Back in November, I wrote a feature story for IA magazine based on my white paper that explained why traditional business school strategies don’t work very well in independent advisory firms, and what firm owners can do about it. Since then, I’ve been asked to give a number of speeches and write some follow- up articles on the subject, so I’ve spent some time mulling over various ways to talk about these issues that will resonate with advisors. One notion that’s occurred to me is that among the biggest mistakes that I’ve see business owners make in the advisory world is thinking about “What” instead of “Who.”
Let me explain. The “what” in my approach are the components of a business that we put down on paper: The business model, structure, organization chart, job descriptions, and the processes and procedures that describe how the business should run. This is where most business owners start, whether they are launching a company or reorganizing it to attain higher goals.
In fairness, this may be a good place to start if you’re running a large corporation (although I doubt this is how the most successful companies do it). With smaller business, that have fewer resources and narrower margins for error, these paper “whats” are a far too theoretical way to think about the firm. Which brings us to the “whos,” that is, the people who work in the business and prospective employees that you might hire.
It seems to me that smaller businesses (which lack HR departments that facilitate a revolving door of employees coming and going, formal training programs and pools of junior employees competing for advancement) are far more dependent on the strengths and weaknesses of their employees and on their ability to work together to build a successful firm. If that sounds like I’m talking about a team, I am. At least, that’s how I think of advisory firms.
Moreover, just like any successful team, it’s way more effective to design a strategy to fit the strengths and abilities of the employees you have than to create a strategy in a vacuum and then try to mold or hire employees who can make it work. Most owner/advisors already know this makes sense, because it’s almost always the way they launched their businesses: based on their own strengths, their expertise, their experience, their people skills and the kind of clients for whom they have an affinity. However, many advisors forget these roots for one reason or another, and try to build their firms according to some paper plan.
I have found that firm owners will be much more successful if they take a more grassroots, ground-up approach, by organizing their businesses to: first, support and compliment their strengths, and then to support and compliment each of their employees.
Before you draw up the org chart and write the job descriptions, think about what each employee does best, and give them a job that uses that talent. Also think about how your employees work together, and be sure that compatible people are in jobs that require a lot of interaction. No, this isn’t rocket science, and yet few firm owners actually think this way.
Sure, you can and should hire additional employees to meet a firm’s needs, or holes in your existing team. But remember, how new employees will fit into your team should be your first consideration: simply hiring the candidate who looks the best on paper is taking a huge risk. Teams made up of superstars rarely work out well for long: Shaq and Kobe come to mind. And most advisory firms I know can’t handle either the turnover or the payroll of the Yankees.