Hurricane Katrina triggered this most recent reflection. My dad and stepmother have lived on the Mississippi Coast for the past 20 years. Now in their late 70s and mid-80s, they were content with the sleepy, humid summers and balmy winters after having spent most of their lives in the Upper Peninsula of Michigan.
Katrina changed all that. Not only was their home destroyed by winds and floods, their town of Pass Christian was virtually obliterated. Yet, after being unable to communicate with the outside world for almost five days, they navigated out of that horror and migrated back to Michigan to live. While somewhat traumatized, they basically handled the change with a glare at Mother Nature and a determination to start their lives over again. How did they learn to cope like that?
My grandparents survived the rape and pillage of Belgium by Kaiser Wilhelm's ruthless army during which my grandfather was badly blistered by mustard gas. For his valor, he was awarded the Croix de Guerre by his country, but my grandparents decided it was time to make their way in a more peaceful land. Together, with their young son, they emigrated to the United States to create a new life but retained their view of disciplined child rearing.
That son, my father, was raised to be tough enough to survive bouts of malaria, and hand-to-hand combat against fearsome Japanese soldiers in the jungles of New Guinea during WWII.
Upon his return, he married and raised three children. He had high expectations and a quick temper, but a looser grip on discipline. Six months after I was born, he lost my mother during the great polio epidemic in 1952. My brother was also stricken at that time but grew strong enough over the years to serve in Vietnam where he was badly wounded emotionally and physically. My second brother was weakened by chronic asthma. In spite of the rough start to our lives, we learned lessons about perseverance and respect and making lives better for others.
I'm not telling you about "The Travails of the Tibergiens" to elicit sympathy or applause, but as I reflect on each of these episodes I can't help but think that in a sense, hardship often is the rite of passage that shapes each person's view of the world.
The relevance of this ramble on pain and suffering to financial advisors is recognition that in this business, many people have endured deprivation to make it the profession it has become. Unfortunately, there is an unconscious tendency on the part of many advisors to expect their employees to suffer as much as they did to make a living before they can be awarded respect and opportunity.
I have talked to many people in this business who grew up poor, or who had failed partnerships, or marriages that have been strained and broken because of their single-minded focus on building a practice, or who have not saved enough for their own retirement. I recall a favorite saying of my dad: "If you're looking for sympathy, you'll find it in the dictionary between s**t and suicide." While his spelling was a bit off, and his guidance on this subject a bit crude, his point was that we all suffer, yet we all make decisions on how we will respond to the challenge. Many abhor the idea that people they hire will have it easier than them; others will see this as an opportunity to teach.
As an example, I recently met with a group of advisors who were furious about the culture of entitlement that in their mind has been bred into their employees. Those of us who are baby boomers can hear the words of our parents in this tirade. These advisors unanimously agreed that their young staff did not appreciate all they had to do to build their practices, just to earn a living. They believed that until their staff suffered the same degree of personal anguish as the founders, they would never be great advisors. They certainly would not be worthy of consideration to be partners in the firm. "We want them to be seen, not heard. Quit complaining about pay and opportunity and just do their jobs!"
One of my younger staff consultants, Lisa Simonson, who was participating in this meeting observed: "It's interesting that every advisory firm we consult with feels their staff needs to go through some rite of passage. I wish you would realize that more suffering is not going to create a better business. I don't think you should resent people for living off of what you created, or learning from what you learned. Maybe it would work better if you help them to grow by capitalizing on your experiences and their energy."
Of course, we were all taken aback by her bluntness (a characteristic of Generation Y) but it forced them to think. Why is it that we feel our employees, or our successors must suffer as much as we do in order to appreciate what they have? Further, why do we think that our employees need to suffer at all to be effective in this business?
Much has been written and said about the differences in generations, especially the gulf between the baby boomers and Generation Y. Angie Herbers, who also writes a column for Investment Advisor, has led the charge in stirring up rebellion against the patronizing and oftentimes patriarchal behavior of advisors towards their staff. Her argument in simple terms is that once a person has earned a degree in financial planning, they are ready to work with clients and expect to be compensated for that expertise.
Of course, most practice leaders believe that technical expertise is only a small fraction of one's ability to render financial planning advice, so they are not quite ready to let these "green peas" loose on their clients. It is the elder's belief that empathy, shared experiences, and hard knocks help one to temper their approach to clients.
A recent column in USA Today (November 7, 2005) noted five characteristics of the Generation Y workers I am certain irritate many owners of practices today:
- High expectations of self: They aim to work faster and better than other workers.
- High expectations of employers: They want fair and direct managers who are highly engaged in their professional development.
- Ongoing learning: They seek out creative challenges and view colleagues as vast resources from whom to gain knowledge.
- Immediate responsibility: They want to make an important impact on Day 1.
- Goal oriented: They want small goals with tight deadlines so they can build up ownership of tasks.
As the article says, "they're young, smart, brash. They want to work, but they don't want work to be their life."
I find that firms who are actively recruiting this age group as staff are finding that they can harness and channel this energy and passion and view of life by creating a clear career path with measurable expectations at each level.
When we look at how young people chafe within their roles, we find that they are often not clear on how they are being evaluated, or how long they will need to toil in this role before given another challenge. This does not entitle them to disrespect their bosses, but it does help us to recognize that when we hire motivated people, they are doing exactly what we would hope they would do--ask for another challenge!
In another case where we were helping an advisory firm design a compensation plan to help lock in their employees for the long term, the biggest impediment to implementing it was the principals' belief that "these are my clients, so why would I want to share ownership in them?"
Of course, this is the point of adding staff in the first place: to provide leverage, continuity of practice, enhanced expertise and a better client service experience. It's not a question of whose clients they are, but what kind of business are you trying to build. It's important not to resent staff who want to be challenged and want to be part of the business. Frankly, they don't see a reason to reinvent the wheel since you already own that patent.
So as the first action step to harness the power of Generation Y, we recommend that you create a career path with measurable expectations. We find that when firms have an entry position in which new staff must first learn the fundamentals of the job, and then create metrics to move staff up the ladder, that they tend to keep everyone focused on the goals. We also find that this tends to vest responsibility in individuals at different levels, provides a framework for learning, and serves to fulfill both the expectations of the staff and the employer.
Second, we would recommend aligning compensation with the behavior you seek. While the temptation is to pay all new hires on a variable basis so that they can earn their keep and minimize your costs while you're growing them, the reality is that you may not want the result such a pay method might create. Typically, when individuals are in sales positions, their compensation should be highly variable and short term. When they are in a service position, their compensation should be more fixed with incentives tied to the result you are seeking such as minimizing client turnover or increasing client satisfaction. So ask the question: What are you hiring them to do? Many new hires in advisory firms are for service roles so that the principals can develop business with the firm's optimal clients.
Third, implement a regular and systematic performance evaluation process. Ideally, you would be checking in with the staff on a regular basis but at least twice a year on a formal basis. This evaluation process allows you to affirm your expectations, evaluate how individuals are meeting those expectations, and counsel them on how they can grow to the next level.
While there is a temptation to revert to your own experience as the basis for evaluation, the reality is that your business has likely grown to a point where you don't need to think about just surviving anymore. Because of the blood, sweat, and tears that you've endured in building an enterprise that can now afford to add capable staff, you will be far better off creating an environment in which motivated people will flourish instead of one where each individual must stop at your personal Stations of the Cross for reflection.
Mark Tibergien is a nationally recognized specialist in practice management for financial services firms, and partner-in-charge of the Securities & Insurance Niche for Moss Adams LLP, the 10th largest CPA firm in the U.S. You can reach him at firstname.lastname@example.org.