A big part of my motivation to create the P4 principles that were covered in the November 2011 issue of Investment Advisor (“Let Go to Grow”) was watching my owner/advisor clients make the same employee mistakes over and over, never questioning their methods and greatly diminishing the success of their firms.
As far as I can tell, their blueprint for mediocrity is widely copied throughout the independent advisory industry.
Owner/advisors’ typical experience with junior advisors says it all. First, they make an all-out effort to hire a “blue chip” job candidate, taking far longer than their firm can really afford and then overpaying to get this hot prospect to take the job. Next, they spend virtually no time training their new employee or even introducing her to the systems, procedures, services, clients, philosophy or goals of the firm—yet they have very high expectations that their “star” will hit the ground running, making a substantial impact from day one. Then, when the new hire struggles (predictably, in my view), owner/advisors quickly become disillusioned with the employee and vent their disappointment and anger by becoming overly critical. Which, once again predictably, starts a downward spiral of unhappiness on both the employee’s and owner’s parts, usually ending with the tarnished employee leaving or being fired—and the owner looking to correct the mistake by hiring an even bigger star.
If you’re an owner/advisor and this scenario doesn’t resonate with you, you should probably take a harder look at your hiring process. As I said, from my contact with thousands of young advisors across the industry, my sense is that it’s almost a universal problem. I call it “setting employees up to fail”—that is, placing newly hired employees in a nearly impossible situation with unrealistic expectations for their impact on the firm, then doing it again and again—and it applies just as often to support staff as it does to professional help. The key to breaking this cycle is for owner/advisors to change the way they think about and work with employees.
The biggest hurdle for most owner/advisors is to let go of much of what they believe or fear about having employees. Like many professionals, independent advisors tend to focus their time and attention on their clients, with employees kind of an afterthought at best and a necessary evil at worst. But as the best doctors, dentists and hospitals have found, much of patient care comes from junior and non-professional staff. By training and supporting their staff, the patients’ experiences are greatly enhanced.
This is equally, if not more, true in advisory firms. In my P4 program, the first and most important P is preparation, and the first step is preparing owners to work with their employees. At the heart of acquiring a productive owner’s mentality is learning to work with employees as partners in their effort to provide the best possible client service. It’s helpful to think of every job at one’s firm as equally important, perhaps not in terms of revenue generation, but certainly in creating each client’s overall experience. In the most successful firms, employees don’t simply leverage the advisors to be more productive, they are part of a team, working together to attract and to serve the firm’s clients.
To start building this team mentality, owner/advisors need to stop thinking of themselves as “the boss” and become teachers, mentors and coaches to employees to help them become better at their jobs and to work together toward the firm’s common goal. I know, this probably sounds pretty touchy-feely, especially to business-school-trained managers. But, believe me, the effect on a small business such as an advisory firm can be dramatic. When advisors assume these roles from the moment a new employee starts with the firm until that employee starts to learn and grow on his own and to mentor other employees, the business becomes more than just a one- or two-person show and can really take off.
Once owner/advisors come to grips with the fact that their employee problems are self-inflicted rather than the result of poor hiring choices, they can get off the “star employee” treadmill. The list of mistakes that firm owners make in managing employees is almost endless, but I’ve found that they basically fall into six categories, starting with the hiring myth, which I’ve already talked about. Here are the other five:
Failing to make time on the front end to train new employees. As I mentioned above, nobody can come into a new advisory firm and hit the ground running without moving up a learning curve. Every firm is unique, at least in some ways, and each new employee needs to learn and understand that uniqueness. The problem is that most advisory firms wait too long to hire help, usually until they are so desperate that they don’t feel they have a moment to spare. The key is to build in time to train every new employee; time for the employee to learn her job and about her new firm; and time for the owner/advisor and other employees to teach her. Think of it as in investment: The more you put in, the greater the benefit you’ll reap.
Criticizing instead of coaching and teaching. There’s a great commercial that’s been running during football games this season featuring Phil Jackson, the legendary coach of the Los Angeles Lakers, telling an autocratic restaurant manager, “I’ve found that anger is the enemy of instruction.” It’s easy to be critical, to get frustrated or impatient with employees. It’s important to point out where employees have fallen short of what’s expected, but it’s even more important to do so in a way that says, “I know you can do better.” Remember, mistakes are how people learn; encourage initiative, correcting mistakes and moving on. The goal is to train confident, competent employees who don’t require supervision and can even help out with training and supervising other employees. A relatively small investment of time and patience on the front end will yield huge dividends of independent productivity for years to come.
Telling rather than showing people what to do. Most owner/advisors’ vision of teaching is to give a new employee a narrative overview of what his job entails and letting him have at it. Wrong. First, most of us just aren’t very good at teaching through lecturing. Second, most new employees will retain very little of what you initially tell them. They’re already stressed, and they don’t have the context to fully understand what you’re telling them. Let them start by reading about their job and everyone else’s jobs in the firm manual (you have a firm manual, right?). Then, encourage them to ask any questions they have. Encouraging questions is by far the best way to teach; they’ll know better than you what they don’t know. Finally, have them do each task that their job entails one at a time, review what they’ve done, let them ask more questions, and do it again until they get it right. Then move on to the next task. Sure, this takes some time, but very quickly they’ll become employees you’ll never have to supervise again.
Demanding that people do their jobs like you would. Everyone is different, with different strengths, weaknesses and abilities. To get employees to own their jobs, they need to figure out how to get it done their way, not your way. Remember, the goal is to train highly productive employees that require little or no supervision. To achieve this, your focus needs to be on the end result, not the process. By allowing employees to use their abilities and creativity, you’ll get results far beyond your expectations.
Bad tools. Nothing communicates that one’s job isn’t important more powerfully than failing to provide the tools to do a good job. Just as new employees require an investment in training, they also require an investment in tools and technology. The biggest cost center for most advisory firms is its employees. Get the most out of that investment by providing the tools your employees need to be as productive as possible.
To create great employees who will help you create a great advisory business, get over the impulse to “be the boss” and instead become your employees’ teacher, coach, cheerleader and supporter. The more you support them, the easier your job will be and the greater success you’ll achieve together.