic, we just never had a problem that we didn't have enough staff and it wasn't because we had hundreds of employees. It's because we had the right employees played in the right position and we were able to leverage off them and we were able to hire much more inexperienced accountants than we used to be able to hire because we plugged them under more experienced accountants and we got that leverage for the first time in our 20 year history. So the Deep and Narrow team, even though it's people, a team made up of people that's still a system for building out teams and for hiring as well. So that's one good example of a system. Another is the divisions, the 7 divisions, and this is the other key one.

Tim Causbrook:

I think one of the reasons so many accounting firm owners came to Wize Mentoring and why I came to Wize Mentoring was because, ie. in my own experience, the whole business $3 million business was based around one person who was the owner, and if you took them out, the whole thing just fell apart. Talk about people dependent. It was really dependent on one person the owner. I think a lot of people who come to us have that problem. It means they're a slave to the business. It means they can't go on holiday if they get sick. They're worried things are going to happen. You know they have to work in, say hours, all kinds of things, and the bigger the firms get, the worse the problem, you know, which doesn't seem to make intuitive sense, but that was very much our experience. We had about 18 staff and 3 million in revenue. It was still people dependent on one person, and so it's all waves of thinking about the business as seven divisions. We've probably heard a story about them before Board is Division 1, Division 2 is Marketing, Division 3 is Sales, which is the client manager, Division 4 is Production, Division 5 is Quality Control, Division 7 is Administration, and Division 7 is Internal Accounts.

Tim Causbrook:

This way of thinking of the business and carving it up into seven different parts is itself a system for withdrawing and not having accountability and being able to scale as well.

Tim Causbrook:

So you can scale by having deeper narrow teams and every time you get close to a million you make another deeper narrow team and you only have to have one Superstar if you want to call it that per million and fees.

Tim Causbrook:

And then the other major system we've got is the seven divisions and as you grow you can find more and more people in the business who naturally tend towards CMO, CFO, COO, CTO, and they can start wearing those hats and the business owner can stop wearing seven hats and they can wear six hats, five hats, four hats, until the only hats the business owners wearing are the ones that they actually want to wear, usually at sales or marketing, or it's on the board and like a chairman role, which is what Ed and Jamie currently are in their own businesses. So that's at a broad kind of top-down view. It's very, very broad kind of the big rocks. We call them the boulders. Those are two really important systems or ways of systematizing the business so that you can start to get people to help you run it and you can get on the journey to having it run without you.

Thomas Sphabmixay:

That's absolutely fundamental, isn't it, Tim? Like a lot of firms, they start thinking of systems in terms of I need to install these apps, I need to get this text back going. Can you just give me your library of SOPs and procedures and maybe I'll make my staff read a novel over the holidays or something, and they'll come back systems- ready? But what you're really talking about at its core is the people, and you know you and I and Christie what we've all seen is how fundamental that has been for the firms, not just for ourselves, but in Wize, in allowing it to be managed from the bottom up, because we're seeing a lot of owners having to spend a lot of their time Manding that ship. You know they're having to micromanage everything. They can't trust their staff. But what you're describing there sounds like you know, if everyone is able to perform in their own role inside of their divisions Within that deep and narrow team structure, that would make people just run really well mechanically.

Tim Causbrook:

Obviously, like I said at the start, you need people to run the business. Like we're not saying systems dependent, get rid of people. We've never said that. What we're trying to say is you need fewer good people to run much larger businesses than fall, and that's where tech comes in. And the other place I've seen in my own firm over the last 20 years where we've become too dependent on people is when all the IP or knowledge or what have you is locked up in people's heads and it's not documented. Often the worst, who are perpetrating you know this business in, if you will are the owners. The owners have so much in their heads and owners tend to be the time- poor or too disorganized to what have you to document these things. And I guess, after having deep and narrow teams for production which is another whole session, after dividing the business into the seven divisions and starting to figure out who can be heading up each division with no bypass and actually responsible for that division, the next thing I would say that that really is the key to making systems is the SOPs, and we've done a fair few sessions on them this year and they're really probably one of the biggest improvements to the new WizeH ub versus the old WizeH ub that Jamie's been building out. It's been putting a lot of work into this part of the new WizeH ub which we can show you in a bit if people would like to see it. But it's just SOPs. It's just absolutely key and SOPs.

Tim Causbrook:

We talk about the four quads. Sops are really quad two they're not urgent but they're important. Right, and a lot of us get trapped in quad one, which is urgent and important, and quad three, which is urgent but not important. The urgent things, regardless of whether or not they're important, steal our attention. The way I try to make Quad 2 urgent is, I think what if this employee wasn't going to be here tomorrow? What if they're going on maternity leave? What if they quit? What if they got sick? What if they went on holiday at a crucial moment? What would we do If the answer is we'd scramble around and try to figure out how to do what they were doing. We probably don't have enough SOPs around whatever they were doing, if that makes sense.

Tim Causbrook:

There are obviously things like triaging software and there's a lot of solutions out there that you know, just for pure communication storing. I'm not so much talking about that it's more about what happens if your admin person goes. Who knows how to use the building software? We had about 20 employees, just under 20 employees, 18 employees. We only had one person who knew how to make the lodgement lists and break them up into three teams. Really simple thing. It was probably the very first SOP or how- to video ever made.

Tim Causbrook:

I sat down with him. Instead of asking this guy, who was a relatively expensive, pretty senior guy to make this report every month, which is really an admin task, I sat down with him and said how do you do that? And I wrote out how he did it. And I've got to be really clear here. We're not trying to make people redundant by doing this.

Tim Causbrook:

And when you start doing this, you've got to kind of tread carefully with your staff. Because if you start asking your employees, how do you do this, how do you do that? And start documenting things, people naturally have the tendency to think, 'Oh, my goodness, they're going to try to replace me. That's why they're documenting it.' And you've just got to reiterate and explain and I always give context. Whenever I do something in my business. I say no, no, we're not, we're not trying to make anyone redundant here or we're not trying to replace you or anything. It's just. It's not a very robust business if one person goes on, leaves, or gets sick and the whole thing stops.

Tim Causbrook:

So ideally, every single thing that's important in the business should be documented at least. At the very least it should be a five-minute quick video that you make when you're showing someone else how to do it. At the most, you should have a SOP. I get pushed back all the time. People say, oh, but what if we change the process? That's fine. You can't edit a blank sheet of paper. You still need to have a process written down, and I would much rather have a bunch of processes that need to be updated than no processes at all. So one of the things we do is we don't have an SOP for this yet. So one of the things we do have is every six months, we have this process where we're reviewing the current SOPs, especially the ones that are reliant on tech. They tend to really need to be updated at least yearly.

Tim Causbrook:

So I would really really encourage you, if you haven't started documenting things yet, to start documenting. Don't get processed by analysis. Don't get overwhelmed. Whatever happens today that doesn't have an SOP, make an SOP for it. And again, to make it urgent, I say what if I'm not here tomorrow? What if something happens to me? What are all the things that I do that I haven't documented Cause I assume I'm always gonna be here because I'm in, I have equity pretty much. So, like I'm involved in the business level, I'm not gonna be here. You never wanna think like that. You wanna make yourself redundant or you wanna replace yourself or you wanna be able to give your role to your best employee who's looking for that promotion track. So yeah, I think, really investing in the SOPs and it takes at least a year to get all the core ones documented really investing in the SOPs, making sure you document them and you get a culture in your business for documenting them.

Tim Causbrook:

So a lot of my employees now, if they're showing someone how to use some software, they'll make a video for it. Or if they're showing someone they're doing some internal training, like around the production work, they'll make a video for it. So we're starting to get a culture now where the staff in a bottom- up type way are saying, hey, we need an SAP for this, or hey, we need a video for this and then sometimes they're just making them themselves. And the last thing I'll say on that is to make sure it happens again, to make it urgent when it's not urgent, we build it into our weekly tacticals. So I would say you can't have accountability without documentation like how to do things. What does this role entail? What does a CMO look after? What does a CTO look after? Do you need documentation for accountability?

Tim Causbrook:

The other thing you need for accountability and this is a system in itself, and probably the last of the four systems or three that I've mentioned today is to have routine and rhythm. And the best way to have routine and rhythm is through frequent meetings. So every week, me and my senior managers, the team leaders, get together and have a weekly tactical. And guess what, once a month, on the first, on the second month of every month which would be, I think, today we look at, because we had a public holiday yesterday we look at SOPs. We say what are the top three SOPs that need to be approved this week? Because they govern the tasks that the business does every week. And so to make something that's not urgent and important urgent and important because systematizing your business is not urgent. To make it urgent. We've built it into our weekly and monthly meetings so that 12 months down the track we'll have 50-odd approved SOPs.

Tim Causbrook:

If we do it, what? Three months, maybe more, maybe less, but that's a system. And so the system is you're building a handbook you took the mention of McDonald's before you're in body. You're building an employee or an owner's manual. And if we're all abducted by aliens, you know, or there was a rapture or whatever it is. I love that show. I'm the remaining leftovers I think it's called. If we all disappeared and people came in and found this handbook, it could run our business or they could run Ed's business, Jamie's business, or even Wize Mentoring. According to this handbook, I would get very similar results to what we were getting. That system is dependent, not people- dependent. The people have been completely interchangeable, but they're getting comparable results.

Thomas Sphabmixay:

So the system is producing the results, people following the systems producing the results, not extraordinary people who are creating a system in their head and it stays in their head that's a big one team when you're mentioning that, and I think that really summarizes it really well Getting those similar results no matter what the inputs are because if the system is built with enough thought and Development and enough has been invested in there, we should be able to get the same McChicken meal every single time. You know we should be able to produce the same level of quality tax return every single time. What are some of the systems you've implemented that have found effective in your audit papers?

Kristy Fairbairn:

So we often find ourselves creating policies to go with SOP as well, because and I Say this to a lot of firm owners who are growing and having scale pains with their staff of you know, don't know why they're not getting it done the same way, isn't it obvious? It should be so simple. Do you have a policy for it? Do you have the framework to support them to be successful? No, so they go hand in hand. Even, do you have a policy document around creating SOPs? Do you have a policy document around amending SOPs after a review of them? Those sorts of things can really help build out the depth and quality of your SOPs.

Kristy Fairbairn:

For us running a bookkeeping practice, we've got a lot of systems in place to ensure we get the same level of work out every month, the same clients, without it becoming fatigued as well. I think sometimes when you have SOPs in place, people get used to them and they'll start skipping steps after a while. So it's really good to review those together and even be interchangeable with the people. Our production manager likes to, every now and then, shake things up and put a different Senior bookkeeper on the work, just to ensure that the systems are going well and that no one's becoming complacent. She does. She really likes to rotate the BAS allocations. So you know we have to have systems in place to know who's doing the work. It's not just by default. That person, because they did it the last two times, keeps us on our toes to always be looking at the systems in our business.

Thomas Sphabmixay:

The checklist is a really interesting method, Kristy, and what a way to be able to develop talent all around your team. Now, just for those who are a little bit not as exposed to this topic, what is the difference between a policy and an SOP? What a difference in mindset for each.

Kristy Fairbairn:

So I guess the policy is it gives the why the business requires it and it gives the expectations of standard. And then the SOP is the how. It shows you exactly how to achieve something and what it should look like at the end.

Kristy Fairbairn:

Excellent, and then that all comes back to being able to get us that similar Output result at the end of it, no matter what our inputs are one of the things I often find people you know when we talk about extraordinary systems for ordinary people and, as you said at the beginning, that you know we need the people. The great thing about an extraordinary system is it allows people to be in their flow or in their genius zone Because they're supported by great systems and structure, instead of feeling like they're in a state of force because they're not sure and they have to think about things that aren't their natural ability. So that's what we're looking to create an environment for people to be successful. Because they have a system behind them to heighten their success, not because we can just have anyone come into our business. People aren't special, but we need to have that safety in our business as well, that our team feels nurtured and valued, because they're given all the tools to be the very best.

Thomas Sphabmixay:

Excellent and you know, one of the tools that I know you use really, really well, Kristy, is your Loom videos and the way you've been able to flesh out each of your client CRMs with all the nuances that that client requires to be able to do the work that you have done really well. Any advice you can have for the room here on developing their Loom videos? For those who don't know, Loom is just a short video recording tool. We have a five-star recommendation here for Loom as well.

Kristy Fairbairn:

Create an SOP on how to name your Lume videos and use the filing structure within Lume. It's been a game-changer absolutely for us. It's so fantastic. It's my admin run it beautifully so that whenever I forget something or I got a look for something, it's so easy to find it in there to see if it needs an update, including down to, you know, storing videos for clients on how they can do things. So Loom is such a versatile tool it's it's worth investing in the paid version if you're ready for it. But even at the entry level. It's so handy. You're not creating, you know, Oscar-worthy movies. You're creating quick, short soundbites, and far as easy to do a quick video of each set rather than one long video of the whole process. But even if you have to have a joke with your team and suggest they play it on double speed, or at least speed one and a half to get through it, then you've got tools there. You're replicating yourself without having to have a cloning machine.

Thomas Sphabmixay:

That's really powerful and I think about it. You know, a manager's charge rate runs at anywhere between 200 or $250 an hour, and you can imagine how costly that is if a junior team member had to get that person to verbally explain that to their team member again when they could have been doing work, and that video pretty much duplicates that manager in that situation. So that's something all of us can't avoid and can't miss out on. If you get the chance to be able to make and encourage your team to make loom videos, I highly recommend you do so.

Kristy Fairbairn:

You can even get the Loom link into your Wize Hub now.

Thomas Sphabmixay:

On this topic of SOPs and policies. Give us a bit of a dive into the Wize Hub and show us what that looks like in this system.

Tim Causbrook:

If you're struggling with a place to store it or just a way to conceptualize how you would lay out the SOPs. Even if you don't use this, it's still really good for conceptualizing it at the very least, although it's great for using it as well. You can see the seven divisions I mentioned before. They're all laid out here and again if you click on how to, it brings you to this policies and procedures section of the Wize Hub and again it's laid out according to the seven divisions and I think it's just so helpful thinking about it like this. Folks I know who do have relatively advanced libraries still struggle with well, where do I put things? How do people find them? Is it from naming?

Tim Causbrook:

We have in my own firm just an image of the seven divisions and what sits in each portfolio, so they just get a sense of where they would look. And then, accompanying that image of the seven folders here where you've got each division and all the SOPs that would sit in that division. I number them just like Jamie does. So six is division six, point one, point two, point three, and point four. I've got about 50 SOPs in the draft format currently, so it is important to have like a numbering system just to keep track of things, and the names of the SOPs can change. So again, having a number system I find is just really really helpful and really the process from you know starting one to completing it is part of the SOP, if you will, of how to make SOPs. So You've got just to their draft and approved, but throughout the whole process of creating it, we approve them at the board level, we approve them at the client manager level in the weekly tactical, and then there's a section of the SOP where it says training. Is there any training required? Because you know how good is an SOP if it just sits in a virtual drawer and no one in the whole organization knows it exists. And I used to email the SOPs around to everybody and they're not going to read the SOP. I wouldn't read one if it was emailed to me. And so we realized pretty quickly we had to do training, whether it was by a team or just having the practice manager, the office manager, sit down with all the key people and train them. It doesn't really matter, as long as it's, you know, in real life, in a video environment, whatever it is in real- time. Train them and allow feedback. We might even tweak it at that stage if still needed because it's not set in stone. It's not the 10 commandments, it's a living document that can keep changing.

Tim Causbrook:

But this is probably the best example I've seen of you knowing how to store the SOPs, and how to create them. You can see all these are in draft mode. Still, he hasn't actually approved them yet. So when you click approved it'll go, it'll change to approved and you can see all the ones that are approved versus the ones that are in draft. You can put in the author or creator if that's necessary. You can put the date that they were created. You can also link here videos. If there's a loom video and sometimes videos are easier like a two- minute video is way better than a document for how to use software, for instance, you can link that video here. If there's a document you know I love documents as well you can. You can link the document here as well. In the links feature you can also link. Let's just say, you've got stuff in your own SharePoint, you can link that to here. You know this isn't SharePoint, this is its own software and it's really a hub. It's not supposed to replace Microsoft 365 or what have you. But yeah, it's just a really, really good way of conceptualizing the divisions.

Tim Causbrook:

The other key thing for accountability. There are two more key things I would just say quickly. That is, every single one of these divisions has someone who's accountable for that division. If it's quality control, it's CTO. If it's marketing, it's CMO. If it's sales, it's the client managers. You know what I mean. So you know CFO for accounts, every single division has someone who really is accountable for making that portfolio or division run smoothly. The SOPs are a tool to help them in their job. So if you don't have people who are accountable to these divisions, you know the SOPs are great conceptually, but they won't have much value for implementation, implementing change in your practice, if that makes sense. So it's really key to have people who are accountable for each division. And then let's say you hired a new CFO. Wouldn't it be great if you could just give them a whole list of SOPs that tell them how to do their job? Well, you know, instead of having, oh this is how Jerry used to do it, this is how Barry does it, these are the SOPs on how to run that division effectively and I would encourage them. If there are any issues that come up while you're trying to run that division. Maybe that's the cause of creating another SOP. Please feel free to recommend SOPs that are gaps in what we already have, or videos, and get them to do that. So, the other way of getting people accountable is to include as many people as appropriate in creating the SOP. Please, please, please, do this.

Tim Causbrook:

When I first started I loved writing I sat in my little room and wrote all those SOPs that were beautifully written, you know, and people kind of ignored them.

Tim Causbrook:

When I started doing it Jamie's way, which involved people in creating the SOP, all of a sudden I got buy-in. The SOP was 10 times better than if I had written it alone. And not just that, I got the buy-in. So we always do it at the weekly tactical because I want the client managers, who are really like the leaders of the business, to be involved in the creation of an SOP, or at least minimum they're signing off on an SOP. They're saying, yep, that's fine by us, you know because often it's standardization. If you've got multiple teams, for instance, you want to make sure that everyone's aligned and you don't want to get political. There are so many reasons why it makes sense, not just for buy-in, but there are so many reasons why it makes sense to involve the leaders in your firm in the creation of SOPs. So I would just say, yeah, keep people accountable to the SOPs by having chief roles in these seven divisions and involve the logical people in your business in the creation of the SOPs as well, to get buy-in. Absolutely crucial.

Thomas Sphabmixay:

Once again have to emphasize if you're a firm that is growing quickly, or even if you're not growing quickly, you're just feeling like things are chaotic and your work is taking too much of your time. A lot of investment needs to be made into systemizing aspects of your firm and ultimately that's going to manifest itself into the form of an SOP.

Wize Mentoring:

Thanks for tuning in. If you liked this episode, please remember to subscribe and leave us a five-star review. For more practical Wize tips on how to build a business that runs without you, head over to wizementoring. com/ podcast to download a pre-copy of The Accountant's 20-Hour Workweek Playbook. We've included a link in the show notes below. See you in the next episode.