Scope Creep: Keeping Successful Advisory Firms From Becoming Dysfunctional

Another advisor may be a Partner, serving as a Lead Advisor, and also having operational (COO type) functions—overseeing Billing, Payroll, Bookkeeping, and Client Administration. Not only are these roles assigned based on their individual abilities and inclinations, but on a fair division of the workload to make your firm successful.  Moreover, their compensation is based on metrics for success in each of their roles, as well as the success of the firm as a whole.

Yet as your company grows, the tendency is for partners and employees alike to take on more duties “because they need to be done,” and their positions to gradually become more unfocused.  Initially, this can be good because it increases firm productivity, and shows that employees have great motivation.  But if it continues unchecked, your firm—and I have seen this in many practices—could actually see growth start to fall.

The problem with scope creep is three-fold:

• First, when partners or employees have taken on a substantial volume of new tasks which aren’t being reflected in their compensation, yet increase their workload, even the best employees can become de-motivated, feeling that their jobs have become unfair.
• Second, it’s human nature to treat “additional” work less seriously than the roles that fall under one’s job description. Yet in an advisory practice, where almost every task involves client service, all roles need to be taken seriously.

• Third, when employees are increasingly taking on roles informally, firm management loses sight of who’s really doing what. That can lead to mistaken perceptions about the firm’s capacity to grow and about the quality of personnel performance. I can’t tell you how many times I’ve seen a dramatic disconnect between firm owners’ perception of how their firm runs, and how it really runs.

Obviously, we don’t want growth or service quality to decline. We do want employees and partners to be motivated, productive and happy. Sometimes, we only need to change the compensation structure to better reflect what people’s jobs really entail. 

More often than not, however, when a firm’s biggest human capital issue is “creeping” job functions and a resulting a dysfunctional organizational chart, the solution is to reevaluate all the job functions that are being performed within a firm, and reallocate them in the most sensible and fair way—so that everyone knows what everyone in the firm is supposed to be doing, and that they are being fairly compensated for doing so.