July 10, 2013

Advisor Owners: Lose Some Control to Empower Your Employees

Back in the 1980s, the US military realized that too much control over soldiers and sailors in combat and other stressful situations wasn’t such a good thing. (I only know this because as a former leader of a Navy search-and-rescue team, my husband was involved in a number of these missions.) It turns out that being in action involves dozens of crucial decisions, which are far more successfully when made by those on the ground rather than by commanders in some far-away headquarters.

Consequently, the military started to give its personnel far greater latitude to deal with situations they faced.  This change in U.S. “command and control” was captured in the movie “Heartbreak Ridge,” as Gunnery Sgt. Highway (Clint Eastwood) trained his Marine platoon to “improvise, adapt, overcome” in difficult situations. 

I’m often reminded of our military’s transformation while working with advisory firms. One of the biggest challenges that we see owner-advisors facing these days is finding a management style that works. Like many small business owners, independent advisors often have a hard time giving up control—not only of what their employees are doing, but how they are doing their jobs. In smaller firms—with just the advisors and one or two staffers—that’s not such a problem (although it isn’t usually much fun for the employees in those situations, either). But as firms get larger, advisors who jab their fingers into every pie not only create growth-dragging turnover, they prevent their employees from providing the leverage that was the reason they were hired in the first place. 

As it turns out, most employees face dozens of decisions during their working days, too. If they aren’t trained and supported to make those decisions, they’ll take them to the firm owner, who can end up spending more time on these low-level decisions rather than taking care of their clients and growing their firms. At that point, owner-advisors have become “supervisors”: workers whose sole job is to oversee other workers. At the same time, they’ve relegated their employees to laborers, simply carrying out a stream of instructions issued by their supervisor. 

Not only is firm growth limited solely by the work capacity of the advisor, but employee motivation and morale plummets, minimizing productivity and maximizing turnover. 

In our work, we’ve found that a much more successful dynamic between firm owners and their employees is to empower those employees to take as much decision-making as possible off the owner’s desk. In fact, we’ve come to realize that the success of most advisory firms largely depends on their employees’ ability to make the vast majority of the decisions they face—and their ability to make them correctly.

Making this happen involves two steps: first, employees need to be trained and supported to make good decisions, and then owner-advisors have to change their mindset to let them do it.

Contrary to what you might think, training and supporting employees is the easy part. That’s because most employees want to do a good job. So if you take the time to teach them what they need to know to do their jobs, and provide the tools they need (which these days mostly means up-to-date technology), you’re almost there. The only thing missing is to let them learn to do their jobs their way.

That brings us to changing owner attitudes. As I said, most owner-advisors act like supervisors, and therefore become supervisors. The better choice—and it is a choice—is for owners to become what we call “resource leaders.” Resource leaders provide the tools for employees to do their jobs with a high degree of independence. When an employee asks them a question, resource leaders don’t simply give them the answer, they give them a resource to find the answer themselves: Go to this website, look in that book, call the Schwab rep or the tech consultants or ask one of the other employees. Or find the answer in the firm’s processes and procedures manual (yes, to have productive, independent employees you need to have a P&P manual).

Perhaps most important, resource leaders let their employees learn their jobs, which means letting them make mistakes. Instead of being overly critical, good resource leaders use mistakes as learning opportunities: to learn a better way, to take responsibility and, yes, to correct their mistakes if necessary. 

In fact, making mistakes is part of taking the initiative. Nobody is perfect, and few people who feel they have to be are successful.

Good business leaders realize that their success depends on the success of their employees. Successful owner-advisors give their employees the tools and the support they need to succeed: to empower them to make the right decisions on the front lines—to serve your clients and grow your firms. 

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