Episode 217: Right Person, Right Seat: How Accounting Firm Owners Get Both

Before Tim met Ed Chan in 2019, hiring at his firm worked the way it does in
most firms. Someone said "we need more staff," so they threw more bodies at the problem. No structure, no org chart, no way of knowing whether anyone was in the right seat. Then he and Ed spent five hours mapping every person in the firm, strength by strength, weakness by weakness, and placing each one in position.

That exercise is what this episode is about. Wize mentor Tim walks through how firm owners can answer two questions that sound like one: is this the right person, and are they in the right seat? The answer applies equally to last
month's hire and to the team member you promoted three years ago.

You'll learn:
✅ Why the capacity planner is where every seat decision has to start
✅ How write-offs and productivity numbers expose who is too slow for their role
✅ The resource mix problem that keeps work stuck even when capacity looks fine
✅ When a client manager genuinely needs a production manager beside them
✅ Why two complementary people in the right seats beat one unicorn every time
✅ The 3-times rule for telling incompetence apart from inexperience
✅ How clear outcomes let you judge any seat within 30 to 60 days

Every firm owner gets a seat wrong eventually. Tim has, Jamie has, Ed has. The difference is having a system that catches it in weeks and fills that seat with the right person the next time.

This is a visual walkthrough, so if you want to see inside the WizeHub as Tim clicks through each section, tune in to the episode on YouTube.

________________  

PS: Whenever you’re ready… here are the fastest 4 ways we can help you fix and grow your accounting firm:  

 1. Download our famous Wize Freedom Map for FREE - Find out the 101 projects every firm owner must implement to build a $5M+ firm that can run without them - Download here 

2. Need to hire right now? Book a 1:1 FREE discovery call with our WizeTalent hiring coaches to help find your next team member the Wize Way – Click Here 

3. Work with Jamie and our mentors for 8 weeks - Build a custom business plan for your firm - Apply here

Transcript

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Welcome And What Freedom Looks Like

SPEAKER_00 0:00

Welcome to The Wise Way, the show for accounting and bookkeeping firm owners who want more time, profit, and freedom in a business that can run without them. I'm Brent Ward, your host, and each week we deep dive into the real stories, proven strategies, and battle-tested tools from successful firm owners just like you. Our wise mentors want to share their journey of how they've scaled and systemized their way to freedom so you can too. If you're stuck in the grind or you're ready to scale smarter, this is your blueprint. Let's get into the episode.

Hiring Mistakes And The Real Question

SPEAKER_01 0:38

Today's topic is on you know hiring, but also really post-hire, uh, which is like how do you know that you've got the right person either in the seat from a recent hire or also, you know, for someone who you've internally promoted into a into a position? Really, really love this topic. It's super important to get right. And yeah, we'll we'll dive in. I don't know if we want to share, but uh, has anyone ever, you know, mishired someone? I'll I'll put my hand up straight away and say, yeah, we we have it Causebrook's my own accounting firm. Uh and has anyone really, you know, had a team or a key person say they can't take on any more work? Has anyone promoted someone into the wrong position? I think I've done yes to every single one of these. You know, and have we ever hired from the gut? Before I met Ed in 2019, we we always hired from the gut. People would just say we need more staff and we just throw more bodies at the problem, as Ed says. There was no um structure, no organization chart.

Capacity Planner As The Baseline

SPEAKER_01 1:35

So to kick things off, who here's got their capacity planner built out in their own wise hub? I'm assuming most of you all would have. So there's probably two or three things we're gonna look at today at a high level. Uh it's really theme-based today. So there's a couple of tools that really uh help. But the first one, if you've been around here for a while, you know, you'll know all about it, is the is the capacity planner. So if you come down here and you can just type capacity in the in the chat there. Every firm needs a capacity planner. I think if there's one takeaway from today, if you don't have a capacity planner built out in your Wise Hub or it's needs really needs to be updated, that's absolutely the first thing you should you should be doing. Um we've got plenty of videos on this, how it works. Um, so I won't go in in depth into it today, but this one looks a bit out of whack. So we've got 2026. That's better. That's much better. So capacity planner is simply all the fees, all the clients, potential growth budget in terms of CPI increases, but also just revenue win. Let's say you've got an organic rate of 10%, and then all the overheads allocated to that team and all the accountants' salaries in that team. And so the most important thing is profit and cash flow, right? This is a way of budgeting out at the beginning of the financial year what your cash flow will what your profit will be. Cash flow will follow on from that if you manage your debtors. So if you look down here, the wages in this team collectively are 31%, which is great. It's below our 40% benchmark, and the gross profit's 68%. And the overheads at 350 only make up 24.6% of the revenue. So this team, if it implements this financial year what we've got in paper, will do a profit of 44% or 630. So believe it or not, I've worked with many, many, many firms where they've got plenty of capacity and the staff are still saying,

Productivity Proof Versus Busy Work

SPEAKER_01 3:40

we need more staff, we need more staff. And it's because they're not doing timesheets, they're not measuring productivity, they're not looking at output. People are busy, they might be working overtime, but they're not productive. It's like a washing machine where the work never gets out, just goes around and around in circles. Some teams and some firms I've worked with genuinely have limited capacity against the budget. So if we look here, guys, this team's only got capacity of 1.2 mil, but it's got a revenue budget of 1.4. This team does need to hire potentially. I'll show you here. We've got a grinder down here, Hugh Jackman. So you got a salary there, must be an onshore grinder. Got productivity 80%. We got a 44 millible working weeks in Australia, 37.5 hours a week. Gives us a fee capacity of 224,000 with a charger rate of 170,000. Cost per hour of 50, he's roughly three times three times the profitable. Multiple labour cost of three, bang on. So that's good. The margins are good, he's got good capacity. If we go a full financial year and Huey Jackman here has only ended up billing 100, we've got potentially workflow problem, or he's potentially too slow. We've got write-offs on Hugh Jackman, and we've got to look at that. So this really allows you to manage because we're measuring against what is reasonable. And everyone here is interchangeable. So, like I said before, if you Jackman takes two hours to do a job that only takes one hour, and we're doing timesheets, we have write-offs, we track productivity, we know he's just too slow. He really shouldn't be in public practice, he should go into private industry or go get another job. And we put someone here who can hit that capacity for us and hit that nice multiple of three times. So it's not an exact science, but I've been looking at these capacity planners for about seven years now, and it's very, very close to what happens in reality, or at least it's a benchmark of what we should expect each team to do in reality. So you can see here the team summary, negative 11%, because they've got capacity to do 1.2, 7.5, but there's 1.4 in the budget. The margins are good though. So if you don't have a capacity planner built out like this, you're flying blind. Um, too many firms don't know what profitability they're going to hit for the year. You can budget for what profitability you're going to hit. I hesitate because the only uncertainty is will we do 10% growth? But even there, guys, you can look at the last five, if you've been around for five years in your business, what's the average growth rate over the last five years when you take out things like tuck-ins? Extraordinary things. And even if you put in here what your average growth rate is over the last five years, the number that you're getting down here should be a pretty certain thing. Right? Now, if the EBIT is well below 25%, or the capacity is well under, you've got negative capacity, you might have a hiring problem, you might have a resource mix problem, you might have a fee problem. But again, if you're in a position in your firm where you can run the firm and you can make those decisions, you really need to take charge and and build out this capacity planner. So that's we we we can go into more detail there if people have questions, but like we've got so many videos in the capacity plan, I just wanted to kind of start there. What happens when the team's not able to get the workout or you know, or you're losing clients, or it's just not happening as efficiently as you'd like it to? And

Resource Mix And Offshoring Reality

SPEAKER_01 7:01

this is something Selena really wanted me to look at today. And it's it's it's a really underrated part of the wise hub. It's in the people section under Discover. So this is looking at the pure numbers of charge out rate, productivity, available hours, available working weeks, right? It's very mathematical, it gives us a number. I've seen so many firms over the years, or not so many, but enough firms over the years that had plenty of spare capacity that had a really bad resource mix and they weren't able to get the numbers that this suggested. The resource mix is this here. So I've worked with firms where there's one onshore accountant and five or six Filipinos with two to three years' experience, and they've got complicated clients and they wonder why they can't get the work out. Well, because they're gonna have to review everything and the work's gonna be um often incorrect, and there's gonna be a lot of types of jobs that they can't delegate to their team because it's just very, very junior team under them. You might have four or five, and you might go, look, the cost of goods look really good because we've got all the offshore labor doing the grinding, but at the end of the day, the resource mix is broken. If you're doing more than five, six hundred K, you really need a production manager to help the client manager. If the clients are relatively complex, good luck doing that offshore. You know, you just got to be real and be reasonable about what the client base needs and resource it to match that. There's no golden bullet here or no unicorn. I've worked with enough guys over the years who just, yeah, I'm just gonna, I'm just going to offshore everything and they wonder why they've still got a job because they don't have people who they can really rely on to do the heavy lifting side of it, and it's just one person at the top. So one way this happens is bottlenecking. There's another way of describing what I just talked about there. Another one is just looking

Strengths And Weaknesses By Role

SPEAKER_01 8:40

at the strengths and weaknesses of the people. And I think this is this is the key thing I think Celine wanted to touch on today. So we've got the production manager here, right? We've got client managers. If you could rank your staff, let's say you've got a production manager in place. I've got three, I've got two, actually, two at the moment. Can you you can rank them according to how technical they are, how good they are at managing workflow, how good they are at managing staff, how good they are at delegating, you know, client manager, how good are they at explaining things in layman's terms, how good are they at upselling, how good are they at keeping in touch with the client base? How good are they at at making it personal instead of an email call instead of a call face-to-face? Uh, how good are they at identifying new ways we can serve the existing client base? These are all like innate strengths and weaknesses. And you might have a full team, like I've got three full teams doing a million dollars each or north of a million in some cases, right? You might have a full team, you might have all these players in position, and you still might not be getting the results. That's where we've you've really got to do a deep dive into this people section of the wise hub. Got the actress in there, okay. And look at this thing here, the strengths and weaknesses and qualifications and other notes. It's not very helpful that it's acting because look, we're we're not running an agency here, but you can see how detailed this is. The firms, very few firms have this level of detail in the strengths and weaknesses and the other notes. Right? Very, very few. If you're having trouble with your team and it's not optimal, and you have all these positions, well, if you don't have all these positions, you know what you've got to do. You've got to throw it in the capacity planner action higher and get the resource mix right as well as the capacity. If you have that in place and you're still not really hitting the numbers you want to hit, you've got to go a little deeper and you've got to go down to the people and the strengths and weaknesses. The beauty of this, guys, is I I don't know who enjoyed high school here or if anyone enjoyed high school ever. Some people do, but in high school, you're trained to be good at everything. You've got to get, you've got to try to get 100% in maths, science, English, engineering, you know, economics, art, whatever it is, right? Music. My brother-in-law did get 100% in everything, but he's a freak. Like I know three people who got 100% in everything in their HSC in high school, right? Three people, right? But most people don't get 100% in everything. And the richest people in life, or the most successful people in life, are usually really good at one thing. Anne Hathaway, stunning actress. She could be terrible at everything else. We know about her because she's really good at acting,

Complementary Teams Beat Unicorn Hires

SPEAKER_01 11:05

right? The reason why I'm bringing this up is we're trying to build out teams here, guys. We're trying to build out teams. A team is full of people who complement each other, complementary skill sets. We're not looking for unicorns who could do everything because they bought they tend to bottleneck, they tend to be very expensive, they tend to be difficult to manage. And when they leave the business, a massive gaping hole is fit is created when they leave because they were holding up so much of it themselves. So what we really want here is people who can manage clients and people who can manage staff down here. There's no right or wrong here, but you need them to complement each other. So I've seen businesses where the production manager, even though they're more junior in years potentially and maybe less salary, are actually the most technical accountant in the team. It doesn't bottleneck as much when that's the case because they're managing three or four accountants under them, while the client manager is managing like six to six hundred to a million dollars in fees. And they complement each other. They're way stronger together than they are apart. If you're struggling with this and you've got the capacity planner built out, the next stage you've really got to get into is looking at the strengths and weaknesses of each team member. And you've really got to know what they are, guys. You've got to understand their strengths and weaknesses and potential. So you've got potential role here, better than they understand it themselves, and play them in position and get the best out of them. There's a brilliant book about this. It's not about sporting, but it's called Trillion Dollar Coach. This is the guy who was the personal mentor, business coach for Steve Jobs and Eric Schmidt, who was the CEO of Google, like in Google's biggest growth period from like, I don't know, early 2000s to I think 2018. He was he was at Google. They had a coach. It was this guy, Bill Campbell, who was the CEO of Intuit in America in the 90s, I believe. He knew people's potential and he brought it out in them. And it's no different for you guys. So it's a really good quad two activity. Really good quad two activity. Again, don't do it just to tick a box and say you've done it. Do it if you've got the plays set up in the capacity play and you've got all the positions filled and you're still not getting the results. Hop in here and look at the strengths of weaknesses. Some people, sometimes guys, frankly, have more weaknesses than strengths. And they're deadly. If they're kind of okay, they're kind of equal. It says they're worse than someone who's just all weaknesses. Someone who's all weaknesses, you just move on pretty quickly. But someone who's got some strong, strong points, we tend to make excuses for them. I know I'm being harsh here, but it's true in my own firm as well. We tend to make excuses for, well, at least they're doing something. And it's just not the case, guys. Like we need to get someone whose strengths outweigh the weaknesses and whose weaknesses can be supplemented or complemented by the strengths of someone else in the team. Going back to the high school analogy, we don't have to be good at everything. And the team, the individual people in the team don't have to be good at everything. But where they have weaknesses, they have to have other team members who complement them where they're weak with their own strengths. And as a sum, it's going to be much, much better than separately. So I'm banging on a lot of that teams here because teams are what make your business scalable. Jamie is doing 7 million in revenue right now, works there one day a week. Why? He doesn't manage any clients. He's got staff who manage clients for him, and they're all backed up by a team. I've got access to Jamie's calendar, as does Selena probably. Sometimes I have a look there, and um, he said something the other day, or was probably a year ago now, and I checked it and it's true. The only time he'll do Sky meetings outside of his Thursday, his one day week at Sky, is when he's on a hiring sprint. Now I think we'll get that. Selena's nodding because she's saying that she knows. When Jamie's teams need staff, he is like a demon. He's like, I will get them the staff they need. Because they cannot do their job unless they're backed up by a team. Doesn't I've I've seen the best client managers in the world, most technical, most commercial, most savvy, just have the worst month ever when they don't have the right support under them. It's just it's as critical as that. We're building a business, and a business is teams, and the teams are led by people who are at the top, who the buck stops with. And depending on who you are in your business, you can be above them and the buck stops with you. You've got to make sure that they've got the right resources. And to be clear, that's not throwing bodies at the problem. It's looking at the capacity planner, it's looking at the resource mix, and it's going down to that people level, looking at the strengths and weaknesses of each of each person in there. And what are we really looking for in this role? So it's very, very strategic. We're not throwing bodies at the problem. We're not hiring the most qualified person. It's really what's the right tool for the job, and that's dictated by the context of what we're looking at with each team here. Different if we're putting internal people into positions, internally promoting them or trying to place them in position. But again, we don't want to set them up for a fall. When I first met Ed in in December of 2019, we spent about five hours putting together our teams. And we probably spent a good hour, hour and a half, two hours looking at the strengths and weaknesses and qualifications and other notes of every single person in my firm at the time. So that we could place them in position and not set them up for a fall. Absolutely critical to get right.

Team Design And Hierarchy To Reduce Chaos

SPEAKER_01 16:06

And I think the the two main tools I use is here the capacity plan and the people here and the people profile, which you can find just here. There's other things you can look at as well as a team designer, uh, where you can build out the teams. The ideal teams will have the plan that we're moving towards. This is what we're trying to avoid. This is what every firm I've worked with starts with. Absolute bottlenecking here. And the clients or the staff suffer, usually the staff. The complexity increases dramatically, like exponentially, when there's no hierarchy. And that's another way of showing that. This comes straight out of Vernharnish. You just can't have 14 people who don't have any hierarchy because there's 91 lines of communication. That's triangles. That's people drowning internal communication traffic. So we're looking at building teams of complementary people at different salaries and different charge-out rates. Collectively, this team should be able to do well north of 25% IBI without anyone in this team burning out. As long as we get the right people playing in the right positions and the bus is going in the right direction, anyone who's not going in that direction or is, or boat's an even better than four, not rowing and not carrying their weight, they've got to get off the boat. Got to get off the bus. And then, you know, when you're looking at your strengths and weaknesses of your people, if you've got people in this finder seat, do they have high interpersonal skills? Do they have good leadership skills? Are they commercial? Like working in sales? Can they shift gears when they're talking to clients? Can they manage clients? If you've got someone in that client manager seat and the answer is like they could do this 50% as good as we need, they're the wrong person for the job. They've either got to be a production manager or they've got to work someone else somewhere else and ruin that business because they'll ruin yours if they're not the right person for the fit. It's not fair on them ultimately, and it's not fair on the business, and it's not fair on the clients, and it's not fair on the staff. So you're on today's call, you a good chance you're able to make these calls in your own business. Absolutely critical that you play people in position and that we build out an ideal team. And if you're anything like me, I had about 18 staff when I met Ed back in 2019. We didn't have a lot of ideal people in that in that team. And so we tried to play people in position as best we could. Ultimately, some of them worked out, some of them didn't. And every time someone didn't work out, it was a chance to get it right the first time and get someone in externally who could do that job because we were hiring to a blueprint here. There's position descriptions. Uh, I don't know if they're in in the wise hub yet, Selena, but they used to be in the wise bolt. But there's, yeah, Selena can direct us to that if you need. We're just looking at a really bird's eye view, high-level view today. But but I'd recommend you look at position descriptions as well if you're hiring internally or externally. There's a bit around the hiring process there, but that's another whole topic. As Jamie says, all these topics kind of bleed into each other. But I'd say today, the next steps are if you don't have a capacity plan, you could kind of build one. If if it's not up to date, update it. Um, and then the next step after that would be if you don't have if it's if it's performing well, you could probably stop there. But if if you need it, if it's not performing as you'd like it to, go a little deeper and look at the ideal teams and look at the people here and build out the strengths and weaknesses and be really honest and be and start with yourself. What are your own strengths and weaknesses? I'm not a detailed person, so I need to work with people who are really good across the detail. I'm good with strategic big vision. I know what we're doing with AI, with tuckens, with JVs, with marketing. I'm all the high-leverage things, that's where I'm bringing the value and my business needs that, and I fill that gap there. So start with yourself, look at your own strengths and weaknesses. It might be that you're really not best placed in your business to be a client manager, you know, and that you could hire someone to do the job better than you could. You don't own a business so you can have a job, right? That's just not why you own a business. So if you're feeling like a bit threatened by the idea of replacing yourself, might need therapy or something. I don't know, you've got to work through those issues. But yeah, if I go buy a farm, I'm gonna hire the best farmer I know to run that farm for me. And they're not, you know. So again, it's all about the right people for the job. Not having the right team is 100% holding you back. Even if the team's kind of limping along, it's got to be is it hitting 25% of it? Have you got your Fab Five going? And is the team getting a great Fab Five result? You know, so that's how we can say objectively things are going well. They don't have to run it the same way you run it, right? That's control freak mentality and that's like craftsman mentality. You'll never grow with that mentality. To be controlled without being controlling, you look at the Fab Five results, you look at the lodgement lists, the client satisfaction surveys coming through, and you know that the business is on track or not on track. Um, often, not always the case, but often, external hires do a better job of managing clients than the owners that I work with. Not always, but but often. So we can end it on that. But hope that's kind of what Slana wanted me to look at today. We'll go up to the slide, make sure we covered it all.

Defining Success Outcomes And Competence

SPEAKER_01 20:41

I mean, the last thing I'd say there just how do you know you've got the right person or the wrong person? You've got to be clear on what the position description is, clear on what success looks like, which is outcomes based, which is you know to do with with the Fab Five. If it's a production manager, uh are the people under them 90% productive, are they improving? Is the workflow, you know, happening smoothly? Is the team consistently billing? If they're a grinder, are they coming in on the budget? Like are they fast and do they make minimum mistakes? And if you keep getting the wrong outcome, right, they're probably incompetent and it's not experience. I've seen very inexperienced people improve rapidly because they were competent but inexperienced. And I've seen in my own firm and a lot of the firms I've worked with over the last seven years, I've seen people just, oh, they're inexperienced and they just keep getting, you know, what do you call it, like more leeway. And you've just got to be objective. I've seen people who have got 10, 15 years experience in the industry, oh, they're still a bit young. Like they're in their mid-30s, guys. Like when are they gonna, you know, when are they gonna set up? So you've got to be really critical on what's incompetent and what's inexperienced. And the difference is someone's incompetent if you have to teach them the same thing more than three times and they're still failing to grasp it. They're just not, they've hit their ceiling of competency that, you know, that done in Kruger, they've hit that. And it's gonna be 10 times the effort just to get them to improve a little bit versus someone with less experience, less qualifications, who just is a growing a learning machine, learning compounds. So yeah, don't kick yourself if you hired or promoted the wrong person. We've all done it, I've done it. Learn from our mistakes and get it right the next time, and get it right by looking at the capacity planner, the resource mix, the strengths and weaknesses of the existing team members, uh, and having a job description with clear outcomes so that you and the new hire can know within 30, 60 days if they're doing a good job or not. And that's kind of really the long and short of it at a high level, but we've gone into a fair bit of detail today.

Wrap Up And Next Steps

SPEAKER_00 22:36

Thanks for tuning in to this episode of The Wise Way. If today's episode sparked an idea or helped you see things differently, please don't forget to leave us a review. And if you haven't subscribed to the podcast on your favorite platform yet, please go ahead and do that as well. Let's continue the conversation here through YouTube or any other social platforms that you can find us on. And just remember, if you're not a subscriber of our weekly Friday tip newsletter, you can get that to your inbox every week going forward. Whether you're starting out or scaling up, you don't have to do it alone. Let's build a business that works for you the wise way. We'll see you in the next episode.