One of the more interesting aspects of consulting with independent advisory firms is that if you work with enough firms for a long enough time, you’ll see some results that you not only didn’t expect, but you couldn’t have predicted. Often those little surprises are positive, such as discovering that hiring great employees isn’t nearly as important to the success of a firm as creating great employees, and that if owners simply support employees to be great, they will virtually manage themselves.
On the other side of the ledger, one negative result that I’ve frequently encountered (but have never seen addressed anywhere) is what I call “owner’s guilt.” These are the guilty feelings that advisors have when they own successful, well-running firms, and find that they have to work quite a bit less than they used to, while making quite a bit more money than they ever expected. Yes, it’s true that my client firms tend to fit this description, but in talking with many other firm owners and firm employees over the years, I’ve come to believe owner’s guilt is a common phenomenon among successful advisors.
While these negative feelings might be considered “a nice problem to have,” they also create bigger problems: Not only can these guilt trips reduce firm owners’ enjoyment of their success, they can also cause owners to act in ways that decrease the success of their firms.
In hindsight, as my client firms became dramatically more successful, I probably should have seen this coming, but I didn’t. Think about it: Owners are trained to believe the harder you work, the greater your results; the better you lead or manage, the better your team will be; the more you are out rainmaking, the more growth your firm will have; and the more you invest in your company, the more you will get out of it in the future. Owners have been hearing this traditional management jargon for decades. It’s ingrained in their heads, and I believe that in some ways, successful advisory firms violate these business standards that owners always believed to be true.
As a result, when firm owners reach the goals they wanted to achieve, they experience the emotional equivalent of disbelief—and they start to feel guilty about their success.
These guilty feelings can make it very hard for owner/advisors to enjoy the fruits of their success: They often feel bad for being out of the office or on vacation, even when there’s no good reason for them to be in the office. While advisors rarely reach income levels or amass portfolios that would be considered wealthy (at least not before they sell their firms and retire), they often secretly feel badly about the take-home pay that substantial, and growing, assets under management can generate.
As a result, these feelings of guilt very often cause firm owners to act irrationally toward their employees. Owner’s guilt often drives owners to try to make their employees happy by simply giving them what they ask for. The problem is that what employees tell you will make them happy, more often than not, won’t make them happy. This is one of those realizations that one comes to only after years of working with employees and trying to make them happy. In my experience, and my research, the most important factor for being a “good” boss and for building a great advisory firm is to know what will make your employees happy—and therefore very productive—even if they don’t. Owner’s guilt will often get in the way of understanding what employees really want and need. Here are the most common complaints that owner/advisors hear from their employees, along with what’s usually really bothering the employee, and the solution that will make employees happy.
“I want more money.” This is a big one, because most employees will tell you this. But, trust me: A month or so after they get a larger salary, they aren’t going to be any happier and they are going to continue to want more. Owners will usually give in and pay their employees more, because they feel guilty about what they are making. What the employee really wants is to feel more connected to the success of the firm, to know where it’s headed and to have a clear role in the success of the company. They see the firm growing and they want to contribute to their firm’s success. What they want is to feel rewarded for their contribution. The solution is simple: Pay a fair market salary and tie their bonuses to the increased revenues of the firm. They don’t have to get large bonuses, but you won’t believe the difference in the attitude of your employees when they see their bonuses growing as the firm grows. It will be as if you added five or 10 new partners without giving up a dime of equity.
“I want partnership in the firm.” Speaking of equity, this is the most common request by unhappy junior advisors. Selling equity in the company is almost always necessary to build a great advisory firm, but the truth is most employees don’t know or understand what’s really involved in firm ownership; when they do find out (which is usually after they become partners), more often than not, they realize that it’s not what they really wanted in the first place or they find out the opportunity cost for doing so is not something they can afford at this point in their lives.
Furthermore, when owners give up equity, they often don’t take the needed steps to qualify and prepare new partners to be successful and profitable partners. In my experience, what employees really want is to feel more in control. To make them happy, owners need to give them everything they need to succeed at their jobs; the resources, the training, the technology and something more challenging to do, such as learning and participating in business management functions. For example, in the firms I work with, we have business management committees. The goal of these committees is to prepare future junior advisors to be partners. Once a junior advisor masters their position, they can be promoted into the business management committee. This committee serves as their secondary job function, and gives them challenging and rewarding responsibilities in the company above their primary job function as an advisor without giving up a piece of equity before it is too soon to make that decision.
“I want more time off.” Try it if you want, but a couple of more weeks a year out of the office isn’t going to help. What employees really want when they ask for more time is greater harmony between work and home. If you allow them a more flexible work environment that fits with their home schedule (spouse’s schedules, children’s schedules, the schedules of outside interests), your employees will have a better balance between work and home life, and their stress level will go down. Many of us are still married to the traditional 9 to 5, but in today’s family life, that’s usually very hard to make work. Let your employees merge their work and home lives and you’ll have employees for life.
“I want a more clear chain of command.” What employees really want is mentorship and deeper meaning in their work. I know, it sounds like a stretch, but after time and again of putting young advisors in front of clients and creating clear organization charts, only to have them remain unhappy, you begin to see what they really want. To be happy in their work, employees need two basic things directly from their firm: a clear understanding of their role in the company and where it is taking them, and a clearly communicated firm mission and goals that make them feel good about their job. Simple: They want to know that what they are doing is important to the clients and to the success of their firm, and that it is taken seriously.
If owner/advisors take these simple steps to make their employees truly happy, their owner’s guilt will disappear overnight. You won’t find these solutions in any business management books or your MBA course work. But if you want happier employees, a more successful practice and the peace of mind to enjoy your success, throw traditional management out the window and take the time to give your employees what they’re really asking for.