episode 174 – transcript

Dave Cain: Welcome to unsuitable on Rea Radio, the award-winning financial services and business advisory podcast that challenges your old school business practices and the traditional business suit culture. Our guests are industry professionals and experts who will challenge you to think beyond the suit and tie while offering you meaningful modern solutions to help enhance your company’s growth. I’m your host Dave Cain.

Dave: Buzzwords are everywhere, from fake news, the wall, to mind share. Words not only shape how we think about something, they can define a movement and even bring about social change. Here in our industry, we hear the word “disruption” each and every day. Here’s the deal. Technology has hit the accounting industry or disrupting our industry at a rapid pace, and as a result, firms are faced with a choice. We can either embrace change and innovate, or we can reject change and step aside.

Dave: Here at Rea, we’ve chosen to embrace change and innovate. On today’s episode, we’re diving deeper into the concept of disruption and how it’s changing the accounting industry and the business world in general for our listeners. Don McIntosh, our firm’s CEO, will talk about disruption in leadership and what we’re doing at Rea to adapt to these changes while working to deliver even more value to the businesses and individuals we serve.

Dave: Welcome back to unsuitable, Don.

Don McIntosh: Thanks, Dave. I’m excited to be here.

Dave: It’s good to see you. As with all our guests, we always like to give our guests an opportunity to talk about business, talk about the company. What’s going on at Rea?

Don:  Well …

Dave: You’ll have 30 seconds to do that, ’cause we’re gonna dive in deeper, but give us a quick thumb sketch on what’s going on.

Don:  Rea’s going through a lot of changes. They’re going through a lot of growth. It’s an exciting time to be here. Pretty excited about where we’re going. Without going into all the details, those would probably take a lot of hours, we’ll just leave it at that.

Dave: We’ll just go from there, but good. It’s good to have you and as we were preparing for today, I thought as Rea & Associates is one of the top 100 CPA firms in the country, and of course that means there’s only 100 CEO positions of top 100 firms in the country. Believe it or not, you have one of the top 100 jobs in the country. There’s only a hundred of these jobs and you’ve got one of ’em. What kind of pressure is that for you, buddy?

Don:  Well, that sounds like a lot of pressure now, Dave. I’ve been blessed. This has been a great firm I’ve been with for about 23 years. To be here, sitting here in this seat is an honor and is very exciting for me.

Dave: Good. In the next few minutes, we want to pick your brain, certainly about disruption and leadership, both the successes and challenges you’ve encountered over your career. Let’s get started. Let’s do it.

Dave: It’s interesting. Just the other day in the mail I received a copy of Rea’s Annual Report, which is also entitled Disruption, so how unique. It’s a great piece, so my hat’s off to you and the marketing team for putting together a very interesting publication entitled Disruption.

Don:  Well, I appreciate that, Dave. Right now that’s exactly what we’re dealing with. We have a great deal of changes that’s coming in the next five years. It’s already started. There’s the artificial intelligence part of the disruption that’s turning some of our accounting industry upside down, and it’s our job to make sure we’re aware of it and trying to get ahead of it. Now, I might say, as you know we just … They had a great big tax law change, so …

Dave: Oh, they did, huh? We’ll dig into that. I got some … tax questions for you…

Don:  Now the … now we’re … Oh yeah, I’m the tax guy. Not, but anyways … I would tell you that that’s been a major thing to try to get ahead of as well so that we can get out to our clients and make sure that we’re gonna help them with all the changes as a result of the tax law change.

Dave: Perfect. Perfect. Going back to our Annual Report in your letter to our clients and our employees and friends, I want to read a couple of quotes that you made in here, and I think that’s just kind of the foundation for today’s discussion. You talk about, “Always be in a state of change. Change is inevitable, and in an age of disruption, businesses that adapt will be the ones that survive. Today the choice has literally become innovate or die.” I think under your leadership at Rea, you’re pushing innovation each and every day and I think you’ve already started to talk about some of the things the firm has embarked on for the betterment of our employees, the betterment of our clients, and giving back to the industry.

Dave: Let’s start with giving back to the industry and one of the initiatives that we’re involved in … I think it’s called Dynamic Audit Solution. What in the world is that?

Don:  Well, Dave, as you mentioned earlier, we’re part of the top 100 firms in the country, so what that enabled us to do is work with the AICPA and to work with other top 100 companies and invest between 40 and $50 million in getting prepared for the future and coming up with a new audit solution that’s going to be … That’s gonna help give us better coverage in the audit. It’s gonna be a better product at the end of the day. We’re really excited about it.

Don:  We made sure that we’re gonna play an integral part of that, and so we have people at the firm that are involved in this every week, every month, and that’s kind of exciting. At the end of the day, we’re hoping to have a product that we can use personally as well as the AICP will have this product out for market so other firms can also take advantage of something like this. That’s part of the giveback to the industry that’s really important to Rea.

Dave: Sure. The AICPA or The American Institute of CPAs is … I guess for lack of a better term, recruited Rea to be part of this initiative because they knew we have a history of innovation. Again, I congratulate you and your team for going out on a limb.

Dave: As we talk about artificial intelligence in auditing, ultimately this will be a huge benefit to our clients, whether they’re in the audit environment or not. Can you speak to … You’re an old auditor from way back, you grew up in the auditing field, so what are the benefits to our listeners who have an audit or a review?

Don:  Well, our hope is that we’ll be able to give better feedback about the results of the audit. We’re gonna learn a lot more about all their transactions. If you think about today’s world, we do a lot of sampling and the use of AI in the future is gonna enable us to audit 100% of their transactions. Hopefully that’s not scary to them. Hopefully that is going to actually give them better feedback and better assurance that they feel better about their processes and about the transactions that are flowing through their company and that they’re being done right and that they’re not fraudulent and they’re being accounted for …

Dave: Good.

Don:  Properly. Their financial statements … They’ll feel a lot better about the numbers on their financial statements.

Dave: Good. Good, good. I think that’s … Again, ultimately as those numbers improve, the benefit for our listeners is the value of the company will increase and maybe we’ll make a business easier to sell and market since the number are rock solid. Again, hat’s off. I know that’s a little bit technical, deep dive, but I think that’s one of the things I wanted to bring out that Rea’s jumping into kind of behind the scenes that most people don’t really know we’re involved in that. Great investment of time, money, and energy from your team, so let’s keep after it.

Dave: I want to touch base … Move around a little bit on this disruption issue, but we all hear whether it’s here at Rea & Associates or with our clients, the race for talent. Finding talent. What’s going on from the CEO perspective to offset this challenge in the industry?

Don:  Well, right now this economy that we have is just unbelievable. It’s really an exciting time for us as a firm, but it’s really an exciting time for our clients. That being said, that means there’s a great opportunity for the accountants in the world as well, and that’s really kind of exciting. At the same time, it’s … Everyone is trying to get the best people into their company, whether it’s a manufacturer or whether it’s a CPA firm, they’re trying to get the best accountants possible. There’s only so many out there at the moment, and that’s kind of what we’re dealing with.

Dave: It’s interesting to know, we’re not alone. Our listeners know they’re not alone. As we go out and do our visitations with our clients, those are some of the top three things … One of the top three things we’re finding that’s on everybody’s mind.

Don:  I would tell you that as we’re interviewing people, they’re very interested about where the firm is going. “Are you still … Are you involved in things? What are you about? What are your plans? What’s in it for me? What are the plans for me?” To me, that’s all really good stuff. That’s very exciting to sit down and talk with someone about that. It’s our job to make sure that we’re ahead of disruption, that we can talk to them about disruption and what we’re doing about it and about growth and to make sure that we have a great message to tell these people that this is a great place to go because we’re not gonna sit there and wait for it to happen. We’re gonna do everything we can possibly do to be in front of it and be more of a catalyst for change rather than having to always react to change.

Dave: Right. Right, and good stuff there. Again, I want to kind of step back and stay with this talent issue for a while, and maybe a commercial, self commercial for Rea & Associates. Are we hiring?

Don:  We’re absolutely hiring. That goes without a doubt. I think we’ve hired, what, about a hundred people over the past year? There about, so it’s been quite a year. It’s been a very busy year. We’re excited about that and we’re doing everything we can to keep that going that direction.

Dave: We have an internship program that’s second to none.

Don:  It’s … The internship program has been a great success. We have really got some fantastic candidates. We’ve really received 3, 4, 500 candidates every year trying to get into our program. At the moment we’ve only got between 20 and 25 openings at the moment.

Dave: Sure. It’s my understanding the firm is conducting a nationwide search for talent as a tax director.

Don:  We do.

Dave: Can you speak to that? Again, it’s your …

Don:  Yeah-

Dave: It’s your nickel, you know?

Don:  I appreciate that.

Dave: Go for it …

Don:  Okay. Yeah, we absolutely are. Part of our strategic plan is to try to find the best people possible to run our industry niches and our service lines. Our tax as a service line, it’s incredibly important to us and we’re looking for someone who wants to be able to drive tax services throughout the entire firm. We’re looking for someone who’s got a lot of leadership skills that can make a difference. We’re looking at, how can we get the best talent possible into our firm that can have a major impact on our people, upgrade their skill set so we can service the clients at a top-notch level?

Dave: As you look at this position, and it sounds like an incredibly interesting position, but that search is going nationwide. You’re also not only looking for that technical aspect, but the entrepreneur spirit. That’s one of the things that I’ve noticed since you’ve taken over leadership of Rea that you are pushing entrepreneur spirit from top to bottom. How were you able to accomplish that?

Don:  We haven’t accomplished everything we want to accomplish there, but we’ve had some success over the last two years since I’ve taken over. We’ve been able to bring in some incredible talent. I don’t need to name ’em all, but in what they have brought, they have brought knowledge, experience, but most of all they brought an entrepreneurial spirit and leadership abilities. If you have those two together, I just don’t think there’s any way those people can be stopped. We’re not … We’re just kind of saying, “Here you go. You can run with it.” You don’t put your thumb down on those type of people. You let ’em run and let ’em build and develop people and it’s an exciting time to watch.

Dave: It’s interesting to watch you and your management team play out in this disruption and build a better firm, a different firm. I’ll call it a non-traditional firm. This is not your grandparents’ CPA firm anymore. It’s a very different landscape now than it has been.

Don:  I think the way to do that is first you have to find the right leaders that understand that if we don’t change we’re gonna die. If we don’t grow, we’re gonna die. If we don’t adapt, we’re gonna die. The reason I say we’re gonna die is because if we don’t do that, and other firms will, we will lose our people because our people absolutely looking. They want to be part of something special. They want to be part of something that’s growing and it also gives them an opportunity to meet all of their professional goals as well. It’s key to find those leaders to work with you, and I’ve been very fortunate to have a leadership crew. I call it The Rea Advantage Group, and that particular group is a great group of leaders and we’ve been making a lot of change.

Don:  We don’t all agree on every single thing right out of the chute, but I really like that ’cause there’s … They verse ideas, which is absolutely critical to coming at the right decision. We finally come to a decision, we all get on the same page, and we implement. For some people, that implementation means change, it means disruption. That means actually even internal disruption, so for some people it’s uncomfortable even inside the firm, but I assure you, it’s gonna be a much better place for everyone in the firm.

Dave: Sure.

Don:  There’s no doubt about it.

Dave: Great, great. As a leader and CEO, and you and I talked the other about this, this is really a … When you sign up to be a leader in a company, it’s really a 24/7 job. I mean, you can’t turn it off at five o’clock. I know you, you’re working around the clock a lot of times in your mind. How do you get away? How do you take a break from … I don’t want to call it grind, but it is a bit of a grind thinking about innovation, but sometimes you gotta step away and recharge those batteries. How do you do that?

Don:  Everyone faces that dilemma differently, and some people can go on vacation and forget about it. Unfortunately, when I go on vacation anymore, I still have my cellphone, I still have all my emails on my phone. I take my computer with me, so that’s not really working. For me personally, I go to construction. Home improvement. I love working on things that … In my own home. I love helping my children with their homes and remodeling them. I go to neighbors and I help them remodel. I’ve done … Whatever it takes. It doesn’t matter whether we’re building walls outside, whether we’re building new rooms inside their house, I just can’t wait. I’m usually the first one there with coffee early in the morning to make sure …

Dave: There you go.

Don:  That they’re ready to go. That’s kind of how I get away from it a little bit.

Dave: Tool Time Donnie. Yeah, there you go. Mistakes. Leaders make mistakes all the time. How do you recover from a mistake?

Don:  Well, you’re right, and I have certainly made a large number of mistakes in my career as well. A couple of things I think really helps. I think number one is if you’re making the mistake, but what you were trying to do was really helpful, then it helps … You can get past it. One of the reasons you can get past that is because you’ve got a great group of people saying, “Hey, your heart was in the right place. You tried to do the right thing. This just didn’t work out this way, this time.” What did you learn from it? How are you going to make sure you don’t make that same mistake going forward?

Don:  Everyone is watching me. Every time I make a mistake, it’s usually bigger at my position, so therefore I have to be able to make sure that the mistakes that I do make are not gonna cripple something. If that means that I have to take a little bit more time and gather more information necessary to try to make an absolutely critical decision that is either life threatening or firm threatening, whatever it might be, then also I’m not afraid to use the counsel of others as well to get to that point. Fortunately for me, I haven’t made any of those massive mistakes that have been career threatening I guess.

Dave: The key there is collaboration, rely on input from your team, but most importantly, don’t be afraid to make a decision. That’s one of the things that sometimes leaders struggle with, and I appreciate that feedback. I know our listeners will … as well.

Don:  I think it’s really important that your leader … That you have friends or coworkers that are not afraid to come in and say, “You really screwed that up.” You have to own that and you gotta pat those people on the back and say, “Thank you so much, ’cause I never want to make that mistake again.” You’re not gonna get a lot of people to do that, but as a leader, I think every leader needs someone that they can depend on, that they can rely on. That someone’s gonna come in and tell ’em the truth and tell ’em the real facts, because if you made a mistake, you need to try to rectify that really quick.

Dave: You mentioned earlier one piece of disruption that’s hit the accounting and consulting industry is the new tax law changes that are wide-sweeping and have an impact all of our listeners and virtually every client and employee. I know you’re an old auditor by trade, but I gotta ask you some tax questions. Are you up for a tax question or two?

Don:  No. No, but …

Dave: No, absolutely …

Don:  You’re gonna get one …

Dave: Throw it out there, throw it out there …

Don:  You’re getting one anyway … I’m an audit guy, so go for it anyways.

Dave: As you know, the entertainment deductions have been slashed, so my question to you is, is client golf still a popular thing?

Don:  Is it still a popular thing?

Dave: Yes. Still permitted within Rea & Associates.

Don:  Well, here’s the deal. Thanks, Dave, I see where you’re going with this. Not that you like to golf with clients or anything, but here’s the deal. If the client likes to golf, and that’s a great place to have really great discussions with a client, then yes, absolutely …

Dave: Let’s go for it …

Don:  And golf. That’s just silly not to do that.

Dave: We’ve got … Not to brag about our Rea golf team, but we got some great golfers around the firm. Client golf, they like to play client golf, but they like to beat the pants off of them. We got a guy, a federal tax strategy guy here in Dublin that can’t make a putt until someone yells “press”, and then he makes every putt known to mankind. One of your guys in Zanesville …

Don:  I think that’s great, by the way.

Dave: It is, and-

Don:  I think the clients need to know that we can step up to the plate.

Dave: Yeah. We got a guy … One of your guys in Zanesville office I think has a lifetime … Is 12 under par lifetime on holes 15, 16, 17, and 18 and overtime, so our guys-

Don:  I think he’s minus 200 in hole number 19.

Dave: Our guys are very good at that, but at the end of the round, we’re picking up the tab, so I know you subscribe to that. I kind of set you up a little bit.

Don:  Yeah, thanks.

Dave: In the last few minutes here, what’s ahead for Rea & Associates and our clients in 2019? I know we have some initiatives that we’re going to talk about over the next few weeks on the Rea Podcast, but I know you were pushing behind the scenes … Talk to me about some of the things we’re doing in the human resource and client accounting services.

Don:  Okay. Rea & Associates is …

Dave: Unless you don’t know about those things. Maybe we’re doing those behind your back, I don’t know. You signed off on it.

Don:  I might know a little bit about that …

Dave: I know.

Don:  Yeah, so-

Dave: Bring us home, Donnie.

Don:  We’re starting HR services, outsourcing services to our client base. It’s been a high demand from our clients that said, “Hey, we need some help in this area.” It’s important that we pay attention to what the clients’ needs are and to do everything we can to … If we can’t do internally, then we’ll help the client externally with someone else who can help. I mean, that’s what a trusted advisor’s all about. We’ve been fortunate enough … We’ve got a great HR team and we’re expanding all of that.

Don:  In addition to that, we have the client advisory services, which really is putting outsourced … I’ll say back office accounting for clients, and again, we’ve been able to bring incredible talent into the firm to help us really develop that. That’s going over really well. Clients are saying, “Hey, we really need this.” As I said earlier in our discussion, there is a … I mean, it’s hard to find enough accountants out there and the companies out there are also struggling trying to find the right accountants to take care of their internal accounting. Therefore we are … We have this service out there for them and it’s really taking off and-

Dave: Sure.

Don:  Doing well.

Dave: Sure, and again, it’s a form of disruption and I know you’ve pushed our team to get out and have conversations with clients and in our network and find out what the issues are. We mentioned earlier about the talent gap. We’re finding there’s talent gap in HR and accounting positions and you’ve listened, our team listened. You pushed to innovate and develop services to meet those needs that are in the marketplace, so that’s fantastic.

Don:  Well, all those leaders that are out there listening, I mean, they know that it’s their job to push, because if we don’t push even when it looks like things are going really, really well, then are competitors are gonna catch up to us and pass us up. That’s just … That’s life. Someone has to keep pushing, not just pushing to push, but you gotta really figure out where you want to go and you gotta go. You gotta commit and you gotta go, and it’s your job to get the right team involved because you can’t talk to everyone all the time. Have them talk to the team, get everyone onboard, and make sure they understand what’s in it for them. Thanks.

Dave: Thanks again for joining us, Don. Great insight on the leadership. I think you and I could spend an entire evening with bourbon and a cigar talking about this thing till the wee hours of the morning.

Don:  Is that what we’re gonna do?

Dave: We can do that. Let’s set it up.

Don:  Okay …

Dave: The future of businesses …

Don:  Next time.

Dave: Will never be the same, and that’s a good thing. Just imagine the things we can accomplish if we continue to embrace change and seek out opportunities like you shared with us today, Don.

Dave: Listeners, did you enjoy today’s episode? Let us know, and of course, open invitation listeners. If you need an ear with Don McIntosh to talk about our services or just simply leadership, feel free to contact Don. He’d love to talk to you. As far as today’s episode, if you like it, comment it or share it. Don’t forget to check out videos of our podcast on YouTube. You can also check out past episodes of unsuitable or access resource pages at reacpa.com/podcast.

Dave: Until next time, I’m Dave Cain encouraging you to loosen up your tie and think outside the box and tackle the disruption.

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