Industry Trends

What Are Accountants Lying to Themselves About?

Caleb Newquist Editor-at-Large, Gusto 
trust solutions

May 19, 2022

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Fooling yourself

We all lie to ourselves. For a while now, I’ve been telling friends, colleagues, and myself that “I am not a marketer.” I say this with overwhelming evidence to the contrary, the most compelling being: I WORK ON A MARKETING TEAM. I’ve been working on a marketing team for four years. It won’t be long before the tenure of my marketing career surpasses the tenure of my accounting career. 

Still, I have accounting, writing, and journalism in my background, which informs my marketing work. I think a lot about accountants and their work and then write about the stuff I think about. And what I’m thinking about for this newsletter is self-deception, thanks to this Arthur Brooks column that I stumbled upon recently but was published last fall.

Deceiving yourself shouldn’t make logical sense. After all, lying involves telling someone something you know to be untrue. When you are both the liar and one lied to, this means you have to both know the truth and not know the truth. In practice, that means willfully disregarding key knowledge to arrive at a conclusion that is more convenient than what the facts appear to suggest.

A couple things come to mind for accountants. First, do you know what your clients are lying to themselves about? Is it the health of their business? Is it crypto? Is it spam bots on Twitter? And if you do know what they are lying to themselves about, are you doing what you can to get them to, you know, stop? I’ve written about this before, within the context of your clients being overconfident—how do you deal with that? It seems like one of those areas where accountants are perfectly positioned to serve as the objective—or at least more objective—sounding board that virtually all businesses need. PwC has a “Trust Solutions” practice; maybe your firm should have a “Call Out Your BS” practice. 

The second thing that this essay got me thinking about was: What are accountants lying to themselves about? One could argue, a lot of things. Their happiness. Their self-esteem. The importance of the metaverse. The profession’s diversity. To be fair, CPAs seem to be cleareyed about questions facing the CPA designation’s relevance. So that’s something

Despite the accounting profession deceiving itself for a long time on a myriad of topics, it has enjoyed a lot of success. That tradeoff has a cost, though, as Brooks explains:

As my colleague Steven Pinker […] reminded me by email, “Whatever advantages self-deception may have in motivation … it has to be balanced against the obvious downside of not learning from mistakes.” Research shows that self-deception is associated with an inability to see our own flaws, which makes self-improvement harder. 

Success is an extremely compelling motive. You know, “It Is Difficult to Get a Man to Understand Something When His Salary Depends Upon His Not Understanding It.” That sort of thing.

Countless accounting firms have made money serving clients with a combination of up-or-out career paths, tracking time, and toxic overwork, and claimed that it was the only way it could be done. Accounting told itself this lie for decades, and now that many new firms have pushed back on this idea, the profession is evolving into… something else. We’re still waiting to see what that is, but it seems that real self-improvement is creeping its way in.

Meanwhile, the profession lost many talented people who left it to do other things. Some even became marketers. 

Pay transparency

We’ve talked about pay transparency a couple of times and how an increasing number of states are starting to require employers to disclose the pay scale for their open positions. One thing I’ve wondered is whether more employers should proactively disclose pay, which could give them an advantage in hiring people in a tight labor market. To my utter surprise, this has not caught on. But it makes little difference, apparently, because more employees—yours and your clients’—are talking about their pay with each other anyway. Bloomberg reports:

Empowered by the tightest labor market in decades and incentivized by skyrocketing inflation, employees are embracing transparency, discussing their pay in the hopes of getting raises for themselves — and their colleagues. 

Nearly 42% of Gen Z workers and 40% of millennials have shared their compensation with a coworker or other professional contact, according to a March study of 2,449 American adults conducted for Bankrate by YouGov Plc. That’s significantly higher than Gen Xers (31%) and more than double that of Baby Boomers (19%). 

It’s been interesting to watch the shift in attitudes about discussing money and compensation. When I was young, virtually all the adults around me gave me the impression that it wasn’t any of my business how much money other people made. This stuck with me through the early part of my career, but when I started writing about compensation for accountants, my attitude completely changed. Virtually no one benefits from secrecy around compensation but employers. Even then, I can make the case that employers would be better served to be open about compensation because it helps build trust with employees. 

And if you disagree, fine. Sounds like your employees will talk about what they make anyway.

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Caleb Newquist
Caleb Newquist Caleb is Editor-at-Large at Gusto. In 2009, he became the founding editor of Going Concern, the one-of-a-kind voice on the accounting profession, serving in the role for 9 years. Prior to Going Concern, Caleb worked as a CPA for nearly 6 years in New York and Denver. He lives in Denver with his wife, two daughters, and two cats.

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