Welcome to the Escaping the Accountants Trap podcast. It's a podcast to help accountants, CPAs and bookkeepers escape what we call the accountants trap. It's where accountants are now, getting paid for their value and are forced to work long hours with high, demanding clients with little pay. Well, how do you escape the trap? And one way is to topic it today's episode in that by ensuring you get the right people on your team, by testing them before you hire them.

To help me with the discussion, I've invited Giles Pearson, the CEO of a count test. Giles, welcome to the show. Hey, Adam. Nice to talk to you today. Hey, I'm really excited, for this episode, because I think what you are doing is fascinating. You're essentially ensuring that accountants who are hiring people for their team are making sure that they are getting the right people on the bus, so to speak, by testing them.

So can you tell us how that works? Yeah, look. And you're spot on. And as we all know, it's super hard to find good talent these days. So, being able to move fast and being able to know the quality of the people that you're taking on is, is really important. And, you know, you might not be able to find the people that are exactly the fit that you need, but it's a way, way better experience for everybody.

If you know the caliber of the person you're taking on and you know you can, you can make that integration into your team much smoother, even if they're not really quite what you want because you, you, you know, you might well not be able to to find that. So, you know, my, my background was 25 years in, in public accounting.

I was a partner with a large firm here in New Zealand where I'm where I am today, partner here with for 18 years. So, you know, I hired loads of people through that time. Not all of them worked out. And, you know, we went looking for some for some technical skills tests that where we, you know, that was our focus at the time, and we just couldn't find in the thing that we sought.

Was it a sort of professional level that we were happy to put in front of a candidate for our firm? So, you know, 25 years in public accounting was a lot and enough. And, you know, when I, when I done that, it was like, here's a little in a little, it's that I might want to scratch.

So I take that was, with my sort of case, I have a Steve Evans and started the county building some technical skills, test here in New Zealand, went to Australia, UK, and sort of a couple of years ago to the US. So, so that's really I guess it's the, it's the, it's the why of why we do what we do.

Okay. So why do accountants why why do you suggest accountants to test their prospects before hiring them? And what type of test should they be performing? You mentioned technical, but yeah. Yeah. Well, what do you suggest? And look, you know, to to answer the first part of that question and you might have seen the survey that came out last week that said that, so 85% of candidates who have college degree lie on their resume.

And really, yeah, I know. Well, and to be fair, you know, like, who hasn't done that? Okay, some of that exaggeration. So it's, you know, how many people did you manage or what was your role title and, and these sorts of things, you know, so you might say low level, but it's, it makes it really difficult when you're hiring to have any confidence in anything that you actually read.

So if you, if you, if you can at least verify their qualification, you can probably to some extent put a line through everything else and go, well, that's interesting because that's what they're telling me. But you know how much of that is real. Yeah. So then you end up with an interview, which is a fraught process on both parts.

You know, smaller firms in particular, they don't necessarily interview very well because they don't interview very often. You know, and I was in that category. I was I was a really I was a poor interviewer. Never had any training on how to interview. You know, there's this concept called competency based interviewing, which is where you're, you know, specifically interviewing for the competencies that you're looking for.

But, you know, how many, how many accounts and 70 KPIs have actually got training in how to do that in a real life situation. So, so the interviewers are often not that great at what they do. And the is some people perform really well at interview. You know, we've all had the stories and you know, my kids would be a perfect example.

You know, my my daughter went to a number of interviews when she went out of college. The first one, she, she, you know, she, she rang up and, and when it went terribly, you know, I just went to pieces. I really didn't know what I was doing. By interview five, she nailed it. It's the same person.

But but she now knew the game. She knew the questions she was going to be asked. She had all these stories, you know, and she gets the job five, you know, five interviews later. But same person will be will be as good as at the job. You know, for the first, employee that she went to to interview for the first one.

So, so, you know, candidates can be, can struggle interview or, you know, outperform compared to how they're going to, achieve in the role. So then what do you do? You know, at that point, you know, you you've got you've got, you know, resumes that, should go in the bin and interviews that give limited, potentially limited insight.

So that's where testing comes in because testing gives you objective evidence. And that's not to say you'd hire somebody only on the testing processes, but it gives you objective insights. So, you know, think technical, you know, you hiring staff accountant, you want to know whether they've got the technical skills for that role. You can ask a few questions that interview, they may or may not.

They know the answers to those randomly. They may know the answers, but actually they don't know much else. Or, you know, randomly. They don't know the answers to those questions, but actually a pretty good so, you know, doing, like a, like one of our tests, which is 40 questions generally. That's a lot of data points. You're getting quite a bit of insight, and being able to compare them, you know, with the norm group, which is what we create or, you know, versus previous hires if you've used testing before.

So you get to, to really be able to see where they sit on that sort of continuum of experience. Hey there, Adam here. From the Escaping the Accountants Trap podcast, I'd like to personally invite you to a free masterclass that we're conducting this Thursday called How to Start a CFO service. To register, just go to the CFO Project Comm and click Free Training at the top.

See you then. You're describing the situation with your daughter, how she got the interview. The job had five interviews, so the opposite could be true. A lot of accountants could be hiring employees or potential employees who are great at interviewing. Right? Who who gamed the interview but then just turn out to be lousy employees. They were just good at great interviews.

I knew what to say. They knew all the right things to say, but this is just sort of a another test, another checkpoint to decide if this person knows what they're really talking about. Well, you know, and you go if you go online and look at, you know what, what? I like the interview questions for an accounting position.

And you've done a couple of interviews already. You get a pretty good idea of the sorts of questions you're going to be asked. So, so, you know, and to be fair, most interview questions are around, you know, tell me about a time when I and a need to describe a scenario and that that's a good question. But equally, candidates know they're coming.

So they think about the scenario and they can dress it up, you know, absolutely embellish and it's like you got to if 85% of them lie on the reason why, how many what percentage of people are going to buy their interview. Yeah, probably about the same. Yeah. And it may not be outright lying. It just maybe just dressing it up like you said just to make it sound a little bit better.

Yeah. It actually was. But as an employer you probably can't tell the difference. To be fair, between somebody who's a 100% honest, 75% honest or 10% honest, right? So the the types of questions that you're asking, just so we can visualize, what's one example of a question that you might ask on a on this test. So so think of, think of a really simple one of very simple test.

So we, we have a test called debits and credits. So it will be the question will be, you know, his, he's an, an entry that your accounting system has processed. You've bought something, you know, you've bought some inventory, and you've received the invoice and your accounting system, you know, Cubii or Xero or whatever.

His process, that invoice for you. What's the journal entry that the, system will have got it, posted and given a variety, obviously, of options for candidate to choose. Okay. So you know, so, so so that test for example, is, is it's a short 120 questions, but it's all about, you know, prove to me you've got an intuitive understanding of debits and credits.

You know, here's a transaction. Tell me what the generator is. Here's a journal entry. Tell me what the transaction was. So you know you're going to get a and you can really tell the people who know stuff and who don't know stuff like that. Simple level. It's it's not it's not very nuanced. So so those are the sorts of things we're trying to tease out, I guess, in, in this process as the tests go further up the chain.

So CPA, public accounting test, you know, the questions obviously get significantly more difficult. And you know, you need that inevitably somewhat generalist because, you know, firms have all different sorts of roles. So we're trying to create tests that are if like good for the widest number of roles that, that the people are likely to have got it.

Okay. So she had the technical side of the test that is there anything that tester sort of personality or culture fit or anything of that nature. Yeah. Look and and and so we decided to have a look at that. Obviously on the skills side, you know, there's really not a lot of options out there for testing skills in public accounting.

But in personality, there's obviously a lot of options that people have traditionally used. And, you know, some of them are, pretty good and some of them are not so good. And, you know, tests that describe your candidates as a, as a color or a, or an animal or something, a good for team building, but they're not they're not good for hiring.

You know, there's generally not a lot of science behind those tests that they're good for getting your team to relate to each other and talk about how they work together. You wouldn't want to hire somebody based on those results. But the there are tests, what they call the big five, personality profiles, which I guess ask a lot more questions.

And they've all had some science. So we looked at those big five ones and, so, you know, we can we can do better for the accounting profession here. So we, we took a, a big study that was done actually out of the UK. Looking at, you know, what a modern accountants need in terms of the, the qualities, that, that they have to have to be successful.

And we sort of combine that with the big five personality profiling and developed our own big five vision, based on these specific qualities for accountants and that stuff like, you know, this is not rocket science. It's like relationships. It's like ethics, problem solving, coping with stress. Not vastly different to maybe what other personality profiles would do, but but we're looking at it through the lens of public accounting.

So, and then when you when you've got the profile done, you get interview questions, based on the profile. So what is what do, you know, what does the profile tell you that that you might want to investigate further. So here's the interview questions that you should ask. And again based on the profile, here's a personal development plan, that you could use with this person if you started off with them.

Obviously over time you'll get to know them very well. And, you know, the personality profile is still right. But obviously you will nuance your, the sort of plan that you might work up with them, for their personal development. But here's something that you can get started with on day one. Okay. This is very interesting.

You mentioned, a few minutes ago that you, you keep some you keep a database of, of test takers across all these different accounting firms and you create you essentially compare for your clients, their test taker score to the norm or to the. Yeah, bridge. And I guess has there is there any sort of surprising statistics that have come out of that that that you found?

The bell curve applies totally applies in, in people's ability as it does, you know, their skills as it does with everything else. Yeah. So, you know, and we get the story all the time. There are KPIs. I don't need to test them because, you know, there KPIs already taken a big test. Yeah. Wow. Yeah. Well, at some point in their life, they did take a big test.

And my, you know, but the bell curve applies. Some people who are KPIs, honestly, just, technically rubbish. And, you know, what's the reason for that? Maybe they've been sidelined in a job where their technical skills haven't been utilized. You know, or so narrowly applied that when you test them on more general things, they just they just don't have it.

Maybe that really good test taker, you know? Yeah. There are a lot of people who can, you know, study extremely hard for taste, go and nail it, walk out next day. Can't remember anything like it at all. Yeah. Yeah, yeah. And that's a that's a real skill. That is probably not, something that as an employee, you would particularly value.

So yeah. So the bell curve, the bell curve totally applies. And you know, it's as an employer when you, when you're looking at these, candidates, you know, you've got to have something sensible. And, and if you like scientific to compare the candidate to because otherwise if it just if you just go, well, here's a raw score, you know, or even sort of just here they are compared to say, anyone else who's ever taken this test, well, how do you know what the quality of that was?

Whereas I guess what we're doing is looking at the quality of the people that we're comparing to and making sure that those comparisons are, good for, for, for, accounting firms. Yeah. Very interesting. So can you tell us about a, a, a particular client that, that you've worked with, that you've performed test for. How has that how is working with you and doing tests for them?

How has that changed their accounting practice. So we can sort of visualize how this really is, impacting the accountant the firm owners lives by. Yeah. So so, you know, there's just 2 or 3 different ways of looking at this. So, you know, one example that we that we had recently was, a firm that actually here in New Zealand and they, so they, struggled like everyone else to, to hire people.

They, they used to test the candidate completely bombed out in the test. But they hired them anyway, because they were desperate. And, you know, they sent me an email like two, two months after the hire going. I really should have listened to you guys. You know, we hired this person. They were they the tests said they were no good and they were no good.

And then we had to let them go. And all the costs of bringing them all in and getting them out. So, you know, that's that's one side of it. I guess the flip side of that is we get a lot of anecdotal feedback from, and when we ask firms this, you know, tell us how the, how this person who did really well in the test tell us how they're doing in the role once you hire them and, you know, the feedback you, you get consistently is the people are the high performers in the test.

The high performers in the office. So, you know, that's that and that's what you're trying to achieve. And look, it's not a 100% accuracy at any stage because people are people. And, you know, people don't succeed for all sorts of reasons. Potentially. But you can at least draw a line under that sort of technical. Yeah.

It but or understand the personality. But and, and what that's likely to look like. But look as another example. So we did a big piece of work with a firm, in Atlanta. So they were looking to do, restructure of the whole test team, and they were really struggling about how to how to get some data around how they were going to make decisions around where people were going to be redeployed.

And they came across, testing. And so they used both their personality and skills testing. They used their bookkeeper test, and they used that across the whole team. And using the results of that as a, as a basis, they then re-engineered the way their team worked from essentially everybody doing everything to having some specific, roles around onboarding and off boarding clients so that the people who were doing the monthly bookkeeping were not being distracted by having to, you know, on board and off board as well, that they could just get on and do the work for the clients who were were being consistent, if you like.

And then they had specialists doing this other, work. So, you know, we were actually working up a, a case study with them, based on that. But, you know, that was a really good experience. They handled it exceptionally well. We were we we were super impressed with the with the way that they, dealt with their team through that because it was, you know, challenging, to give people that uncertainty that they're not nobody's jobs were were lost in this process.

But people, you know, people get nervous and upset, I guess, when, when change like that is coming up and they're being asked to take tests whilst they still, you know, in a row. Yeah. So, you know, there's it can be a useful adjunct to, I guess, to, to help with those sorts of processes and again, provide some objective evidence to add to, you know, that that sort of subjective view of where people are at and what they, what they can potentially do for you.

Yeah, absolutely. I mean, you would thoroughly vet thoroughly that software or equipment that you would buy for your business. You might as well vet the people that you hire thoroughly as well. Yeah, I'll look and people probably spend a lot longer. You know, reviewing, reviewing the latest, part of their tech stack than they do, you know, hiring somebody who's going to cost them 75,000 a year.

Yeah. So reality. Yeah. Make sense? Well, so somebody listening says I'm interested. What what do they go, jump on our website qantas.com. And how do you spell that. So I ake o u in t e s t s. Okay. So the t is shared IT1 only one t only one t in the middle. I know we yeah.

We didn't pay our marketing goal. Sorry. I media people enough money to come up with the name that people spelt. All right. Well, but but yeah, on the on there, we, we, people can have a look at a free trial. So, you know, we understand that firms may want to have a look at one of these tests before they use them on a candidate, you know, try them out internally.

And you can see the range of, of tests we've got there. And there's a, the 15 or 20 skills tests across the US market. Perfect. Okay. So we'll put that link account test, in our podcast page for this episode. Giles, thank you so much for being with us today. Adam. It's been a pleasure to talk to you.

Yeah. So and to everyone listening or watching, thank you so much for spending the last few minutes with us as we discussed how to escape the accounts chat. Bye for now.