September 8, 2022

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Everyone’s tracking time now

Long before there was a worldwide pandemic, accounting firms—and other professions, e.g., lawyers—were tracking employees’ time. For each relevant period—usually two weeks—employees filled out timesheets in fractions of an hour to report what they worked on so that clients could be billed for their efforts. Along with knowing how much money to charge a client (or how much time to allocate to a project), the premise of: “What did you spend your time doing today?” told managers and firm leaders about the productivity of their employees. 

A partner might be reviewing a timesheet and think to himself: “Oh, I see Johnson spent 30 hours on the Penske file this week. That’s twice as much as last year. But I saw him in the office until the wee hours of the morning. Obviously he was working. What the devil is going on?”

This imaginary but not unrealistic scenario is more or less how the accounting world still thinks about productivity. That is, time = things getting done. Accordingly, many firms still track time and keep timesheets. There are several reasons for this: 

  1. It’s a relatively easy task. Keep track of what you’re working on and for how long. Put it in a spreadsheet. That time is applied to the respective employee’s billing rate, and that result is what you charge the client. 
  2. It’s useful for comparing to past productivity on the same job. Was the time spent this year more or less than last year? If there’s a big difference, the folks in charge can INVESTIGATE.   
  3. Firms have been doing things this way for decades. People working in the field expect it; it’s part of the job.
  4. Accounting firms have been wildly successful—i.e. profitable—for decades, too. Ain’t broke, etc.

Over the last decade-ish, some strong, spirited arguments against tracking time and using timesheets have gained traction in some corners of the accounting world. Among those arguments:

  1. It’s a poor measure of productivity for firm leaders. 
  2. It’s an administrative burden, leading to errors and manipulation.
  3. It doesn’t accurately capture the value that accountants can provide.
  4. It’s an unfair method of billing clients. 
  5. More anecdotally, most accountants’ experience—including my own—with tracking time is: It sucks. I’m already overworked, this is one more thing I have to do, and someone will probably pepper me with questions about it. 

That’s not an exhaustive list, but overall, it’s safe to say, tracking time is a hotly debated topic in the profession.

When the pandemic upended the working world, one thing that happened was that a lot more people started working out of the eyeshot of their managers or bosses. This was great for many workers who don’t require much supervision, but it’s awful for managers whose job it is to… supervise. Because so few people were familiar with remote work and even fewer with supervising remote workers, a lot of people seemed to have PANICKED and immediately concluded that tracking employees’ time and activity through their computers was the best thing to do. And virtually overnight, monitoring employees’ productivity went from dystopian trope to real life.

In the spring of 2020, Patrick Baratta graduated from the University of Virginia and began working remotely for AlphaBrook, which provides research on government contracting. Soon the company began gauging its workers’ productivity using a program called Monitask, according to Mr. Baratta and several former colleagues.

Once, he said, a manager asked why his score had dropped during a particular 10-minute increment. “Sometimes I have to use the bathroom,” he replied. (Matthew Hastings, AlphaBrook’s founder and chief executive, said the company “would never assess an employee over just 10 minutes of their time.”) In interviews and written submissions to The Times, workers across a variety of jobs — pharmaceutical assistants, insurance underwriters, employees of e-commerce companies — also said productivity pressure had led to problems with bathroom breaks.

I get it. Trying to figure out how to measure employee productivity is difficult. But I don’t think putting workers in the position of having to create a pretense of productivity while doing offline work or answering the call of nature is the solution. It’s a little dehumanizing, a great way to repel good employees, and have a few wireless keyboards end up in the toilet.

But businesses are plowing ahead, in part, because remote work is here to stay and, in part, just because:

“If we’re going to give up on bringing people back to the office, we’re not going to give up on managing productivity,” said Paul Wartenberg, who installs monitoring systems for clients including accounting firms and hospitals.

But in-person workplaces have embraced the tools as well. Tommy Weir, whose company, Enaible, provides group productivity scores to Fortune 500 companies, aims to eventually use individual scores to calibrate pay. “The real question,” he said, “is which companies are going to use it and when, and which companies are going to become irrelevant?”

Another real question might be: “Which employers will treat their people like machines, and which ones will have sustainably happy and productive employees?” 

It’s reasonable for businesses to expect their employees to be productive. It’s something altogether different to decide that productivity will be tracked programmatically to account for every minute of their day. While accounting firms haven’t had the technology to do precisely that, they have decades of experience asking employees to track and account for their time and, by extension, their productivity. Firms’ insights into what works, what doesn’t, and what will cause people to revolt, gives accountants another opportunity to be indispensable to clients trying to navigate this exceptionally complex business landscape. 

Will accounting firms be accounting firms in the future? 

A regular theme around these parts is whether accounting firms will continue to be accounting firms in the future. Accounting firms are providing new services that accounting firms historically haven’t provided, they’re hiring lots of non-accountants, and universities even have accounting programs for non-accounting majors

Things are evolving in a very interesting way that could render accounting firms unrecognizable in the future, so I appreciate that Dan Hood asked the uncomfortable question at Accounting Today: Do we need accounting firms? Clearly, Dan says, we need the services, but the structure of firms has all kinds of flaws, so maybe that’s worth rethinking:

The firm structure is not a particularly efficient way of raising or mobilizing capital. Given the number of firms that complain about the difficulty of finding the next generation of partners, it’s clearly less attractive as a structure to potential partners than it once was. Too many firms don’t even capitalize on one of the form’s clear advantages — the ability to have a wide range of expertise in one place — to aggressively cross-sell services to a single client base; instead, they act more like a collection of individual practitioners in a WeWork space. 

Maybe I’m reading too much into it, but there may be some subtext here suggesting that accountants aren’t great business people. Whether that’s true or not, Dan points out that some firms have started doing more corporate-y things like appointing CEOs instead of managing partners. Anecdotally, I’ve heard about some firms that now have “customer success” and sales teams which would have been virtually unheard of a short time ago. 

If I was part of a business that was essentially characterized as having an uncertain future, can’t or doesn’t recognize and take advantage of its strengths, where everyone essentially operates in a vacuum, I’d start thinking about what to do differently. Accounting firms are businesses, too, after all. So it might be the best thing for the profession’s future if firms looked more like businesses and less like accounting firms.

Arthur Andersen, RIP, redux

The Wall Street Journal recently published an Arthur Andersen retrospective to mark the 20 years since the firm’s demise, and it reminded me of a few things:

  1. The vast majority of people who worked at Andersen had nothing to do with the firm’s collapse, and to this day, are nostalgic about their time there.
  2. The Supreme Court unanimously overturned Andersen’s obstruction of justice conviction in 2005, and virtually no one cares. 
  3. For those who do care, they do not appreciate your Arthur Andersen memes and jokes and will gladly point out your complete lack of understanding.

Exhibit A:

Earlier this year, a Reddit user shared an animated image of documents falling from a printer into a paper shredder, with the caption “Live from Arthur Andersen.” Rutland Price, an accounting analyst at financial-services firm Protective Life Insurance Co., responded to the shredder image by pointing to the Supreme Court ruling, which came too late to save the firm. “You get a lot of Arthur Andersen memes that I don’t think are quite justified,” Mr. Price said. 

Oh, boy. If justification had anything to do with memes, we wouldn’t know the first thing about the Johnny Depp/Amber Heard trial. In fact, if memes required justification, large swaths of the internet would vaporize.  

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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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