Navigating Change: Reflections on Bench’s Closure and Tandem’s Transformation

We’ve been thinking a lot about the closure of Bench Accounting, followed by its acquisition by HR firm Employer.com. 

As many of you have seen, the closure of Bench prompted a lot of social media posts from firms looking to acquire their clients, lots of posts speculating about the “what and how” of their demise and a few posts offering support to employees.

We reflected internally…

• Does it make sense for Tandem to pick up Bench clients? No.
• Can we help some Bench employees find new roles at Tandem? Sadly, not at this time.

We share some of these reflections below, including some of the journey of where we’ve been as an organization, where we’re going, and why it’s important.

Bench Accounting versus Tandem

What we are sharing below is based on what we can best ascertain from information gathered over the past week and from following Bench’s development.

We also acknowledge that where our firms differ greatly is that Bench Accounting was in the software development space while also delivering accounting services. Although Tandem has dabbled in software development, our core focus remains to this day in service delivery in the areas of finance & accounting, people & culture, and strategy & operations, relying instead on the right tech stack for each business depending on their needs and what software is emerging in the market as best-in-class.

From what can be ascertained, Bench was pursuing what is best described as a Cost Focus approach, which is one of the four strategic approaches developed by Michael Porter in the 1980s. Since the 80s, a fifth strategic approach has emerged that blends both a low cost AND differentiated strategy but it remains a controversial strategy and notoriously hard to maintain.

Bench focused on US-based small business clients, offering a low-cost solution. As clients were sharing the cost of their services on social media, we were shocked to find that the cost they charged their clients per year is close to the cost of what we charge clients per month.

But why?

Earlier this year we made a decision to restructure Tandem. The previous Tandem model was developed in a period where the gig economy was starting to gain momentum. 

Although many platforms still exist to this day that serve a two-sided marketplace, both for people seeking work and for people looking for talent, they tend to pursue a cost-based strategy with a high-volume, low-margin model. Although it hadn’t directly been named, through our two-sided marketplace model, matching startup founders with fractional talent, this was also the strategy that Tandem inadvertently was pursuing – until very recently.

This Cost Focus approach was also totally out of alignment with our values and left us feeling like we were facilitating transactions in a model that would require us to continually get bigger and deliver services more cheaply. Our network of subconsultants had grown dramatically in order to maintain consistently available capacity for our clients – starting with a handful and growing to almost 400 subconsultants by the end of 2023.

We were making decisions, as all business leaders do, to satisfy the classic Project Management Triangle: Quality, Cost, and Time.

Of course, everyone wants a high-quality product or service, fast, and as cheap as possible, but companies will often go out of business trying to obsessively fulfill all three. We were in that classic scenario! 

On the client side of our marketplace, we aimed to deliver a cost-effective service, and match clients with a service delivery partner as quickly as possible, which would often lead to internal quality challenges.

We were also trying to facilitate a quality experience for the subconsultants working with Tandem – providing the highest level of compensation we could afford along with a constant flow of client work respecting individual work capacities (which in consulting is always a roller coaster).

This model never became profitable because we were trying to fulfill cost, time, and quality on both sides of the marketplace.

What does it take to be cheap in a service-based business?

You have to look at the primary inputs to a service-based business, which are people. These are the people that, as a leader, you go to work alongside every day and are accountable for and accountable to. 

As a leader, you can make an organizational decision to pay these individuals as low as possible without risking both your reputation and the ability to retain talented people. It’s a big risk.

Startups often pay lower wages in an attempt to preserve precious cash during a delicate period of trying to find product-market or service-market fit. Eventually, however, you either have to commit to continuing to hold wages low in the pursuit of a low-cost strategy or make another choice.

We finally made another choice.

Why we moved to investing more deeply in an employee-focused business serving high-growth and mid-sized clients

Trying to be an affordable, high-quality, and fast service delivery provider was exhausting, and it felt like a zero-sum game. 

We’re now walking a path towards:

• Knowing that Tandem employees are being compensated fairly for their work, have health and dental benefits, and can live comfortably. 
• Feeling like the subconsultants that we work with are values-aligned, understand why we do what we do, where we’re going, and how they can share in the benefits of Tandem as we grow. 
• Working to deliver services as efficiently as possible but with an understanding that partnering with Tandem is a two-way relationship versus a transactional exchange.
• Reinvesting profits in areas of the business that truly make our business what it is, our people.
• Knowing that our clients love to work with us and understand that they are paying a fair price for the value exchange for our services.
• Trusting that our client mix isn’t so heavily weighted to startups – which is, let’s be honest, a relatively high-risk client to serve! We deeply love startups having a keen sense of the heart, soul, and guts it takes to launch a business, and we’ll likely always retain a small portfolio of amazing startups that we’re deeply passionate about, but it’s no longer the entire makeup of who we serve. 
• Making sure to spend time building relationships with partners where there is reciprocity and mutual benefit – cultivating partnerships with organizations that are a perfect fit for our regenerative clients.
• Remembering that in caring for the collective, we also have to care for the organization that sustains the collective. That means remembering to put our own oxygen mask on!

This winter at Tandem, we’re also reflecting on what seeds we have to sow, what branches we need to prune back, and what straw bedding we need to put down to protect established plants (yes, I’m going to use gardening metaphors here! We can learn a lot from the wisdom of what works in living systems). 

We’ve found that as we’ve changed our focus, whether it’s a partner, an employee, a subconsultant, or a client, at times we’ve decided not to continue journeying together. Change isn’t easy, and we have so much gratitude for those who have been on the early iterations of our business.

What we do hope is that the people who stay will continue to value our gifts, are passionate about investing in us, what we are doing, and why.

This change is also still a work in progress, as we’ve been known to say, we’re baking the cake as we’re writing the recipe. 

We’ve made mistakes, and we continue to have areas that we’re looking forward to improving, but our North Star is calibrated to something that is more energizing and nourishing.

Happy that Bench Employees and Clients Have Found a Home

We empathize with the large number of people in Canada and the US who are affected by the closure of Bench.  This created a lot of chaos and upheaval for business owners and Bench employees.  These are people in our industry and folks that are adjacent to us, both geographically and by way of the work that we do. 

From what people have shared, the suddenness and lack of detailed information induced panic on all sides.

We wish Benchmates all the best as they make the transition to Employer.com, and hope that they will find a good home within the new company culture.

With Love,

Renee