I'm not really big on war movies, but my (new) husband Drew is. So I've seen my share of combat flicks, from the "Sands of Iwo Jima" to "The Battle of the Bulge." The Hollywood versions of combat often seem a bit contrived, but what really interests me are dramas about how great leaders manage their soldiers under some of the most stressful situations imaginable. Think Tom Hanks leading his isolated team in "Private Ryan," and Col. Hal Moore taking care of his "boys" in "We Were Soldiers, Once."
One of my favorite scenes is in "Midway," which is set just after the Japanese Navy bombed Pearl Harbor in 1941. America's toughest Admiral, William "Bull" Halsey, is hospitalized, and the commander of our Pacific Fleet, Chester Nimitz (played by Henry Fonda), visits him to discuss his replacement. Halsey recommends Raymond Spruance, a brilliant but newly minted admiral.
Nimitz responds that the Pentagon will have his scalp if he picks Spruance over 200 or so more experienced commanders. Halsey responds: "Chet, one of the first lessons you taught me is that if you're going to command, command." Nimitz gives Spruance the nod and takes the heat, and under his brilliant leadership, Spruance's carrier task force defeats the Japanese in the Battle of Midway, turning the tide of the war in the Pacific in America's favor.
Those Who Can, Lead
I recently celebrated my 10-year anniversary helping independent advisors to successfully grow their practices. That milestone prompted me to reflect back over those years on what separates the best firms from the wannabes. Halsey's quote came to mind. The truest answer I can give is the most successful firms, year in and year out, are run by owners who act like owners. Here are some thoughts about what it means to have that "owner's mentality" and why it's so important to the success of an advisory firm.
While an owner's mentality is important in every aspect of an advisory business--from financial to operations to marketing--it's most critical in the human capital area. To perform their best, employees need management, and they need leadership, even in a small firm. In fact, leadership is probably even more important in a smaller firm, where there's no corporate culture or tradition of success to carry weak management.
Most employee problems at advisory firms stem from the owner's inability or refusal to take ownership responsibility. Yes, it's a good thing to have your employees like you. I'd even say that with few exceptions, it's essential to get the most out of the folks who work for you. Perhaps the only thing more important than being liked is being respected, and there's the rub: far too many owners trade being respected for being liked, which is a bargain headed for problems.
Like other social mammals, humans are essentially "pack" animals, like wolves or dogs: We're more comfortable--and more productive--in group settings (our pack) where everyone's role is clear. We like to know what we're supposed to do, where we fit into the pecking order, and most importantly, who's in charge. Unfortunately, many owner/advisors aren't very good at creating organizational structures, clarifying roles, or demonstrating their authority in a benevolent and evenhanded way.
Be the Alpha Dog
If you've ever watched "The Dog Whisperer" or worked with a dog trainer, you'll know that most "problem" dogs are created by their owners. Dogs need to know who the alpha dog is, and where they fit into their pack. But most dog owners are more concerned that their dogs like them than establishing their leadership. Sound familiar?
Fortunately, the experts tell us that we dog owners don't have to be cruel or cold to establish our alpha-dog-ness. Very simple actions (learned from observing wolf packs) clearly communicate to our dogs who's running the show. Always eating first, being the first one through any door, never letting a dog sit at the same height as you, and not allowing a dog to sleep in "your" bed, all tell dogs that you are the leader. (Even if they sleep in your bed with you, staking out "your" place on the bed, sends the same message.) Once they understand who's Number 1, dogs are almost always better behaved, and willing to take your commands.
Firm owners also need to demonstrate their leadership in ways that resonate with employees, and refrain from behavior that undermines their authority or respect. For instance, I'm constantly amazed by advisors who make promises to their employees that they can't, or don't, keep. Future advancement is usually the big pie-in-the-sky, but failure to fix operational problems, or deal promptly with employee conflicts, often leads employees to question the veracity or competence of an owner.
Perhaps the biggest mistake advisors make is to continually start new initiatives within the firm--adding a new service, changing a client procedure, buying new software, etc.--only to turn their attention to some new idea before the last one is completed. Nothing undermines employee morale more than putting their heart into a new project to improve the firm, only to have the plug pulled before they get it done. Do that more than a couple of times, and you'll create employees who are less than motivated to get involved in new projects, or to put much of themselves into their day-to-day jobs either.
The Enervating Power of Poor Morale
When morale starts falling, things can really go south in a hurry. In my experience, employees aren't very good at identifying what's actually making them unhappy (does this sound like a marriage?). So, they usually focus on compensation. When confronted with complaints of unhappiness and demand for more pay, most advisors give in--under the theory that employee turnover is the last thing they can afford, and often because they want to be nice.
Since money wasn't really the problem, it won't be the solution either. So, when employees still find themselves unhappy after their raise, their frustration level increases, and they find something else to complain about--and to demand. For the same reasons, their owner/advisor gives in once again. Can you see here the parallel to some pretty unhappy Labradoodles? After a few more go-rounds like this, the relationship becomes strained: Many employees are ready to quit--and their owners are ready to let them go.
To throw a monkey wrench into this downward spiral, owners truly need to act like owners as early as possible. An owner's mentality could have prevented many of the above problems in the first place. But no business is without challenges: How we deal with those challenges as they arise will make the difference between success and failure (or at least, unhappy mediocrity) for an advisory firm. Here's the thinking that enables the most successful advisors to take command of their businesses, and maintain the respect of and great relationships with their employees:
o Know what your employees are really worth--and pay it. Perhaps the prime directive for all employers, it's absolutely essential to be certain what each employee is worth, both to your firm and in the outside job market. I advise my clients to know the pay scale for each job, and pay at the high end of it: you get the best people, can demand a lot of them, and never lose them to a better paying job. What's more, you'll eliminate the all-too-easy demand for higher compensation, shifting the focus of unhappy employees, and yourself, to what's really bothering them.
o Understand that no employee is essential. Many advisory businesses suffer from lack of experience in hiring and losing employees. Sure, turnover hurts a firm, but it's not the end of the world. Do what you can to hire the right people and keep them. But don't ever feel that you have a gun to your head if they're unhappy. Putting employee issues in their proper perspective will help you more effectively identify the real problem, and find an effective solution, if possible (which it almost always is). Armed with this view, ironically, you'll have lower employee turnover.
o Avoid knee-jerk solutions. The key to not constantly starting new initiatives that you don't complete is realizing that doing the wrong thing (just to "do something") usually makes things worse than the original problem. Advisors with an "owner's mentality" first try to identify the problem, then determine what caused it, determine if it's an isolated issue or a broader problem, and finally, devise a solution that will truly get to the cause without creating other problems. (See Slow Down, Pardner! Sidebar for more on how to accomplish this.)
Being a business owner (like a dog owner or a combat commander) is more than being a pal: It comes with a responsibility to do the right thing for your business, which as it turns out, is doing the right thing for your employees, too.
Angela Herbers is a virtual business manager and consultant for independent financial planning firms. She can be reached at firstname.lastname@example.org.