I suspect that there’s a prevailing belief throughout our universe that the larger advisory firms—because they have more employees—have solved many of the HR problems that tend to plague smaller firms. In my work, I’ve come to the conclusion that the opposite is often the case: That larger firms simply assume problem employees are the norm, and compound their problems by creating “hiring factories” to support their high turnover rates.
Contrary to what you might think—and probably common sense—even though larger firms (with say $2 million or more in annual revenue) tend to have not only more employees but higher employee-to-advisor ratios, their owner/advisors tend to spend substantially less time thinking about their employees. In part, that’s because owner/advisors at larger firms simply have a lot more to think about: from compliance to partnership issues, and from marketing to technology. If they think about their employees at all, it’s usually about hiring, as I mentioned above.
What’s more, these owner/advisors typically assume their firms’ HR problems are being “handled” by their office managers. Unfortunately, more often than not “office managers” at larger advisory firms tend to have their hands full just with the administrative functions required by having many employees: dealing with payroll and benefits issues, in addition to the revolving door of terminations and new hiring. That leaves nobody with responsibility for the training, productivity or morale of the employees.
In many firms, they’ve stopped doing annual compensation reviews because they don’t have anyone with time to do them, and they don’t seem to have any effect on their high turnover rates anyway. The HR strategy seems to be one of “avoid and conquer:” If you ignore a problem long enough, it will simply go away. I reality, it does: the “problem” employees will eventually find another job, or if not, have to be terminated.
Which, of course, starts the whole hiring cycle all over again, without ever addressing the real problem(s). Way more often than not, so called “problem” employees are really people who want to do a good job and make a career with their firm, but have become frustrated at their lack of prospects of doing either. Without sufficient training or support in their jobs, it’s usually difficult for them to succeed. And without a career path or prospects for advancement, the motivation to do so is often very low. So eventually they’ll look for a better job, and the firm will begin the cycle all over again with a new employee.
I know, I know: you’re pretty sure this happens at other firms, but certainly not at yours. My question to you is: How do you know? What’s that annual employee turnover rate? If it’s more than 20%, you really might want to rethink your answer. Here’s a suggestion: make a commitment to actually finding out. After all, the first step to solving any problem is to admit that you have one.
To get a handle on the employee situation in an advisory firm, I recommend a simple survey: Ask each employee to rate the firm in not more than 10 areas, including their benefits, compensation, training, job support, perception of the firm, job satisfaction, their level ofhappiness, etc. And do it anonymously, if you want honest answers. Chances are you’ll get a new perspective on your firm—one that might motivate you to make some changes.