One of my owner/advisor clients recently had a problem: His junior advisor wasn’t getting his work done in a timely manner. When I talked to the junior advisor about what the problem was, here’s what he told me: “I don’t think the owner realizes how much work he dumps on me. He’s given me no training or direction on how to do it, and yet expects everything to be done ASAP and done perfectly. It’s impossible.”
When I talked to the owner about what his junior advisor said, I pointed out that he was a very good kid, bright, hardworking, who really wanted to do a good job. The owner responded by saying: “I don’t understand what the problem is. I don’t ask him to do anything that I can’t do, and I put in 60 or 70 hours a week to get it done.” The owner called me the other day to tell me he fired the young advisor.
This is a classic case of how most advisors try to run their firms—and why they are destined for mediocrity at best. By their own actions, owner/advisors inadvertently set their employees up to fail. When the employees ultimately do, owner/advisors blame them, fire them and try to hire someone they hope will do better. They almost never do, and the owner repeats this process over and over, all the while complaining about the “lack of talent” in the job market today.
My P4 practice management principles (see “Let Go to Grow,” Investment Advisor, November 2011) are designed to break this cycle. The first of those four principles is preparation, which is, not coincidentally, the most important and by far the most difficult to get. Preparation is about preparing owner/advisors to build an ultra-successful advisory firm that virtually runs itself. Preparation can be summed up in one simple sentence: All the problems in your advisory firm stem from one source—you.
I told you it was hard to “get.” In fact, I can just see the owner/advisors reading this crossing their arms over the chests and scowling. That’s the usual reaction of owner/advisors who are in the audience when I give my P4 talks. In fact, almost nobody gets it right away. But over time, usually many years, some advisors do come to realize on their own that the success or failure of their advisory firm is almost entirely the result of the actions they take, not their employees. Unfortunately, the time it takes for them to come to this realization usually costs them years of wasted effort and millions of dollars in lost revenues and equity value. My No. 1 job is to shorten that learning curve and get owner/advisors on the path to making decisions that grow a successful firm as quickly as possible.
Like many owner/advisors, the advisor in the sad story above doesn’t yet understand that his actions caused his employee to fail. Among other things, he’s continuing to make two classic mistakes that almost all advisors make: His lack of management has led to the “now” syndrome, in which one crisis follows another, putting himself and his staff under constant pressure to put out these fires ASAP; and the mistaken belief that this ongoing problem can be solved by hiring “star” employees.
I use various techniques to help owner/advisors realize that they have created an environment in which their employees are destined to fail. Usually, the most successful is simple prediction. When owner/advisors refuse to take my advice that the problem isn’t their employees (like the advisor in my example), I tell them: “Fine. We’ll fire this employee and hire another one with even better credentials and more experience, for even more money, and within two weeks, you’ll realize you are doing the same counterproductive things. Within 90 days, you’ll be back in the same place, with the same problems.” It gets their attention when my prediction comes to pass just as I said it would, although in too many cases, we have to go through this process two or three times before an owner admits that the employees aren’t the problem, and we lose some good employees for no good reason.